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Prime Minister Employment Generation Scheme

  • 13-Jul-2023


The Prime Minister’s Employment Generation Programme (PMEGP) was launched to encourage young entrepreneurs in India to begin micro-businesses in urban and rural areas. PMEGP is a credit-linked subsidy scheme that is administered by the Ministry of Micro, Small, and Medium Enterprises of the Indian Government. 

The scheme provides all assistance to young entrepreneurs, including financing, to set up new operations. PMEGP was launched on March 31, 2008, by combining two similar schemes, Prime Minister Rozgar Yojana (PMRY) and Rural Employment Generation Programme (REGP) to effectively promote entrepreneurship among young people

The Khadi & Village Industries Commission (KVIC) oversees PMEGP at the national level along with their boards and directorates at state levels, while the District Industries Centre (DIC) manages the scheme at the district level. PMEGP aims to increase employment opportunities in the service and manufacturing sectors by helping young people set up new businesses, which can also contribute towards achieving sustainable economic growth in India.

The PMEGP (Prime Minister's Employment Generation Programme) is a scheme that offers subsidies to start a microenterprise. It provides loans in the form of PMEGP credit, making it an accessible program for aspiring entrepreneurs.

Here are the main objectives of the scheme:

  1. To create employment opportunities in both rural and urban areas by assisting in the establishment of new micro-enterprises.
  2. To promote self-employment among the nation's craftsmen and unemployed youth, fostering a collaborative effort.
  3. To prevent migration of rural youth to cities in search of long-term employment by promoting year-round vocational training.
  4. To supplement the income of traditional craftsmen in rural areas by providing opportunities for self-employment.

The PMEGP guidelines outline specific loan amounts for eligible candidates:

  • Applicants under the manufacturing category can receive a loan of up to Rs. 25,00,000.
  • Applicants under the services category can receive a loan of up to Rs. 10,00,000.

The amount of self-investment required varies depending on the location of the enterprise:

  • For enterprises located in the plains, the maximum self-investment limit is set at INR 1,00,000.
  • For enterprises located in the hills, the maximum self-investment limit is set at INR 1,50,000.

PMEGP Loan Details

The Prime Minister's Employment Generation Programme (PMEGP) is a scheme implemented by the Ministry of Micro Small & Medium Enterprises, Government of India. Its main objective is to encourage young people to start micro-businesses by providing credit assistance.

Under the PMEGP, the loan term spans from three to seven years. Due to the COVID-19 pandemic crisis, the scheme's loan-issuing institutions have implemented a necessary 6-month moratorium on all loans taken.

Banks affiliated with the PMEGP scheme cover 90-95% of the project cost, depending on the borrower's classification. The remaining amount, called margin money, is the subsidy provided by the scheme and is proportional to the applicant's capital expenditure.

Participants of the PMEGP initiative are expected to contribute a minimum share of the project cost and receive a rebate on loans obtained from affiliated banks. The amount of subsidy or margin money granted is determined by the applicant's classification and region of residence

Please note that the specific subsidy rates falling under the PMEGP framework can be found on the official PMEGP website or through the official scheme documents.

PMEGP Loan Interest Rate

As you mentioned, the PMEGP offers a credit-linked subsidy for starting new service and manufacturing firms. The interest rates for PMEGP loans range from 11% to 12%, which is still considered affordable.

However, there is an additional benefit for some businesses through an 'Interest Subsidy Eligibility Certificate' system, which offers a reduced interest rate of 4%. This adjustment is made by the Khadi & Village Industries Commission and is only available for firms involved with Polyvastra and Khadi goods.

Overall, PMEGP appears to be a well-designed program with attractive interest rates to encourage entrepreneurship and generate employment.

Eligibility Criteria for PMEGP

The PMEGP (Prime Minister's Employment Generation Programme) aims to encourage young people in India to start micro-businesses by providing loans and subsidies. This initiative is expected to create new jobs, reduce unemployment, and promote economic participation among the youth. However, applicants must meet specific eligibility requirements to become beneficiaries of the program. Here is a summary of the eligibility criteria for applicants of the PMEGP subsidy scheme:

Age Requirement: The applicant should be 18 years old or older.

Educational Qualification: The applicant should have at least passed the class VIII final examination of their respective school.

Project Size Requirement: An individual applicant needs to meet the pre-set project size requirements. For applicants in the manufacturer category, the project size must be Rs. 10,00,000 or more. For applicants in the service category, the project size must be Rs. 5,00,000 or more.

Self-Help Group Eligibility: Self-help groups can be eligible for the PMEGP if they have not previously availed benefits from any other similar scheme.

Charitable Trusts: Charitable trusts are eligible to apply for the PMEGP.

Registered Societies: Registered societies can also apply for the PMEGP subsidy scheme.

Co-operative Societies: Co-operative societies involved in the production business are eligible for the PMEGP.

No Income Limit: There is no income limit for obtaining the loan under the PMEGP.

New Businesses Only: The financing option is only available to new businesses and applicants who have not previously participated in or gained from comparable initiatives.

Approved Operations: The credit is only available for operations that have been explicitly approved, except for those mentioned in the negative list.

By fulfilling these eligibility requirements, individuals and organizations can access the benefits of the PMEGP to start and grow their micro-businesses in India.

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