PMEGP: Number of micro enterprises set up in FY20 declines; employment dips from 5.87 lakh in FY19

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March 24, 2021 5:30 PM

Skill, Labour, Talent for MSMEs: Beneficiaries can avail loans up to Rs 25 lakh in the manufacturing sector and Rs 10 lakh in the service sector with a subsidy of 15 per cent to 35 per cent for different categories under PMEGP.

The government had announced the Rs 20,000-crore subordinate debt scheme for stressed MSMEs last year under the Covid stimulus package.

Skill, Labour, Talent for MSMEs: The number of micro-enterprises set-up under the Modi government’s pro-entrepreneurship scheme Prime Minister’s Employment Generation Programme (PMEGP) has witnessed a decline in FY20 from the preceding year. From 73,427 PMEGP micro-enterprises set-up in FY19, the number contracted by 9.2 per cent to 66,653 in FY20, according to the government data. Implemented by the Khadi & Village Industries Commission (KVIC), the estimated employment generated through the beneficiary units simultaneously also declined from 5.87 lakh in FY19 to 5.33 lakh in FY20. The year-on-year (YoY) decline had followed the jump in the number of micro firms set-up and estimated people employed from 48,398 and 3.87 lakh respectively in FY18.

KVIC Chairman Vinay Kumar Saxena wasn’t immediately available for comments for this story.

“PMEGP is a major credit-linked subsidy programme aimed at generating self-employment opportunities through setting up of micro-enterprises in the non-farm sector by helping traditional artisans and rural/urban unemployed youth. Under the scheme, to set up new units, beneficiaries can avail loan up to Rs 25 lakh in the manufacturing sector and Rs 10 lakh in the service sector, with subsidy of 15 per cent to 35 per cent for different categories,” MSME Minister Nitin Gadkari said sharing PMEGP data in a written reply to a question in the Rajya Sabha. The scheme was launched in 2008.

Also read: Bank credit to small businesses jumps 6.4% in January; MSEs’ share dips marginally

While the YoY decline wasn’t overwhelming, the impact of Covid on PMEGP beneficiaries was quite significant. According to a recent study by KVIC, 88 per cent of micro beneficiaries under PMEGP were ‘negatively affected’ due to the Covid pandemic. Among the affected 88 per cent, 57 per cent stated that their units were shut down temporarily during the Covid period, while 30 per cent reported a drop in production and revenue. Under PMEGP, as of March 24, FY21, 60,867 micro enterprises were supported with margin money of Rs 1,834.2 crore, according to the data available with the KVIC.

“While Covid is among the key reasons for the impact on enterprises but isn’t the only one. Impact on small businesses is a case of multi-organ failure. Demonetisation, GST complexities, etc., were other reasons continuing to haunt MSMEs. Covid must have impacted around 20-25 per cent MSMEs who either reduced their production or shut their operations but issues around GST compliance and demonetisation have been other major reasons,” Vishwanath, Co-Chairman, Industry Committee, PHD Chamber of Commerce and Industry had told Financial Express Online.

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