Launch
- The Government of India approved the introduction of a credit-linked subsidy program called the Prime Minister Employment Generation Programme (PMEGP) in 2008 for the generation of employment opportunities through the establishment of micro-enterprises in rural as well as urban areas.
- It allows entrepreneurs to set up factories or units.
Administration
- It is a central sector scheme being administered by the Ministry of Micro, Small and Medium Enterprises (MoMSME).
- Implementing Agency at the National Level: Khadi and Village Industries Commission (KVIC) – a statutory organization under the administrative control of the Ministry of MSME.
Objectives of the Prime Minister Employment Generation Program
- Employment Generation Opportunities: To create prospects for employment in the nation’s urban and rural areas by starting new microbusinesses, projects, and self-employment ventures.
- To gather rural and urban unemployed youth and widely scattered traditional artisans and, to the extent possible, provide them with self-employment options at their location.
- Generation of mass employment in different sectors: To supply a significant portion of the nation’s traditional and aspiring artisans and unemployed rural and urban youth with ongoing and lasting employment to stop rural youth migration to urban areas.
- To boost craftsmen’s ability to earn a living wage and aid in accelerating the expansion of both rural and urban jobs.
Features of the Prime Minister Employment Generation Program
Eligibility:
- Any individual above 18 years of age.
- Only new projects/units are considered for sanction of loans.
- Self-help groups that have not availed benefits under any other public scheme, societies, production co-operative societies, and charitable trusts.
Maximum Cost of Project/Unit Admissible:
- Manufacturing Sector: Rs. 50 lakh
- Service Sector: Rs.20 lakh
Government Subsidy:
- Rural Areas: 25% for general category and 35% for special category, which includes SC/ST/OBC/Minorities, NER, Hill and Border Areas, transgender, physically disabled, north eastern region, aspirational and border district applicants.
- Urban Areas: 15% for general category and 25% for special category.
Role of Banks:
Loans are provided by public sector banks, regional rural banks, cooperative banks, and private scheduled commercial banks, which are approved by the respective State Task Force Committee.
Changes
- The definition of village industry and rural area has been changed for the scheme.
- Areas falling under Panchayati Raj institutions would be accounted under rural areas, whereas areas under Municipality will be treated as urban areas.
Significance
- The scheme will create sustainable estimated employment opportunities for about 40 lakh persons in five financial years.
- It facilitates the generation of employment opportunities for unemployed youth across the country by assisting in the setting up of micro-enterprises in the non-farm sector.
- Since its inception in 2008-09, about 7.8 lakh micro enterprises have been assisted with a subsidy of RS 19,995 crore, generating estimated sustainable employment for 64 lakh persons. About 80% of the units assisted are in rural areas, and about 50% of units are owned by SC, ST, and women categories.
What are the Challenges?
- The Scheme is crippled by structural issues and a high rate of Non-Performing Assets (NPAs). From 2015-16 to 2019-20, assistance of Rs. 10,169 crore was provided. Out of this, Rs. 1,537 crore has turned out to be NPA.
- A deficiency in skills, lack of market study, low demand, and stiff competition are believed to be the key reasons for such a large number of NPAs.
- While normally, all central schemes are given definite annual targets, this scheme is not driven by any such target. As both the states and the banks work without the aim of completing the annual target of disbursement of loans, the program may lose its drive.
Way Forward
- Besides providing financial support, the government needs to conduct an intensive training program to help potential entrepreneurs focus on the right market and the right products.
- The scheme can prove beneficial at a time when the economy needs to recover from the effects of the Covid-19 pandemic. Timely disbursal of funds is crucial for the execution of projects and for creating employment in the country.
- The government has to focus on the micro-segment with better technology and marketing support. Only financial support is not enough. Awareness about the scheme is another challenge.
