Credit and Finance for MSMEs: The government scheme to provide financial assistance to individuals setting up new enterprises — Prime Minister’s Employment Generation Programme (PMEGP), which had FY21 as its best performing year since FY17, has enabled employment for 2.91 lakh people in the current financial year so far. According to the latest official data, 36,391 new micro enterprises were extended subsidy of Rs 1,150 crore, and 2,91,656 jobs were created through these units during the little over a seven-month period of the financial year 2021-22. Implemented by the Khadi & Village Industries Commission (KVIC), PMEGP’s FY22 performance so far managed to exceed 31,436 units set up under the scheme in FY17 with total employment of 2.51 lakh.
The maximum assistance of Rs 25 lakh is provided to only new units admissible in the manufacturing sector and Rs 10 lakh for the service sector. The scheme allows any individual, above 18 years of age and at least VIII grade pass, to apply for assistance. Self-help groups, production co-operative societies, charitable trusts etc., are also eligible, however, existing units under other government schemes such as Pradhan Mantri Rozgar Yojana, Rural Employment Generation Programme, etc., and units that have already availed government subsidy under any other scheme are not eligible for PMEGP.
The employment generation assumed significance as over 5 million formal and informal workers had lost their jobs in October. The number of employed people in October stood at 400.77 million in comparison to 406.24 million in September 2021, as per monthly data from the Centre for Monitoring Indian Economy (CMIE). Moreover, the national labour force participation rate (LFPR) also declined from 40.66 per cent in September to 40.41 per cent in October.
On the other hand, as per a study done by KVIC earlier this year, 88 per cent of micro beneficiaries under PMEGP were ‘negatively affected’ due to the Covid pandemic. 57 per cent of beneficiaries had said their units were shut down temporarily during the Covid period, while 30 per cent reported a drop in production and revenue. Despite the Covid impact, a record 74,415 units were setup in FY21 with the subsidy of Rs 2,188 crore and employment to 5.95 lakh people since FY17, as per the available data. ““This is the best performance under PMEGP since its inception in 2008-09. Thus, the target fixed under PMEGP for the year 2020-21 has been surpassed despite COVID 19 challenges,” MSME Minister Narayan Rane sharing the data in reply to a question in the Rajya Sabha had said in July this year.