The scheme provides state governments' guarantee for more disbursals and faster implementation. According to KVIC officials, the scheme has been a success in a span of four years as compared to the old pattern approach which could not do in forty years. The disbursals and the recovery are at a faster pace than that of the old system.

The scheme, which was launched during 1995-96 with a corpus amount of Rs 1000 crore, offers an enhanced loan amount to an individual of Rs 10 lakh and Rs 25 lakh for a cooperative society, the official said. Sixty-five per cent (with a low interest) of the project cost will be funded by consortium of banks credit (CBC), margin money loan of 25 per cent provided by KVIB and remaining 10 per cent from the entrepreneurs, the official said.

The advantageof the scheme is that margin money loan will be converted into grant after successful implementation of the scheme and repayment of term loan in full.

The flexibility on income criteria, educational qualification and age limit will create sustainable employment generation. The 100 per cent security and stage-by-stage report will make units work hard for viability. The easy loan repayment schedule is also handy for the entrepreneurs.

The success is also due to the screening and appraisal committees set up to scrutinise proposals, examine the financial and technical viabilities, besides measuring the entrepreneurs capabilities for establishing and running the units.

The khadi village industries boards (KVIB) are witnessing a quantum jump in the financing of more viable and bigger projects. A state subsidy of 25 per cent enables self-sufficiency at village level and prevents migration from rural areas, according to KVIB chief executive officer, P Sundara Kumar.

For example, Kumar said, under this scheme,the AP government in a span of two years disbursed around Rs 46 crore (out of the state guarantee of Rs 50 crore) as against Rs 81 crore for the whole 40 years under the old pattern scheme, Kumar said.