The government on Thursday pulled up Khadi and Village Industries Commission (KVIC) for failure of Prime Minister?s Employment Generation Programme (PMEGP) in 2008-09, the period of its inception. Incidentally, the government managed to provide funds to only 36,287 projects in the micro, small and medium enterprises (MSMEs) sector against the target of financing 61,227 projects during the year.
?For successful implementation of PMEGP, it is important that the margin money provided to KVIC for distribution through banks reaches the beneficiaries promptly for setting up micro, small and medium enterprises. KVIC should talk to its state units, nodal branches of banks, senior officers of financial institutions to ensure that the unspent amount reaches the beneficiaries immediately to enable them to set up their projects,? minister of state for MSMEs Dinsha Patel told a meeting of National Khadi and Village Industries Board here. Through the projects financed in 2008-09, the government generated 3,62,870 jobs against the target of 6,12,245 jobs. In 2009-10, the government plans to give subsidy to 61,697 projects, which will create 6,16,937 employment opportunities.
PMEGP was launched on August 15, 2008 to generate 37 lakh jobs by the end of 2011-12. KVIC was appointed as the nodal agency for the credit-linked subsidy scheme, in which the government gives up to 35% of the cost of setting up new MSMEs as subsidy or margin money through financial institutions.
During 2008-09, the government released Rs 506 crore as margin money to banks and other financial institutions for further dissemination, but only Rs 106 crore reached the entrepreneurs. The balance amount of Rs 400 crore is still lying unspent with them, Patel pointed out. ?KVIC has to correct this,? he added.
A ministry official said the main reason for not spending the amount is the long time taken by financial institutions in processing the application. ?The authorised banks and financial institutions take at least 45 days to process the applications and disbursement of the subsidy takes another 15 days. This time gap between making the application and the distribution of subsidy along with loan needs to be shortened for the programme to be more effective,? the official said.
Meanwhile, a micro finance institution (MFI) claimed that KVIC is ?not doing enough? for micro enterprises under PMEGP, as MFI are not authorised to give loans under the scheme. ?Micro units generally don?t go to banks for their usual requirement of loans up to Rs 15,000. They would generally go to MFIs, but they would not get the benefit of PMEGP because they could not receive subsidy through such institutions,? an official of an MFI said, urging KVIC to authorise MFIs to implement the scheme.