Prime Minister’s Employment Generation Programme (PMEGP)

The Prime Minister's Employment Generation Programme (PMEGP) is an important government initiative aimed at promoting self-employment and micro-enterprise development in both rural and urban India. By providing financial support through subsidies and loans, PMEGP seeks to create sustainable employment opportunities, especially for young entrepreneurs and traditional artisans. 

The PMEGP is a government-backed scheme designed to help Indian citizens set up new micro, small, and medium enterprises. It is a credit-linked subsidy scheme launched by the Government of India to encourage the establishment of micro-enterprises in non-farm sectors. 

It was created by merging two earlier schemes, the Prime Minister’s Rojgar Yojana (PMRY) and the Rural Employment Generation Programme (REGP), thereby combining their strengths. The scheme is implemented by the Khadi and Village Industries Commission (KVIC) at the national level, with support from State KVIC Directorates, State Khadi and Village Industries Boards (KVIBs), District Industries Centres (DICs), and banks.

This programme focuses on generating self-employment and sustainable jobs for unemployed and underprivileged youth by encouraging entrepreneurship. It offers subsidised loans enabling entrepreneurs to start ventures that create jobs and contribute to economic development, primarily in the manufacturing and service sectors. 

This scheme targets rural and urban areas alike, with special emphasis on vulnerable groups such as SC, ST, women, minorities, ex-servicemen, and differently-abled individuals. By facilitating access to finance and offering a margin money subsidy, the PMEGP aims to reduce migration from rural to urban areas by boosting local employment options. 

The scheme has clear goals aimed at enhancing employment and entrepreneurial opportunities: 

• Generate sustainable employment opportunities in rural and urban areas across India by supporting new self-employment ventures. 

• Empower traditional artisans and unemployed youth with financial and technical assistance for starting their own businesses. 

• Accelerate economic growth by creating numerous micro-enterprises that can contribute locally and nationally. 

• Stem the flow of occupational migration by promoting employment opportunities within communities. 

• Foster inclusive growth by prioritising disadvantaged groups such as women, SC/ST, minorities, and persons with disabilities. 

The scheme has clear goals aimed at enhancing employment and entrepreneurial opportunities: 

• Generate sustainable employment opportunities in rural and urban areas across India by supporting new self-employment ventures. 

• Empower traditional artisans and unemployed youth with financial and technical assistance for starting their own businesses. 

• Accelerate economic growth by creating numerous micro-enterprises that can contribute locally and nationally. 

• Stem the flow of occupational migration by promoting employment opportunities within communities. 

• Foster inclusive growth by prioritising disadvantaged groups such as women, SC/ST, minorities, and persons with disabilities. 

The PMEGP scheme offers multiple advantages to aspiring entrepreneurs: 

• Credit-Linked Subsidy: Beneficiaries receive a margin money subsidy that reduces initial capital outlay, making business setup easier. 

• Encourages Entrepreneurship: Supports innovators and traditional artisans to convert their skills into viable income-generating businesses. 

• Job Creation: Each new enterprise potentially generates additional employment, contributing to local and national economic development. 

• Inclusive and Accessible: The scheme is open to various categories, including individuals, SHGs, trusts, and cooperatives, expanding outreach. 

• Government Backing: Implementation by KVIC ensures transparency and streamlined disbursal of subsidies and loans. 

• Flexible Repayment: The repayment tenure of 3 to 7 years with moratorium periods helps ease financial burden on new businesses. 

Loan interest rates are set by banks and financial institutions at their own discretion. However, these are linked to RBI’s floating benchmark rates, ensuring they are competitive and affordable for new entrepreneurs. Usually, PMEGP loan interest rates typically range from 11% to 12%. 

• Interest rates are subject to changes based on monetary policies and lending institutions. 

• The scheme sometimes offers an Interest Subsidy Eligibility Certificate (ISEC), allowing eligible businesses to benefit from a much lower effective interest rate of around 4%. 

• The Khadi and Village Industries Commission may adjust the interest rates to facilitate ease of payment for businesses related to khadi or polyvastra products. 

This mix of regular and subsidised interest rates makes the PMEGP loan schemes viable options for small businesses. 

Eligibility involves specific criteria ensuring that support reaches the right candidates: 

• Eligible Entities

  • Individuals above 18 years of age looking to set up new micro-enterprises.

  • Self-help groups (SHGs), charities, societies registered under Societies Registration Act, 1860.

  • Production cooperatives and charitable trusts.

• Educational Qualification:

  • No minimum qualification is required for units costing up to ₹10 Lakhs in manufacturing and ₹5 Lakhs in the service sector.

  • For projects above these thresholds, individuals must have passed at least Class VIII.

• New Projects Only: Assistance is available only for new ventures; existing units that have received subsidies under PMRY, REGP or other government schemes are ineligible.

• Project Cost: Land cost is excluded from project cost calculations.

• Exclusions: Projects without capital expenditure or real estate ventures are not eligible.

• One beneficiary per family: Only one individual from a family (including spouse) can apply under the scheme.

Applicants need to prepare certain documents to support their loan and subsidy applications:

• Aadhaar Card and PAN Card for identity verification.

• Caste certificate if applying under reserved categories.

• Special category certificates where applicable (women, minorities, disabled, ex-servicemen).

• Proof of residence (utility bill, ration card, etc.).

• A detailed project report or business plan.

• Educational qualification certificates (especially for projects above specified thresholds).

• Any relevant registration certificates for societies or trusts.

• Training certificate under the Entrepreneurship Development Program (EDP), if applicable.

• Photographs and bank account details.

Online Application

Applying for a PMEGP loan online is convenient and transparent:

1. Visit the official PMEGP portal.

2. Register yourself by entering Aadhaar and generating an OTP for authentication.

3. Fill the online application form carefully with personal and business details.

4. Upload scanned copies of all required documents.

5. Submit the application and note down the application ID for future tracking.

6. Check the ‘Score Card’ section to estimate eligibility chances.

7. Choose your preferred Entrepreneurship Development Program (EDP) training mode and complete it, if necessary.

The online process helps applicants track their application status transparently.

Offline Application

For those preferring offline procedures, these are the required steps to take:

1. Visit the nearest KVIC office, KVIB, DIC, or the designated bank branch offering PMEGP services.

2. Obtain the application form and fill it out with accurate information.

3. Attach all required documents and photographs.

4. Submit the form to the designated office.

5. Follow up regularly with the office or bank to track application progress.

6. Complete the required EDP training if not done earlier.

Offline applications receive similar attention as online ones and can be a preferred mode for people uncomfortable with digital processes.