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GUIDELINES ON PRIME MINISTER 'S EMPLOYMENT GENERATION PROGRAMME ( PMEGP) 1 The Scheme Government of India has approved the introduction of a new credit linked subsidy programme called Prime Minister's
GUIDELINES ON PRIME MINISTER 'S EMPLOYMENT GENERATION PROGRAMME ( PMEGP) 1 The Scheme Government of India has approved the introduction of a new credit linked subsidy programme called Prime Minister's Employment Generation Programme (PMEGP) by merging the two schemes that ere in operation till namely Prime Minister's Rojgar Yojana (PMRY) and Rural Employment Generation Programme (REGP) for generation of employment opportunities through establishment of micro enterprises in rural as well as urban areas. PMEGP will be a central sector scheme to be administered by the Ministry of Micro, Small and Medium Enterprises (MOMSME). The Scheme will be implemented by Khadi and Village Industries Commission (KVIC), a statutory organization under the administrative control of the Ministry of MSME as the single nodal agency at the National level. At the State level, the Scheme will be implemented through State KVIC Directorates, State Khadi and Village Industries Boards (KVIBs) and District Industries Centres (DICs) and banks. The Government subsidy under the Scheme will be routed by KVIC through the identified Banks for eventual distribution to the beneficiaries / entrepreneurs in their Bank accounts. The Implementing Agencies, namely KVIC, KVIBs and DICs will associate reputed Non Government Organization (NGOs)/reputed autonomous institutions/ Self Help Groups (SHGs)/ National Small Industries Corporation (NSIC) / Udyami Mitras empanelled under Rajiv Gandhi Udyami Mitra Yojana (RGUMY), Panchayati Raj institutions and other relevant bodies in the implementation of the Scheme, especially in the area of identification of beneficiaries, of area specific viable projects, and providing training in entrepreneurship development. 2. Objectives (i) To generate employment opportunities in rural as well as urban areas of the country through setting up of new selfemployment ventures/projects/micro enterprises. To bring together widely dispersed traditional artisans/ rural and urban unemployed youth and give them selfemployment opportunities to the extent possible, at their place. To provide continuous and sustainable employment to a large segment of traditional and prospective artisans and rural and urban unemployed youth in the country, so as to help arrest migration of rural youth to urban areas. T (iv) To increase the wage earning capacity of artisans and contribute to increase in the growth rate of rural and urban employment. 3. Quantum and Nature of Financial Assistance Levels of funding under PMEGP Categories of beneficiari es Beneficiary ' s Rate of Subsidy under PMEGP contribution (of project cost) (of project cost) Area (location of project/unit) General Cat Urban Rural egory 10% 15% Special (including SC / ST / 25% 05% O B 25% 35% C /Minorities/Women, Exservicemen, Physically handicapped, NER, Hill and L Border areas etc. Note: (1) The maximum cost of the project /unit admissible under manufacturing sector is Rs. 25 lakh. (2) The maximum cost of the project/ unit admissible under business / service sector is Rs. 10 lakh. (3) The balance amount of the total project cost will be provided by Banks as term loan 4. Eligibility Conditions of Beneficiaries (i) Any individual, above 18 years of age (ii) There will be no income ceiling for assistance for setting up projects under PMEGP. (iii) For setting up of project costing above Rs. 10 lakh in the manufacturing sector and above Rs. 5 lakh in the business /service sector, the beneficiaries should possess at least VIII standard pass educational qualification. (iv) Assistance under the Scheme is available only for new projects sanctioned specifically under the PMEGP. (v) Self Help Groups (including those belonging to BPL provided that they have not availed benefits under any other Scheme) are also eligible for assistance under PMEGP. (vi) Institutions registered under Societies Registration Act, 1860; (vii) Production Co-operative Societies, and (viii) Charitable Trusts. (ix) Existing Units (under PMRY, REGP or any other scheme of Government of India or State Government) and the units that have already availed Government Subsidy 2 under any other scheme of Government of India or State Government are not eligible. 4.1 Other eligibility conditions Note: (i) A certified copy of the caste/community certificate or relevant document issued by the competent authority in the case of other special categories, is required to be produced by the beneficiary to the concerned branch of the Banks along with the Margin Money (subsidy) Claim. (ii) A certified copy of the bye-laws of the institutions is required to be appended to the Margin Money (subsidy) Claim, wherever necessary. (iii) Project cost will include Capital Expenditure and one cycle of Working Capital. Projects without Capital Expenditure are not eligible for financing under the Scheme. Projects costing more than Rs.5 lakh, which do not require working capital, need clearance from the Regional Office or Controller of the Bank's Branch and the claims are required to be submitted with such certified copy of approval from Regional Office or Controller, as the case may be. (iv) Cost of the land should not be included in the Project cost. Cost of the ready built as well as long lease or rental Workshed/Workshop can be included in the project cost subject to restricting such cost of ready built as well as long lease or rental workshed/workshop to be included in the project cost calculated for a maximum period of 3 years only. (v) PMEGP is applicable to all new viable micro enterprises, including Village Industries projects except activities indicated in the negative list of Village Industries. Existing/old units are not eligible (Para 29 of the guidelines refers). (1) The Institutions/ Production Co-operative such and Societies/Trusts specifically SC/ ST/ OBC/ Women/ Physically registered as Minority Institutions Handicapped / with Ex-Servicemen and eligible for Margin necessary provisions in the bye-laws to that effect are Money (subsidy) Institutions for the special categories /Production Cooperative. However, for Societies/Trusts special categories, not registered as belonging to will be eligible for Margin Money (Subsidy) for general category. (2) Only one person from one family is eligible for obtaining financial assistance for setting up of projects under PMEGP. The `family' includes self and spouse. 5. Implementing Agencies 5.1 The Scheme will be implemented by Khadi and Village Industries Commission (KVIC), Mumbai, a statutory body created by the Khadi and Village Industries Commission Act, 1956, which will be the single nodal agency at the national level. At the State level, the scheme will be implemented through State Directorates of KVIC, State Khadi and Village 3 Industries Boards (KVIBs) and District Industries Centres in rural areas. In urban areas, the Scheme will be implemented by the State District Industries Centres (DICs) only. KVIC will coordinate with State KVIBs/State DICs and monitor performance in rural and urban areas. KVIC and DICs will also involve NSIC, Udyami Mitras empanelled under Rajiv Gandhi Udyami Mitra Yojana (RGUMY), Panchayati Raj Institutions and other NGOs of repute in identification of beneficiaries under PMEGP. 5.2 Other Agencies The details of other agencies to be associated by nodal agencies in the implementation of PMEGP are as under: i) Field Offices of KVIC and its State offices ii) State KVI Boards iii) District Industries Centre (DIC) of all State Governments/ Union Territories Administrations reporting to respective Commissioners /Secretaries (Industries). iv) Banks/Financial Institutions. v) KVI Federation vi) Department of Women and Child Development Yuva (DWCD Kendra ), Nehru Sangathan (NYKS), The Army Wives Welfare Association of India (AWWA ) and Panchayati Raj Institutions vii) NGOs having at least five years experience and expertise in Project Consultancy in Small Agro & Rural Industrial Promotion and Technical Consultancy Services, Rural Development, Social Welfare having requisite infrastructure and manpower and capable of reaching Village and Taluk level in the State or Districts. NGOs should have been funded by State or National Level Government Agency for any of its programmes in the preceding 3 years period. viii) Professional Institutions/ Technical Colleges recognized by Government/ University and University Grants (UGC)/ All Commission India Council for Technical Education (AICTE) having department for vocational guidance or technical courses providing skill based training like ITI, Rural Polytechnic, Food Processing Training Institute, etc. ix) Certified KVI institutions aided by KVIC / KVIB provided these are in category A+, A or B and are having required infrastructure, manpower and expertise for the role. b f x) Departmental and Non - Departmental Training Centres of KVIC / KVIBs. 4 xi) Micro, Small and Medium Enterprises Development Institutes (MSME-DIs), MSME Tool Rooms and Technical Development Centres, under the administrative control of Office of Development Commissioner, MSME. xii) National Small Industrie s C orporation ' s (NSIC) offices, Technical Centres, Training Centres, Incubators and Training cum Incubation Centres (TICs) set up in PPP Mode. xiii) National level Entrepreneurship Development Institutes like National Institute for Entrepreneurship and Small Business Development (NIESBUD), National Institute for Micro, Small and Medium Enterprises (NIMSME) and Indian Institute of Entrepreneurship (IIE), Guwahati under the administrative control of Ministry of MSME, their branches and the Entrepreneurship Development Centres (EDCs) set up by their Partner Institutions (PIs). xiv) Udyami Mitras empanelled under Rajiv Gandhi Udhyami Mitra Yojana of Ministry of MSME. xv) PMEGP Federation, whenever formed. 6. Financial Institutions (i) 27 Public Sector Banks. (ii) All Regional Rural Banks. (iii) Co-operative Banks approved by State Level Task Force Committee headed by Principal Secretary (Industries) /Commissioner (Industries) (iv) Private Sector Scheduled Commercial Banks approved by State Level Task Force Committee headed by Principal Secretary (Industries)/ Commissioner (Industries). (v) Small Industries Development Bank of India (SIDBI). 7. Identification of beneficiaries: The identification of beneficiaries will be done at the district level by a Task Force consisting of representatives from KVIC/State KVIB and State DICs and Banks. The Task force would be headed by the District Magistrate / Deputy Commissioner / Collector concerned. The Bankers should be involved right from the beginning to ensure that bunching of applications is avoided. However, the applicants, who have already undergone training of at least 2 weeks under Entrepreneurship Development Programme (EDP) / Skill Development Prc^iarrune (SDP) / Entrepreneurship cum Skill r.. -.^eveiopment Programme (ESDP) or Vocational Training (VT) will be allowed to submit applications directly to Banks. However, the Banks will refer the application to the Task Force for its consideration. Exaggeration in the cost of the project with a view 5 1) only to availing higher amount of subsidy should not be allowed. KVIC will devise a score card in consultation with SBI and RBI, and forward it to the District Level Task Force and other State/District functionaries. This score board will form the basis for the selection of beneficiaries. This score card will also be displayed on the websites of KVIC and Ministry. The selection process should be through a transparent, objective and fair process and Panchayati Raj Institutions should be involved in the process of selection (Para 11 (i)(b) of the guidelines refers). 8. Bank Finance 8.1 The Bank will sanction 90% of the project cost in case of General Category of beneficiary/ institution and 95% in case of special category of the beneficiary/institution, and disburse full amount suitably for setting up of the project. 8.2 Bank will finance Capital Expenditure in the form of Term Loan and Working Capital in the form of cash credit. Project can also be financed by the Bank in the form of Composite Loan consisting of Capital Expenditure and Working Capital. The amount of Bank Credit will be ranging between 60-75% of the total project cost after deducting 15-35% of margin money (subsidy) and owner's contribution of 10% from beneficiaries belonging to general category and 5% from beneficiaries belonging to special categories. This scheme will thus require enhanced allocations and sanction of loans from participating banks. This is expected to be achieved as Reserve Bank of India (RBI) has already issued guidelines to the Public Sector Banks to ensure 20 % year to year growth in credit to MSME Sector. SIDBI is also strengthening its credit operations to micro enterprises so as to cover 50 lakh additional beneficiaries over five years beginning , and is recognized as a participating financial institution under PMEGP besides other scheduled/ Commercial Banks. 8.3 Though Banks will claim Margin Money (subsidy) on the basis of projections of Capital Expenditure in the project report and sanction thereof, Margin Money (subsidy) on the actual availment of Capital Expenditure only will be retained and excess, if any, will be refunded to KVIC, immediately after the project is ready for commencement of production. 8.4 Working Capital component should be utilized in such a way that at one point of stage it touches 100% limit of Cash Credit withili three years of lock in period of Margin Money and not less than 75% utilization of the sanctioned limit. If it does not touch aforesaid limit, proportionate amount of the Margin Money (subsidy) is to be recovered by the Bank/Financial Institution and refunded to the KVIC at the end of the third year. r 8.5 Rate of interest and repayment schedule Normal rate of interest shall be charged. Repayment schedule may range between 3 to 7 years after an initial moratorium as may be prescribed by the concerned bank/financial institution. It has been observed that banks have been routinely insisting on credit guarantee coverage irrespective of the merits of the proposal. This approach needs to be discouraged. RBI will issue necessary guidelines to the Banks to accord priority in sanctioning projects under PMEGP. RBI will also issue suitable guidelines as to which RRBs and other banks will be excluded from implementing the Scheme. 9. Village Industry Any Village Industry including Coir based projects (except those mentioned in the negative list) located in the rural area which produces any goods or renders any service with or without the use of power and in which the fixed capital investment per head of a full time artisan or worker i.e. Capital Expenditure on workshop/ workshed, machinery and furniture divided by full time employment created by the project does not exceed Rs. 1 lakh in plain areas and Rs.1.5O lakh in hilly areas. 10. Rural Area (1) Any area classified as Village as per the revenue record of the State/Union Territory, irrespective of population. (ii) It will also include any area even if classified as town, provided its population does not exceed 20,000 persons. 11. Modalities of the operation of the Scheme (i) Project proposals will be invited from potential beneficiaries at district level through press, advertisement, radio and other multimedia by KVIC,KVIBs and DICs at periodical intervals depending on the target allotted to that particular district. The scheme will also be advertised /publicized through the Panchayati Raj Institutions which will also assist in identification of beneficiaries. (a) Sponsoring of project by any agency is not mandatory. The beneficiary can directly approach Bank/Financial Institution along with his/her project proposal or it can be sponsored by KVIC/ KVIBs / DIC/Panchayat Karyalayas etc. However, the applications received directly by the Banks will be referred to the Task Force for its consideration. T (b) A Task Force, consisting of the following members, will be set up to scrutinize the applications received by it. Dist Magistrate/ Deputy Commissioner/ Collector - Chairman Lead Bank Manager - Member Representative of KVIC/KVIB - Member Representative of NYKS/SC/ST Corporation - Special Invitee Representative of MSME-DI, ITI/Polytechnic - Special Invitee Representatives from Panchayats - 3 members (To be nominated by Chairman/ District Magistrate/ Deputy Commissioner/ Collector by rotation) General Manager, DIC or State Director of KVIC -Member Convenor Note : Task Force may also co-opt representatives of other lending institutions. (c) The Task Force will scrutinize the applications and based on the experience, technical qualification, skill, viability of the project etc., the task force will shortlist the applications and call for an interview of the applicants separately for rural and urban areas to assess their knowledge about the proposed project, aptitude, interest, skill and entrepreneurship abilities, market available, sincerity to repay and make the proposed project success. The selected candidates will be provided project formulation guidance and orientation by KVIC, KVIBs and DICs who will also assist and guide them in project formulation and submission to the concerned Bank in the area. The applicants may also approach any of the other agencies listed in para 5.2 of these guidelines for assistance in this regard. (d) KVIC will identify the Nodal Banks at State level in consultation with State Governments and will forward the list to all the implementing agencies. (ii) The release of funds to the implementing agencies will be in the following manner:- (a) Government will provide funds under PMEGP to the nodal implementing agency, i.e. KVIC which will in turn, (within a period of 15 days of receipt of the money from the Government), place the margin money (subsidy)funds with the implementing Banks at the State level in their respective accounts in accordance with the targets allocated to each implementing agency. CEO, KVIC will convey the margin money (subsidy) targets allotted to each State to the Principal Secretaries/ Secretaries (Industries)/ Commissioners (Industries) simultaneously. The target among the Districts in the State will be assigned by the State Level Bankers 8 Coordination Committee. SLBCC will ensure that targets are evenly distributed within each district. The State-wise targets in respect of KVIC/KVIBs will be made available by KVIC to SLBCC where overall allocation of district-wise targets will be decided. Any modification of the targets for which KVIC is directly responsible will be permitted only with the concurrence of the Ministry. (b) KVIC will place the margin money (subsidy) amount with the Banks involved in the implementation of the scheme in accordance with the targets allocated to the implementing Banks in the State/ District. DICs, in close coordination with Banks, will ensure that at least 50 % of the total margin money (subsidy) allocated to them will be utilized in setting up of projects in rural areas. (c) KVIC being the single Nodal Agency at the National level, will coordinate with the identified implementing agencies, i.e., KVIBs, DICs and others. KVIC will carry out most of the important tasks envisaged in the forward and backward linkages, including e-tracking, web management, publicity, physical verification of units, organizing EDP training programmes, awareness camps, workshops and exhibitions and therefore will require to utilize major share of the allocation under forward and backward linkages. However, KVIC will ensure that it will reserve and allocate at least 25 % of the total allocation under Forward and Backward linkages, under the Scheme to DICs of different participating States appropriately taking into account the demand and extent of implementation. This money will be released to DICs, only after obtaining an undertaking from the State Government tha
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