PMEGP Scheme:- August 2008 saw the launch of PMEGP, a credit-linked subsidy program managed by the Ministry of MSME. By assisting in the formation of micro-businesses in the non-farm sector, the PMEGP seeks to generate employment in both rural and urban areas. The Finance Commission has approved the program to run for the entire 15-year cycle (2021–2022, 2025–2026).PMEGP was created by combining the Prime Minister’s Rojgar Yojana (PMRY) and the Rural Employment Generation Programme (REGP), both of which were implemented on March 31, 2008. The approved budget for the PMEGP, which covers five fiscal years (2021–22 to 2025–26), is ₹13,554.42 crore. The program’s objectives include the establishment of approximately 4,000 projects and the creation of 30,00,000 jobs (each employing eight people).
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- the development of chances for continuous, sustainable self-employment in the country’s rural and urban areas
- creating small enterprises to address a significant portion of the youth unemployment rates in both rural and urban areas and to offer traditional and aspiring artisans long-term, stable employment.
- encouraging participation from financial institutions to increase the flow of credit to the micro sector
The benefits of the PMEGP Scheme are as follows:
- For both rural and urban areas, it offers low-interest loans and subsidies to launch new micro businesses in the non-farm sector.
- It lessens reliance on moneylenders and pushes financial institutions to expand lending to the microbusiness sector.
Eligibility PMEGP Scheme
- If a project costs more than Rs. and involves someone who is at least eighteen years old, should they be involved? 5 lakh in the service industry or over Rs. 10 lakh in the manufacturing sector, they must pass Standard VIII.
- Organizations recognized by the Societies Registration Act of 1860 Cooperative societies centered on production
- Self-help organizations and benevolent trusts
- The State/UT Khadi & V.I. and KVIC carry out the Scheme. Boards in rural areas; District Industries Centres, with a 30:30:40 split between KVIC, KVIB, and DIC, respectively, implement the Scheme in urban and rural areas.
- An income cap does not apply when starting a project.
- Under the Scheme, only newly established units are eligible for assistance.
- Units that are already in operation or that have previously received a government subsidy under a state or federal program are not eligible.
- Any sector, including Coir-based initiatives, with the exception of those on the blacklist.
- In plain areas, the maximum per capita investment should be Rs. 1.00 lakhs; in hilly areas, it should be Rs. 1.50 lakhs.
- The highest project cost in the manufacturing sector is Rs. 25.00 lakhs, while in the service sector, it is Rs. 10.00 lakhs.
Negative List Of Activities
- industry or business involved in the production, processing, or retailing of meat or alcoholic products such as pan, cigarettes, beedi, etc.
- Industry/Business related to floriculture, horticulture, sericulture, and cultivation.
- Production of polythene carry bags and recycled plastic containers with a pore size of less than 20.
- The Khadi Certification Rule applies to products that involve hand spinning and hand weaving as well as the processing of Pashmina wool.
- Transport in the rural areas (apart from autorickshaws, houseboats, and tourist boats in the A and N Islands; additionally, houseboats, Shikaras, and tourist boats in Jammu & Kashmir; and bicycle rickshaws).
- Only in the A and N Islands and NER will CNG autorickshaws be permitted, subject to the Chief Secretary of State’s approval and merit-based evaluation.
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The project’s maximum allowable cost is Rs. 10 lakh under the business/service sector and Rs. 25 lakh under the manufacturing sector. The project cost will cover one cycle of working capital and capital expenses. Under the scheme, projects without capital expenditure are not eligible for financing. The project budget shouldn’t include the cost of the land. If the amount of the subsidy at the end of the third year is less than the previously mentioned cap, a portion of the recovered funds will be returned to the KVIC.
10% of the project cost for borrowers in the general category and 5% of the project cost for borrowers in the special category make up the margin money contribution.
In the general category, the eligibility subsidy is equal to 25% in rural areas and 15% in urban areas of the project cost. Special Category: The eligibility subsidy is equivalent to 25% of the project cost in urban areas and 35% of the project cost in rural areas.
How does this PMEGP Scheme work?
Assume Mr. Don, a recent graduate from Bangalore Urban who wishes to apply for the PMEGP Scheme program. Project Cost Estimate: 10 lakh rupees Under the PMEGP, Mr. Don made the required contribution of Rs. 1 lakh (10% of Rs. 10 lakh). Mr. Don received a payment of Rs. 9 lakh..Upon approval of the PMEGP application, the bank typically retains Rs 1,50,000, or fifteen percent of the project’s total cost. KVIC will reimburse the bank for this money within 24 hours. This makes it simple for entrepreneurs like Mr. Don to secure the capital they need to grow their companies. Take note:
- Banks will provide working capital in the form of cash credit and capital expenditures in the form of term loans.
- After deducting the owner’s contribution and the margin money subsidy, the bank credit will account for sixty to seventy-five percent of the total cost. Banks will seek subsidies based on the capital expenditure estimates included in the project report.
- A minimum of 75% of the authorized limit must be used during the three-year margin money lock-in period, and operating capital should be distributed to eventually satisfy the entire cash credit limit.
The Rate of Interest and Repayment Schedule
Sometimes the standard interest rate applies to the business. There are three to seven years on the repayment schedule.
In this case, neither collateral security nor a third-party guarantee are necessary. The bank must receive pledges for any property acquired through the bank loan.
KVIC is the nodal agency at the federal level. The program’s execution in both rural and urban areas will be supervised by the Khadi and Village Industries Commission, Khadi and Village Industries Boards, and DIC.
Each and every beneficiary must finish the two-week training period.
Financial Agencies Approved under PMEGP
The following are the specifics of the financial organizations recognized by the PMEGP Scheme:
- Regional Rural Banks (RRB)
- Co-operative Banks
- Public Sector Banks
- Private Scheduled Commercial Banks approved by respective State Task Force Committee
Pre-Requisite for PMEGP Scheme Loan
The following paperwork must be arranged by the business owner before submitting an application for a PMEGP loan.
- Documents for KYC and PAN card
- A thorough project report
- All supporting documentation regarding the credentials of the entrepreneurs, bank statements, permissions, caste (for certain special concessions), and margin money arrangements
- Records proving the assets and, if any, liabilities that are gathered
- Quotes necessary for the purchase of the assets needed to complete the project
- The most crucial step is to speak with your banker, find out if they will consider the loan, and then contact KVIC or other nodal agencies.
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Simplified Procedure for Apply PMEGP Scheme
The following are the updated application requirements for the Prime Minister’s Employment Generation Programme (PMEGP):
- To apply for the Prime Minister’s Employment Generation Programme (PMEGP), entrepreneurs must go to the program’s official website.
- Choose ‘Online Application Form for Individual’ or ‘Non-Individual’ from the main page. It will show the online PMEGP application. In the application form, include the following information:
- The applicant’s Aadhaar number
- The applicant’s name should match exactly what is on their Aadhaar card.
- To submit the application, choose one of the following agencies: DIC, KVIB, or KVIC (per the streamlined procedure).
- From the drop-down list, choose the State and District.
- From the list, choose District.
- From the list, choose the Sponsoring Office.
- Decide on the Legal Type
- Gender Choose your date of birth and gender.
- From the list, choose the applicant’s Social Category and Special Category.
- Credentials and Contact Information
- Choose the unit’s location (rural OR urban).
- Location of the Suggested Unit
- From the drop-down list, choose the sort of activity (e.g., manufacturing or service).
- Choose an industry from the list and provide a description of the product.
- Information about EDP training, including whether or not the training institute name is entered.
- Information about the Needed Loan:
- Information about the Bank
- Once all required information has been entered into the corresponding field, click the Save Applicant Data button to save the details.
- The entrepreneur must upload the aforementioned files after selecting “Save Applicant Data” in order to complete the application submission process.
- Following the Final Submission, the registered mobile number will receive an email with the applicant’s ID and password.
Application Processing as per Revised Guidelines
- The state/district level implementing agencies, such as Khadi and Village Industries Commission (KVIC), KVIB, and DIC, will review the application preliminary and look over the personal and factual information provided in the application and project reports in accordance with the modified PMEGP procedure.
- Following a preliminary evaluation of the application, the KVIC will send the entire application, together with a copy of the Lead Bank Manager for informational and monitoring purposes, straight to the financing bank that the applicant has selected to make credit decisions.
- Banks will review the applications from a technical and financial standpoint and approve loan applications in accordance with the updated guidelines. The project must, among other things, meet the requirements listed below in order to be eligible for the loan:
- Industry Investment Per Person
- Individual Contribution
- Rural Areas (KVIC/KVIB/DIC Sponsored Projects)
- List of Negative
- The applicant and implementing agencies will receive the sanction letter via online delivery from the bank. Additionally, the sanction letter will be automatically sent to the training facility authorized by RESTI to conduct PMEGP EDP training.
FAQs on the PMEGP Scheme
Q. What are the limitations of PMEGP?
Ans- There is a Rs. 9.5 to Rs. 50 lakh loan limit under the PMEGP. The program sets a Rs. 50 lakh maximum project cost ceiling for the manufacturing sector. It sets a 20 lakh rupee ceiling on costs for the business and service sectors. The bank approves the remaining 90 to 95% of the contribution, with the beneficiary contributing 5 to 10%.
Q. Who is not eligible under PMEGP?
Ans- Units that are already in operation (under PMRY, REGP, or any other scheme of the Indian or State governments) and those that have previously benefited from government subsidies under any other scheme of the Indian or State governments are ineligible.
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