PMEGP – Overview

India has a population of 1.39 billion people, with over half of the population under the age of 35. This makes India an ideal place to work with young entrepreneurs on a large scale. The Prime Minister’s Employment Generation Programme (PMEGP) is a step to concentrate all efforts on encouraging youngsters to begin micro-businesses in the nation’s urban and rural areas. PMEGP allows young entrepreneurs to get all the assistance they need, including financing, to set up their own business ventures.

PMEGP was launched on 31 March 2008 by combining the previous Prime Minister Rozgar Yojana (PMRY) and Rural Employment Generation Programme (REGP). It was a step to consolidate two schemes with almost similar aims to concentrate all efforts on encouraging youngsters to begin micro-businesses in the nation’s urban and rural parts. The administrative management of the PMEGP scheme is under the Ministry of Micro Small & Medium Enterprises of the Indian Government.

PMEGP has been handed to the Khadi & Village Industries Commission (KVIC ) at a national scale, their boards and directorate at state levels, and the DIC at the district stage. It is a credit-linked incentive to increase employment throughout the country’s young generation. It does this by helping youngsters get jobs in service and manufacturing businesses by helping them set up new operations.

To understand the scheme’s complexities, let’s look at the features of PMEGP.

PMEGP Loan Scheme Features

PMEGP supplies subsidies to launch a microenterprise, which makes it a feasible scheme because of the availability of loans in the form of PMEGP credit. 

The following aspects distinguish this critical initiative:

Let’s go over the objectives of the scheme first:

  • To create jobs in rural and urban regions by assisting in setting up brand-new micro-enterprise firms.
  • To bring together the nation’s craftspeople and unemployed youngsters in a collaborative effort to set up self-employment chances.
  • To avoid rural adolescent migration to metropolitan centres in pursuit of long-term work by promoting vocational throughout the year.
  • To supplement traditional craftspeople’s incomes in rural regions by giving opportunities for self-employment.

The set PMEGP guidelines strictly restrict the specified amount as loans to the applicable candidates. 

  • For applicants under the manufacturer category, the quantum of loan is restricted to Rs. 25,00,000.
  • For applicants under the services category, the quantum of the loan is restricted to Rs. 10,00,000.

The amount of self-investment is set based on the place of the organisation. If the enterprise is situated in the plains, the maximum limit is set to INR 1,00,000. However, for those set in the hills, the maximum limit is set to INR 1,50,000.

PMEGP Loan Details

PMEGP is a scheme designed to encourage young people to start micro-businesses by providing them with credit assistance. The administrative management of the PMEGP scheme is under the Ministry of Micro Small & Medium Enterprises, Government of India.

The Prime Minister’s Employment Generation Programme loan term spans three to seven years. Because of the COVID-19 pandemic crisis, the scheme’s loan-issuing institutions have placed a necessary 6-month moratorium on any and all loans taken. Banks cover 90-95% of a project cost, depending on the borrower’s classification. The project’s subsidy is termed margin money, which is proportional to the applicant’s capital expenditure.

Participants of the PMEGP initiative are expected to contribute a minimum share of the cost of the project and get a rebate on loans obtained from banks affiliated with the programme. The subsidy amount is determined by the applicant’s classification and region of residence. This program’s subsidy is known as margin money. The table below shows the current subsidy rates falling under this PMEGP framework.

Here are the PMEGP loan details:

Borrower’s ClassificationBorrower’s Share (Percentage of the overall cost of the project)Bank Provided Share  (Percentage of the overall cost of the project)Subsidy Rate in Urban Areas (Percentage)Subsidy Rate in Rural Areas (Percentage)
General 10 901525
Special*5952535

*People who are ST/SC/OBC, women, physically disabled, Ex-Defence force personnel, and people living in the North East or Border Regions, among others, are included in the above-defined special group.

PMEGP Loan Interest Rate

The Prime Minister’s Employment Generation Programme is a move toward concentrating efforts to encourage younger individuals to create micro-businesses in both urban as well as rural parts of the country. It is primarily a credit-linked subsidy meant to generate employment among the nation’s people by pushing them to start new service and manufacturing firms. Therefore, the interest rates are kept affordable.

The PMEGP interest rate ranges from 11% to 12%. Nevertheless, an ‘Interest Subsidy Eligibility Certificate’ system offers 4% interest rates. The Khadi & Village Industries Commission adjusts the difference between the adjusted interest rate of 4% and the normal interest rate of 11% to 12 %. But, the modified lending rate of 4% is exclusively accessible for firms involved with Polyvastra and Khadi goods.

Eligibility Criteria for PMEGP

PMEGP encourages young people to start micro-businesses in India by offering loans and subsidies. New businesses based on this effort are likely to bring new jobs, stem unemployment, and open doors for more economic participation of the youth. However, specific eligibility requirements must be fulfilled before an applicant can become a beneficiary of the plan. 

The following is a summary of the eligibility requirements for applicants of the PMEGP subsidy scheme:

  • The applicant should be 18 years old or older.
  • The applicant should have at least passed the class VIII final examination of their respective school.
  • An individual applicant needs to meet the pre-set requirement of the project to be eligible.
    • For applicants under the manufacturer category, the project size requirement is set to Rs.10,00,000 or more.
    • For applicants under the service category, the project size requirement is set to Rs. 5,00,000 or more.
  • If the applicant is a self-help group, they can be eligible for the PMEGP if they haven’t previously availed of benefits from any other scheme.
  • Charitable Trusts are eligible.
  • Registered Societies can apply.
  • Co-operative societies which are involved in the production business are eligible.
  • There is no income limit for obtaining the loan.
  • The financing option is only available to new businesses and applicants who haven’t previously participated in or gained from comparable initiatives.

The credit is only available for operations that have been explicitly approved, other than those mentioned in the following negative list.

Operations which are Allowed:

  • Agro-based food processing activities
  • Production of handmade paper as well as fibre
  • Activities where forests, chemicals, minerals, polymers, and chemicals are used to make products.
  • Biotech and rural engineering
  • Service products and textile goods

Operations on the Negative List

  • Slaughterhouse and meat-processing activities
  • Liquor-serving restaurants and/ or dhabas
  • Tobacco and other related goods
  • Toddy sales, as well as tapping activities
  • Activities which are cash crop-related
  • Floriculture, horticulture, and so forth

PMEGP Loan Documents

The PMEGP site portal, a specific digital interface supplied by KVIC, can be used to start the loan application procedure. For a smooth operation, the list of paperwork necessary is extensive, reflecting the standards of the institutions.

  1. All the borrower’s KYC papers for data entry into the PMEGP online portal, including Aadhaar Card, PAN Card, EPIC, etc.
  2. A valid community or caste certificate is required to prove the applicant belongs to the category.
  3. The claim for the applicable subsidy from the plan.
  4. The project’s overall cost is a breakdown of one phase, which includes capital expenditure and working capital.
  5. A certification from the banking institution’s controlling office certifies that no working capital is needed.

PMEGP Application Process

The PMEGP portal is the Government of India’s flagship programme, with a large slate to operate on to provide job possibilities, especially affecting traditional means of self-sufficiency. Interested applicants can register for the PMEGP initiative digitally by filling out the PMEGP Application Form available on the PMEGP portal. If you are an individual or a non-individual candidate, follow these guidelines to make your PMEGP registration go smoothly.

  1. Go to the Prime Minister’s Employment Generation Programme’s official KVIC online webpage.
  2. Once on the PMEGP portal, click on the ‘Online Application form for Individuals’ option or the ‘Online Application form for Non-Individuals’ option based on your classification. To access the application form for individuals, copy and paste this URL into another tab in your browser.
  3. When the application has been accessible, fill it out with the necessary information.
  4. When you select ‘Save applicant data,’ your file is saved.
  5. Attach the necessary papers and file them along with the application form.
  6. Following successful registration, an acknowledgement ID with the passcode will be given to the applicant’s specified cellphone number.

If you are a non-individual applicant, there is an extra step. Upon visiting the official PMEGP portal and selecting the option for ‘Online Application form for Non-Individuals’, choose a classification from ‘Registered Institutions’, ‘Self-help groups’, ‘Co-operative Societies’, and ‘Trust’. The components of the groups’ forms will differ.

After filing for a Prime Minister’s Employment Generation Programme credit on the PMEGP portal, applicants can track the progress of their application by following the procedure outlined below:

  1. Open the PMEGP portal.
  2. Select the ‘Login Form for Registered Applicant’ option.
  3. Log in by entering the username and passcode.
  4. Tap on the ‘View Status’ button to find out the progress of the PMEGP yojana credit application.

It is critical to remember the following points while applying for a PMEGP Loan.

  1. Construct your business concept.
  2. Determine the location, type, and other specifics.
  3. Make an effective project report.
  4. Choose the appropriate form based on your non-individual or individual status.
  5. Please upload all needed documentation.

It is critical to understand that a bank may deny a PMEGP credit request if applicants fail to meet the eligibility requirements or for any other valid reason. If the bank declines your application, you may request that they explain why.

If you have questions or issues about PMEGP online, kindly contact the helpline at 07526000333 / 07526000555. You may also contact the PMEGP Helpdesk at helpdesk@udyami.org.in. 

The Bottomline

PMEGP is a top priority for the Indian government to foster employment among the youngsters of rural India. The program’s successful implementation calls on the participation of numerous entities, which includes Panchayats, at the roots of government in selecting prospective recipients. The sustainability of the PMEGP online plan would ensure that a substantial number of jobless youngsters find productive work and a demographic balance in the nation’s urban and rural sectors.

The Prime Minister’s Employment Generation Programme has successfully generated employment opportunities for unemployed youths and economic development. The PMEGP subsidy plan has been demonstrated to be one of the most effective instruments for creating self-employment resources at the grass-roots level, given that it has widened its target base for manufacturing and services operations to the young population of the society. Apply for a business loan with Tata Capital today.

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