1. Introduction to PMEGP
The Prime Minister’s Employment Generation Programme (PMEGP) is a flagship scheme launched by the Government of India to provide employment opportunities through the establishment of micro-enterprises in both rural and urban areas. Administered by the Ministry of Micro, Small and Medium Enterprises (MSME), it aims to bridge the gap between urban and rural employment by encouraging self-employment ventures.
Key Highlights
- Launched in 2008.
- Managed by Khadi and Village Industries Commission (KVIC).
- Provides financial assistance for new micro-enterprise units.
- Offers subsidy-linked credit support to unemployed youth and traditional artisans.
2. Historical Background
PMEGP is a combination of two earlier schemes:
- Prime Minister’s Rojgar Yojana (PMRY)
- Rural Employment Generation Programme (REGP)
These two programs were merged in 2008 to form a unified employment generation strategy for India, known as PMEGP, ensuring better resource utilization and integrated development.
3. Objectives of the PMEGP
The core objectives include:
- Generating employment opportunities through the setting up of new self-employment ventures.
- Bringing together widely dispersed traditional artisans and unemployed rural/urban youth and give them a platform to start micro-enterprises.
- Providing financial assistance to establish new manufacturing/service units.
- Promoting sustainable development, rural industrialization, and income generation.
4. Implementing Agencies
PMEGP is implemented at three levels:
- National Level – KVIC (Khadi and Village Industries Commission)
- State Level – State KVIC Directorates, KVIBs (Khadi and Village Industries Boards), and District Industries Centers (DICs).
- Banking Sector – Various nationalized and private sector banks disburse loans and subsidies.
5. Eligibility Criteria
To avail benefits under PMEGP, the applicant must meet the following conditions:
- Age: Minimum 18 years.
- Educational Qualification: Minimum VIII standard pass for projects above ₹10 lakh (manufacturing) and ₹5 lakh (services).
- Eligibility:
- Individuals (unemployed youth).
- Self Help Groups (SHGs).
- Co-operative Societies.
- Societies under Societies Registration Act.
- Charitable Trusts.
- Production-based institutions.
Note: Existing units or units already availing government subsidies are not eligible.
6. Financial Assistance Offered
Under PMEGP, financial support is provided as a mix of bank credit and government subsidy.
Project Cost Limit:
- Manufacturing Sector: Up to ₹50 lakh.
- Service Sector: Up to ₹20 lakh.
The loan is extended by the bank and the beneficiary contributes a margin money (own contribution), while the government provides a subsidy.
7. Subsidy Details
The subsidy offered is a Capital Subsidy, which is not repayable.
| Category | Urban Area Subsidy | Rural Area Subsidy |
|---|---|---|
| General | 15% | 25% |
| SC/ST/OBC/Minorities/Women/Ex-Servicemen/PH/NER | 25% | 35% |
Beneficiary Contribution:
- General Category: 10% of project cost
- Special Category: 5% of project cost
8. Sector-wise Coverage
PMEGP covers a broad range of manufacturing and service activities. Some popular sectors include:
- Food processing
- Handicrafts and cottage industries
- Agro-based industries
- Textile and garments
- Tourism services
- Repair and maintenance services
- Beauty parlors and salons
- Retail shops
- IT-enabled services
Non-permissible sectors:
- Alcoholic beverages, tobacco, and polluting industries.
9. Application Process
Step-by-Step Guide:
- Visit the official portal: www.kviconline.gov.in
- Register Online under PMEGP e-portal.
- Fill in personal details, business proposal, and loan requirement.
- Upload the required documents.
- Submit the application to your preferred implementing agency (KVIC/KVIB/DIC).
- The application is scrutinized and forwarded to a bank for credit appraisal.
- Once approved, the bank sanctions the loan.
- The government subsidy is linked to the loan and released after verification.
10. Required Documents
- Aadhaar Card
- Educational Qualification Certificates
- Project Report
- Caste Certificate (if applicable)
- Special category certificate (for women/SC/ST/PH etc.)
- Rural Area Certificate (if applicable)
- Passport-size photographs
- Consent from Gram Panchayat or Municipality
11. Role of Banks and KVIC
Banks
- Appraise the project proposal.
- Sanction the loan.
- Disburse the margin money subsidy after lock-in.
KVIC/KVIB/DIC
- Process and forward applications.
- Provide Entrepreneurship Development Program (EDP) training.
- Monitor the functioning of units.
12. EDP Training under PMEGP
It is mandatory for the beneficiaries to undergo EDP (Entrepreneurship Development Programme) training for 10 days (or 6 weeks for special cases).
Training Topics Include:
- Business skills.
- Financial literacy.
- Marketing and sales.
- Bookkeeping and GST.
- Online selling and eCommerce.
EDP is conducted by:
- Rural Self Employment Training Institutes (RSETIs).
- KVIC Training Centers.
- MSME Development Institutes.
13. Online Portal and Digital Process
The scheme is now fully digital:
- Online application and tracking.
- SMS/email alerts.
- Geo-tagging of units.
- Digital verification of subsidy disbursement.
- Dashboards for monitoring.
Portal: PMEGP e-portal
14. Monitoring and Evaluation
Monitoring is done at multiple levels:
- KVIC HQ for national oversight.
- State-Level Monitoring Committees.
- Regular inspections by DIC/KVIC.
- Geo-tagged verification of physical units.
- Third-party evaluation studies.
15. Success Stories and Case Studies
PMEGP has transformed the lives of lakhs of Indians.
Example 1: A woman entrepreneur from Maharashtra set up a garment unit and now employs 25 rural women.
Example 2: A youth in Assam started a honey processing business and exports to five states.
Example 3: A disabled man from Karnataka began a mobile repair shop and now owns a chain of service centers.
16. Challenges in Implementation
- Delays in loan approvals.
- Lack of awareness among rural youth.
- Difficulty in preparing project reports.
- Lack of collateral-free loans beyond ₹10 lakh.
- Shortage of trained EDP trainers in remote areas.
17. Improvements and Policy Changes
Recent updates to PMEGP include:
- Raising project cost ceilings.
- Relaxed norms for rural artisans.
- Mobile app for real-time tracking.
- Enhanced support to SC/ST/Women/North-East entrepreneurs.
- Provision for second financial assistance to successful units (PMEGP 2.0).
18. PMEGP in the Context of Atmanirbhar Bharat
PMEGP supports the Atmanirbhar Bharat Abhiyan (Self-Reliant India Mission) by:
- Creating local jobs.
- Encouraging Make in India projects.
- Empowering rural women and youth.
- Reducing dependence on government jobs.
- Promoting micro-industries in backward areas.
19. Comparison with Other Employment Schemes
| Scheme | Loan/Subsidy | Target Group | Business Focus |
|---|---|---|---|
| PMEGP | Subsidy + Loan | Youth & artisans | Manufacturing + Service |
| MUDRA | Loan only | Micro-entrepreneurs | All sectors |
| Stand-Up India | Loan + Support | SC/ST & Women | Greenfield Enterprises |
| Startup India | Funding + Incubation | Tech startups | Innovation-centric |
20. Frequently Asked Questions (FAQs)
Q1. Can I apply for PMEGP if I already run a business?
A: No, PMEGP is only for new units.
Q2. Is collateral required?
A: Not required for loans up to ₹10 lakh under Credit Guarantee Fund Trust (CGTMSE).
Q3. Can a student apply?
A: Yes, if above 18 and meets education criteria.
Q4. What is the duration of loan repayment?
A: Usually 3–7 years, including a moratorium of 6–18 months.
Q5. Is subsidy refundable?
A: No, the government subsidy is not repayable.
21. Conclusion
The Prime Minister’s Employment Generation Programme (PMEGP) is one of India’s most impactful self-employment schemes. By offering financial assistance, training, and digital support, it encourages lakhs of aspiring entrepreneurs to convert ideas into businesses. Whether you’re a youth, artisan, woman, or a cooperative – PMEGP is your gateway to economic independence.
With rising unemployment and rural distress, schemes like PMEGP play a critical role in shaping the future of India’s workforce and supporting the vision of an Atmanirbhar Bharat.
