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Prime Minister’s employment Generation Scheme (PMEGS) is an employment generation programme adopted and implemented by the PM of India to provide employment opportunities in micro-level industries. It is major credit-linked subsidy programme implemented to provide jobs for unemployed youth by generating self-employment opportunities via establishing micro-industries at the non-agricultural sector. Ministry of Micro, Small and Medium Enterprises (MSME) is responsible for implementing this programme that came into effect since the year of 2008.
This programme helps in creating jobs for numerous unemployed people in the non-farming sector. The scheme is being implemented by Khadi and Village Industries Commission (KVIC), State Khadi and Village Industries Board (KVIB) and District Industries centres (DIC). Under this scheme, loans are provided for facilitating self-employment by public sector banks, selected private sector and Cooperative banks by providing subsidies from MSME. The PMEGP Scheme is being implemented by Khadi and Village Industries Commission (KVIC) at the national level. At the State level, the Scheme is being implemented through State Khadi and Village Industries Commission Directorates, State Khadi and Village Industries Boards and District Industries Centres and banks. PMEGS is a merger of two national schemes, namely, Prime Minister’s Rojgar Yojna and Rural Employment Generation Programme.
Objectives of the Scheme
The main aim of the scheme is to provide opportunity for stable, continuous and sustainable self-employment for the unemployed sector of the urban and the rural areas. Another objective of the act is to provide continuous and stable employment for the large segment of the rural and urban population by providing self-generating businesses at the micro-level. The scheme also facilitates the role of financial institutions and public banks, creating a higher credit flow at the micro-level sector.
Unemployment is one of the major challenges faced by the Indian Government. This scheme gives the opportunity to unemployed youth to receiver loans at a subsidised rate to create small business and micro level industries. The act was implemented with the aim to tackle poverty by giving the power to people to own their own businesses. This loan system also helps create greater credit flow for the registered bank by giving eventful distribution to the beneficiaries in need for the loan.
The Implementing Agencies, namely KVIC, KVIBs and DICs will associate reputed Non-Government Organization (NGOs)/reputed autonomous institutions/Self Help Groups (SHGs) / National Small Industries Corporation (NSIC) / Udyami Mitras empanelled under Rajiv Gandhi Udyami Mitra Yojana (RGUMY), Panchayati Raj institutions and other relevant bodies in the implementation of the Scheme.
Eligibility under the Scheme
Any individual above 18 years of age is eligible for applying under the scheme. General category beneficiaries can avail margin money subsidy of 25 % of the project cost in rural areas and 15% in urban areas. Beneficiaries belonging to Special Categories such as Scheduled Caste/Scheduled Tribe/OBC /Minorities/Women, Ex-serviceman, physically handicapped, NER, Hill and Border areas etc. can avail margin money subsidy of 35% in rural areas and 25% in urban areas. The maximum cost of projects can be Rs. 25 lakhs in the manufacturing sector and Rs. 10 lakhs in the service sector. Benefit can be availed under PMEGP for setting up of new units only.
Why was it introduced?
By the year of 2008 in India, unemployment and poverty were major crises in the country. In both urban and rural areas, there was an acute shortage of job availability. This was toppled with a huge and growing population, creating havoc and crises all over the country. The small and medium sector was experiencing a downfall in production and distribution. Crises over poverty and employment led to many unemployed youths. This was also tumbled with lower credit flow rate in the economy.
This programme was implemented by the Ministry of Ministry of Micro, Small and Medium Enterprises to tackle the problem of unemployment. By providing loans to people for business at low rates and careful supervision by the banks, this scheme gave the opportunity for creditors to open small and micro level businesses in the urban and rural areas. Creating of businesses also led to exponential increase in the job availability solving the unemployment crises. It aimed to make the people of India ‘self-sufficient’. It has generated sustainable and continuous employment availability in both Rural as well as urban areas of the country. This scheme was implemented specifically to provide loans at lower interest rate to people so that they could become business owners in both service and manufacturing sector.
Furthermore, the financial institutions due to higher loan crediting, has shown a big increase in its credit flow system. This scheme has provided stable and sustainable employment to a large segment of prospective and traditional artisans, rural and urban youth in the country through setting up of micro and small enterprises.
This act has been under the supervision of by Khadi and Village Industries Commission (KVIC), State Khadi and Village Industries Board (KVIB) and District Industries centres (DIC). Some of salient features are-
- Individuals with age of 18 years or more must be passing standard 8th can avail loan for their project required above Rs 5 lakh in the service sector and above Rs 10 lakh in the manufacturing sector.
- These businesses must be registered under the Societies Registration Act of 1860. These are self- help businesses that are form of production bases cooperative societies.
- The Scheme is implemented through Khadi and Village Industries Commission, State Khadi and Village Industries Commission Directorates, State Khadi and Village Industries Boards and District Industries Centres and banks in Urban and Rural areas in the ratio of 30:30:40 between Khadi and Village Industries Commission / Khadi and Village Industries Boards / DIC respectively.
- Also, assistance under this scheme is provided to small business owners for development and running.
- The per capita investment under the scheme shall not be more than Rs 1 lakh in plains and Rs. 1.5 lakhs in elevated areas such as hill and platues.
- Maximum project cost shall be Rs 10 lakh in the service sector and Rs 25 lakh in the manufacturing sector.
- There is no income ceiling for setting up projects.
Progress made under it
According to article published in “FINANCIAL EXPRESS” “Prime Minister’s Employment Generation Plan is estimated to have created over 11, 13,000 jobs during the three years till 2017-2018”. According the press release by the Government, this scheme was able to generate 5,87,416 jobs during the year 2018-2019 which was more than it targeted to create. Also, Khadi and Village Industries Commission (KVIC) generated about 36904 jobs till 26th June, 2019. This scheme also succeeded in sick textiles and Khadi industries as well. It has a good reach and has targeted almost all sections of the society based on social background, education background, location etc. Thus, PMEGP till now has performed well and shown a creative pattern of works to the rural areas, but along with the progress made by the scheme, it has also lead to some difficulties, the most important being the delay in the process of sanctioning of loans at different stages because of factors such as asking collaterals for loans, physical verifications and delay in adjustment of margin money.
- Steps taken to strengthen it
“Ministry of MSME has introduced online Margin Money disbursement directly to financing bank branches so as to enhance transparency and expedite disbursement of Margin Money under the scheme”. It has also provided for financial assistance of up to 1 crore for manufacturing units and up to Rs. 25 lakh for service units with certain subsidies as well for expansion/upgrading the existing PMEGP units. It has also permitted 10% of financial allocations for trading activities in the form of sales outlets in certain districts so as to boost the marketing of KVI product. Awareness camps, workshops, Bankers Meetings and exhibitions at all levels are being organized in order to propagate the PMEGP scheme for the development of micro industries.
Along with this, Coir activities are included under the scheme and Coir Board has been made as an implementing agency. Also, it has permitted 10% of the total financial allocation to the “Retail outlets/business – selling Khadi products, Village Industry products procured from Khadi and Village Industry Institutions certified by KVIC and products manufactured by PMEGP units”. Lastly, the ministry has also initiated the process of Geo-Tagging of all the units.
The PEMGP has been one of the major employment generation credit linked subsidy programme in the country. The main aim of the programme was to generate employment for large number of people in the small sector, in the urban and rural areas. It was a merger of two employment generation schemes that are PMRY and REGP. At the national level, the Scheme is being implemented by Khadi and Village Industries Commission (KVIC), a statutory organization under the administrative control of the Ministry of MSME as the single nodal agency.
At the State level, the Scheme will be implemented through State KVIC Directorates, State Khadi and Village Industries Boards (KVIBs) and District Industries Centres (DICs) and banks. It includes small business of rural and urban areas namely-
1. industry or business for sale of meat, tobacco, etc
2. Industry or business for agriculture, floriculture, horticulture etc
3. Rural Transport (except Auto rickshaw, House boat, tourist boat in A & N Islands and except house boat, Shikara & Tourist Boats in Jammu & Kashmir and Cycle Rickshaw.)
4.CNG Auto Rickshaw
5. Polythene and plastic business, etc
These are at the micro and small level. It is necessary for a country like India to implement such schemes. Eradication of poverty still remains one of the major challenges for the government. Government bodies have worked together to execute this programme successfully. The Implementing Agencies, namely KVIC, KVIBs and DICs will associate reputed Non-Government Organization (NGOs)/reputed autonomous institutions/Self Help Groups (SHGs) / National Small Industries Corporation (NSIC) / Udyami Mitras empanelled under Rajiv Gandhi Udyami Mitra Yojana (RGUMY), Panchayati Raj institutions and other relevant bodies will work together in identification and assistance of businesses. It includes identification of beneficiaries, finding viable projects and providing the required training and education.
To generate continuous, stable, safe and sustainable employment and to help the financial institutions achieve a credit line and flow, this programme has been a success in providing employment to many thousands to unemployed people. Providing subsided rate loans to people and assisting them to make an optimum utilisation of resources received by education and training has been the primary goal of PMEGP.
The scheme itself is to challenge the problem to poverty head on. It is the duty of the government to keep and regular check at the statistics attached to it, the designated government bodies must ensure that optimum utilisation of resources are being made by the small business owners under this scheme. Creating employment and businesses will help in growth of the economy simultaneously. Manufacturing and distribution at this large scale will have an immense increase in the GDP level by the secondary sector. This programme has been a very thorough and well implemented plan for the unemployed sector as well for the economy and the financial institutions.
Authors: Ridhima Chandani from Manipal University, Jaipur and Tanmay Sinha from Symbiosis Law School, Hyderabad.
Editor: Dhawal Srivastava from Rajiv Gandhi National University of Law, Patiala.