How has Prime Minister’s Employment Generation Programme fared so far?
Sai Krishna Muthyanolla
February 25, 2022
The Prime Minister’s Employment Generation Programme is a major credit-linked subsidy programme aimed at generating self-employment opportunities through the establishment of microenterprises. Here is a review of the numbers of the scheme since its launch in 2008-09.
The Prime Minister’s Employment Generation Programme, abbreviated as PMEGP, is a major credit-linked subsidy programme aimed at generating self-employment opportunities through the establishment of microenterprises in the non-farm sector by helping traditional artisans and unemployed youth across the country. The scheme was launched in 2008-09 and is being implemented by Khadi and Village Industries Commission (KVIC) under the Ministry of Micro, Small & Medium Enterprises.
Under the scheme, general category beneficiaries can avail of a margin money subsidy of 25% of the project cost in rural areas and 15% in urban areas. For those beneficiaries belonging to special categories such as ST/SC/OBC/Women/Minorities/Ex-serviceman/physically handicapped/NER/Hill and Border areas, etc., the margin money subsidy is 35% in rural areas and 25% in urban areas. The maximum project cost is Rs 25 lakhs in the manufacturing sector and Rs 10 lakhs in the service sector and the balance amount of the total project cost will be provided by Banks as a term loan.
7.4 lakh units have been assisted in generating employment for nearly 60 lakh persons since inception
Since its inception, up to 27 January 2022, over 7.41 lakh new micro units have been assisted with margin money subsidy under this scheme, generating an estimated employment opportunities for about 60.6 lakh persons, as per data presented in the Parliament.
With respect to the number of beneficiaries or the projects assisted through subsidy under the scheme, over 19,000 projects were assisted in 2008-09 which increased to an annual average of 55,150 projects between 2009-10 and 2020-21. Between 2018-19 and 2020-21, an annual average of 71,498 projects were assisted as compared to an earlier annual average of 49,701 between 2009-10 and 2017-18. In 2020-21, the year when the pandemic affected the economy, over 74,415 projects were assisted, the highest in a year since the inception of the scheme. This increasing trend in the number of assisted projects is also evident from the employment generation numbers.
In 2008-09, the estimated employment generated was over 2 lakhs. Since then, an annual average of 4.5 lakh employment has been generated under the scheme between 2009-10 and 2020-21. In 2020-21, when the number of assisted projects was the greatest, the estimated employment generated was also the highest with over 5.95 lakhs. Between 2018-19 and 2020-21, when the number of assisted projects was higher than in the previous years, an annual average of 5 lakh employment was generated. In 2021-22, with about 2 months left for the financial year to conclude, more than 3.7 lakh employment has been generated in over 60,180 assisted projects.
UP, Tamil Nadu, and West Bengal account for more than 25% of the employment generated under PMEGP till date
From the inception of the scheme up to 09 July 2021 (in 2021-22) for which the state wise data on the employment generated under the scheme is available (as per a response in Rajya Sabha in July 2021), Uttar Pradesh reported the greatest employment with over 6.2 lakh, followed by Tamil Nadu and West Bengal with more than 4 lakh employment each. These 3 states account for 25.8% of the total employment generated under the scheme. Jammu and Kashmir, Maharashtra, and Andhra Pradesh reported more than 3 lakh employment each. The top 15 states with the most employment reported (more than 1.6 lakh each) together account for 81% of the total employment generated under PMEGP.
While Jammu & Kashmir and Uttar Pradesh reported more than 70,000 employment each in 2020-21 alone, Telangana (since 2014-15), and Himachal Pradesh generated more than 80,000 employment each since the implementation of the scheme in the states. North-eastern states of Nagaland, Mizoram, Meghalaya, and Manipur reported more than 20,000 employment each, while Delhi reported less than 14,000 employment since inception.
Since 2016-17, Rs. 11,557.73 crores were allocated for the scheme and Rs. 10,588 crore was released as of 31 January 2022. The yearly allocated and released amounts under the scheme are indicated in the following chart. Except in 2018-19 and 2019-20, the amount released has been higher than that allocation between 2016-17 and 2020-21.
Amount spent for generating one job under PMEGP has increased in the last five years
The ratio of the amount disbursed, and the employment generated gives the amount spent for generating one job under this scheme. For instance, in 2020-21, Rs. 2,188.8 crores were disbursed, and 5.95 lakh was the estimated employment generated, which implies that for generating one job, the government had to release about Rs. 36,766.
In the five years between 2016-17 and 2020-21, data indicates that disbursed amount per job generated has gradually increased from Rs. 31,408 in 2016-17 to Rs. 36,767 in 2020-21. In other words, the cost of generating employment under the scheme has gradually increased, which could be in part due to the inflation effect.
Gujarat spent more than Rs. 90,000 for each job in 2020-21
While the type of project & the relevant subsidy may determine the amount spent for generating one job, the data for states provides a broad indication.  The amount spent across states for each job generated in 2020-21 ranges from around Rs. 20,000 (in Meghalaya) to Rs. 90,387 (in Gujarat).
In every year since 2016-17, Gujarat has spent the most money for each job generated, which may be an indication of the type of projects assisted in the state. In 2016-17, the state spent more than Rs. 65,000 for each job generated which has increased to Rs. 90,387 in 2020-21. With the same amount of Rs. 90,000 in 2020-21, three jobs were generated in the states of Arunachal Pradesh, Chhattisgarh, and Kerala.
In Andhra Pradesh where the amount disbursed was the second-highest in 2020-21, the amount spent for the generation of one job increased from Rs. 34,738 in 2016-17 to Rs. 51,272 in 2020-21. While the amount spent for the generation of one job increased in most states, the states of Madhya Pradesh, Karnataka, and Chhattisgarh reported a decrease in the amount spent for the generation of one job. In Madhya Pradesh, the expenditure per job has dropped by nearly 34% from Rs. 53,776 in 2016-17 to Rs. 35,558 in 2020-21.
The committee report highlighted the non-compliance with RBI’s mandate
Earlier, in March 2021, the Public Accounts Committee submitted its report on the implementation of PMEGP. The report was prepared based on an audit by the Comptroller and Auditor General of India for the period from August 2008 to March 2016. Some of the key recommendations made in the report are the following.
While the scheme has proved essential & useful to encourage micro-enterprises & help resolve the issue of unemployment, the emphasis could be on monitoring & evaluating the quality of employment & the sustainability of the jobs generated through the scheme.
Featured Image: Prime Minister’s Employment Generation Programme