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What is the PMEGP (Prime Ministers Employment Generation Programme) scheme?

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Microenterprises, with small investments, create various employment opportunities for skilled and unskilled workers in rural and urban areas. They generate income for entrepreneurs and employees. It helps to boost India’s GDP and economic development.

However, there are several instances whereby entrepreneurs fail to set up enterprises due to a lack of financial resources. To meet such financial issues, promote self-employment opportunities, and generate employment, the Indian government has introduced numerous employment generation schemes. This employment generation programme is introduced and administered by the Ministry of Micro, Small, and Medium Enterprises (MSME). This scheme was launched in 2008.

The main objective of this scheme is to promote the establishment of micro-enterprises. The growth in microenterprises, in turn, assists in generating employment opportunities. It is a new credit-linked subsidy programme whereby micro-enterprises are provided margin money assistance and loan assistance.

The Khadi and Village Industries Commission (KVIC) is responsible for executing the PMEGP scheme at the central level.  The KVIC Directorates and Khadi and Village Industries Boards (KVIBs) of the respective state, identified banks, and District Industries Centres (DICs) are responsible for executing the scheme at the state level.

This scheme aims to control the migration of rural people to urban areas by creating continuous and sustainable employment opportunities for artisans (traditional and prospective) and the unemployed.

What are the special features of the PMEGP scheme?

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The highlighting features of the PMEPG scheme are as follows:

1. All income-level individuals can apply for financial assistance under the PMEGP scheme and get support to start a business.
2. New projects recognised by the PMEPG are eligible to get financial assistance. Existing projects registered under any other central or state government scheme or projects to which government subsidy has already been granted are not eligible to apply for the PMEPG scheme.
3. The total project cost is the sum of working capital and a term loan to cover capital expenditures. The maximum project cost limit in the manufacturing sector, defined by the administrator of the PMEPG, is Rs. 50.00 lakh, and the same is Rs. 20.00 lakh for the projects in the service sector.
4. The contribution rate of promoters in the general category is 10%, in the special category, it is 5% of the total project costs. The special category includes women, physically handicapped people, and others, along with SC/ST/OBC/minorities.
5. The rate of subsidy varies according to the project’s location and categories of beneficiaries. The subsidy rate is 15% for the combination of the applicant from the general category and the project located in an urban area. The rate is 25% for the combination of the applicant from the general category and the project located in a rural area.
6. For special category applicants, the subsidy rate is 25% for projects set up in the urban area and 35% for the rural area. Hence, the maximum limit of the total project cost backed by banks through term loans is as follows:
7. General category applicant, project/unit in urban area—75% of total project cost
8. General category applicant, project/unit in rural area—65% of total project cost
9. Special category applicant, project/unit in urban area—70% of total project cost
10. Special category applicant, project/unit in rural area—60% of total project cost
11. It should be noted clearly that the interest rates of term loans vary from one financing institution to another.
12. The beneficiaries of this scheme are required to take mandatory EDP training for the stated period. The project cost and type of industry are factors considered to determine the duration of training. The total training cost is borne by the government.

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What are the eligibility guidelines of the PMEGP scheme?

One must fulfil the following requirements to be eligible for the PMEGP scheme.

1. Age: The business promoter of 18 years or above can apply for assistance under the PMEGP scheme.
2. Aadhaar Number: The applicant’s valid Aadhaar number is one of the prerequisites for the PMEGP scheme registration.
3. Authentication consent: The applicant should agree to the term of checking and verifying personal information such as name, date of birth, gender, and contact number by the government system named UIDAI for the proof of identity.
4. New unit: Only new projects that are not included in the negative list of Village Industries are eligible for financial assistance. Occupations included in the negative list are, namely, industries engaged in processing meat or slaughtering, production of intoxicants, activities prohibited by local authorities, manufacturing of polythene carry bags below standards, cultivation, and animal husbandry.
5. Education qualification: The applicant must have passed the 8th standard in case of projects above 10.00 lakh in the manufacturing sector and above 5.00 lakh in the service sector. However, no minimum education qualification is required for projects up to 10.00 lakh in the manufacturing sector and 5.00 lakh in the service sector.
6. Capital expenditure: Projects without capital expenditure are not eligible for financial assistance.
7. One-member eligibility: Only one family member is eligible for financial assistance. The definition of family under PMEGP includes self and spouse.

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What documents are required to avail of the PMEGP scheme?

Visit https://www.kviconline.gov.in/ for the online application. To speed up the online application, keep the scanned copy of the following documents ready.

1. Applicant’s Passport Size Photo
2. Applicant’s education qualification certificate (certificate of highest education)
3. Project report detailing the project’s feasibility and viability
4. Rural area certificate and special category certificate, if required.
5. The size limit of scanned documents is 1 MB.

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FAQ: PMEGP Scheme

1. How much subsidy can we avail of through the PMEGP scheme?

Under this scheme, the beneficiaries of different categories get a subsidy of 15% to 35% of the total project cost.

2. Is the PMEGP (Prime Ministers Employment Generation Programme) scheme a government initiative?

Yes, it is introduced by the government to boost social and economic development.

3. How much financial assistance can we get through the PMEGP scheme?

Eligible applicants can receive financial assistance in the form of a term loan for 90% to 95% of the project cost, with the remaining cost covered by the beneficiary's contribution.

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