Prime Minister’s Employment Generation Programme (PMEGP)- I

By | March 10, 2019

Prime Minister’s Employment Generation Programme (PMEGP)- I

The Prime Minister’s Employment Generation Programme known as PMEGP is a central government scheme. This was introduced in the year 2008.

The main objective of the scheme is to generate employment opportunities through establishment of self-employment enterprises in rural and urban areas.

This scheme is administered by the Ministry of Micro, Small and Medium enterprises (MoMSME), Government of India and the scheme is implemented by Khadi and Village Industries Commission (KVIC). In short, KVIC is the nodal agency for the scheme at National level. At the states the scheme is implemented through, State KVIC Directorates, State Khadi and Village Boards (KVIB) and at district level it is through District Industries Centre (DIC).

Under this PMEGP scheme, as an incentive to the entrepreneurs to set up new units/ enterprises, Government grants subsidy on the cost of project. This subsidy is transferred to the bank from where the beneficiary / entrepreneur availed the loan for setting up the new unit. The subsidy amount depends on the project cost of the unit and a maximum subsidy of Rs. 8.75 lakhs will be available to the enterprises.

Normally, new units are only permitted to avail benefits from the PMEGP scheme. However, existing units can also be permitted to avail benefits under PMEGP provided,

  • Margin Money (subsidy) claimed under PMEGP has been successfully adjusted.

  • First loan availed under PMEGP/MUDRA has been successfully repaid in the stipulated time.

  • The unit is is profit making with good turnover and having potential for growth in turnover and profit with modernization/upgrading the technology.

Before going into the details of the scheme let us understand the terminology,

  • Project cost: Total requirement of funds for establishing an enterprise / business unit.

  • Beneficiary’s contribution / margin and Bank Loan: Some times, the entrepreneur may not be in a possession to raise funds for the entire project cost. Therefore, he may have to approach a Bank. But, banks will not sanction loan for entire project cost. They insist for beneficiary i.e. the entrepreneur’s contribution in the project cost. This portion is called margin. Total project cost less margin will be Bank Loan.

  • Subsidy: Under certain schemes Governments provide certain amount of subsidy as incentive to the beneficiaries. This is to encourage the beneficiary to establish enterprises / units and achieve the scheme objectives. Normally, this subsidy is provided on the project cost.

      • Ex: Project cost : Rs. 20 Lacs

        If beneficiary’s contribution is 10 % i.e. Rs. 2 lacs

        If subsidy is 20 % i.e. Rs. 4 lacs.

  • Manufacturing Unit: Units engaged in the process of manufacturing of goods.

  • Services unit: Units engaged in providing services to various units / enterprises.

Under PMEGP the funding and subsidy details are:

Category of beneficiary for a new unit

Beneficiary’s contribution

Subsidy ( % )

Urban / Rural*

Urban*

Rural*

General Category

10 %

15 %

25 %

Special Category ( SC/ ST / OBC / minorities/ Women / Ex.Service men/ handicapped etc.)

5 %

25 %

35 %

*Area i.e. location of the project/ unit

 

  • Maximum project cost under manufacturing sector is restricted to Rs. 25 lakhs and for services / business sector it is Rs. 10 lakhs.

  • However, for 2nd loan for upgradaton of existing PMEGP / MUDRA units is:

    Category of beneficiary for an existing unit for upgradation

    Beneficiary’s contribution

    Subsidy (%)

    All categories

    10

    15

  • Maximum project cost for up gradation under manufacturing sector is Rs. 1 crore and for business / service sector is Rs. 25 lakhs

  • Maximum permitted subsidy is Rs. 15 lakh.

Eligibility criteria for availing loan under PMEGP :

  • Eligibility conditions for new beneficiaries / units :

    • Individuals of above 18 years of age

    • Educational qualifications is not a criteria. However, if the new unit’s project cost is above Rs. 10 Lakhs in manufacturing sector and above Rs. 5 lakhs under business / service sector then only the applicant should have passed 8th class.

    • There is no ceiling of income (of the beneficiaries).

    • Those Self Help Groups which have not availed any benefits under any scheme.

    • Societies, Co-operative societies, Trusts are eligible.

    • Units which have availed government subsidy are not eligible.

    • Only one person from a family is eligible for PMEGP.

  • Eligibility conditions for existing beneficiaries / units :

    • The Subsidy that the Government is providing is a ‘one time assistance’. For any enhancement of credit limit or for expansion/modernization of the project, margin money (subsidy) assistance is not available. However, 2nd subsidy is also available for those units which are selected for upgradation through 2nd loan under this scheme, The criteria for selection for up gradation is

        • Subsidy claimed under earlier PMEGP has been successfully adjusted.

        • First loan availed under PMEGP/MUDRA has been successfully repaid in the stipulated time.

        • The unit is is profit making with good turnover and having potential for growth in turnover and profit with modernization/upgrading the technology.

        • For such units, maximum project cost for upgradation under manufacturing sector is Rs. 1 crore and for business / service sector is Rs. 25 lakhs and maximum permitted subsidy is Rs. 15 lakh.

(…contd in part II)

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