Central Government Scheme, Prime Minister's Employment Generation Programme (PMEGP)

Prime Minister’s Employment Generation Programme (PMEGP)- As per Amendment applicable from 01.06.2022

Government of India has approved the introduction of a new credit linked subsidy programme called Prime Minister’s Employment Generation Programme (PMEGP). The said scheme has merged two schemes  namely Prime Minister’s Rojgar Yojana (PMRY) and Rural Employment Generation Programme (REGP).

PMEGP is in operation since 2008-09 and has been approved for continuation over the 15th Finance Commission cycle i.e. for the period of 5 years from 2021-22 to 2025-26.

Objectives of the scheme:

  1. To generate employment opportunities in rural as well as urban areas of the country through setting up of new self- employment ventures/ projects/ micro enterprises.
  2. To bring together widely dispersed traditional artisans/ rural and urban unemployed youth and give them self- employment opportunities to the extent possible, at their place.
  3. To provide continuous and sustainable employment to a large segment of traditional and prospective artisans and rural and urban unemployed youth in the country, so as to help arrest migration of rural youth to urban areas.
  4. To increase the wage-earning capacity of artisans and contribute to increase in the growth rate of rural and urban employment.


Meaning of Rural Area:

  1. Any area classified as Village as per the revenue record of the State/ Union Territory, irrespective of population.
  2. All the areas, irrespective of their population, falling under Panchayati Raj Institutions will be accounted under Rural areas.


  • For setting up of project costing above Rs. 10 Lacs in the manufacturing sector and above Rs. 5 Lacs in the business/ service sector, the beneficiaries should possess at least VIII standard pass educational qualification.
  • Assistance under the scheme is available only for new projects sanctioned specifically under the PMEGP. Existing/ old units are not eligible.
  • Negative list of activities which are not covered under PMEGP includes Meat and slaughterhouse, sale of intoxicant items like Beedi/ Pan/ Cigar/ Cigarette etc., hotels or dhabas offering liquor, preparation of tobacco, tapping of toddy for sale, Activities prohibited by Local Government/ Authorities, Manufacturing of polythene carry bags of less than 75 microns thickness and manufacture of carry bags or containers made of recycled plastic for storing, carrying, dispensing or packaging of food stuff and any other item which causes environmental problems, Cultivation of crops/ plantation like Tea, Coffee, Rubber etc., Sericulture, Horticulture, Floriculture, Animal Husbandry etc. {However, value addition under these will be allowed. Off Farm/ Farm linked activities in connection with sericulture, horticulture, floriculture etc. will also be allowed. Dairy, Poultry, Aquaculture, Insects industries connected with Animal Husbandry will also be allowed}.
  • Only one person from family is eligible for obtaining financial assistance under PMEGP. The family includes self and spouse.
  • Financial Institutions: All Public Sector Banks, All Regional Rural Banks, Co-operative Banks, Private Sector Scheduled Commercial Banks regulated by RBI, SIDBI.

Financial Parameters:

  1. Maximum cost of the project admissible:
    • Manufacturing Sector: Rs. 50 Lacs.
    • Business/ Service Sector: Rs. 20 Lacs.
  2. Beneficiary’s Contribution (of project cost):
    • General Category: 10%
    • Special Category (SC/ST/OBC/ Minorities/ Women, Ex-servicemen, Physically handicapped, NER, Hill and Border areas etc.: 5%
  3. Project Component:
    • Project cost will include Capital Expenditure and one cycle of working capital. Projects without Capital Expenditure are not eligible for financing under the Scheme.
    • For Manufacturing units, Working Capital component should not be more than 40% of the project cost and for Service sector units, Working Capital shall not be more than 60% of the project cost.
    • Projects costing more than Rs. 5 lakh, which do not require working capital, need clearance from the Regional Office or Controller of the Bank’s Branch and the claims are required to be submitted with such certified copy of approval from Regional Office or Controller, as the case may be.
    • Cost of the land should not be included in the Project Cost.
    • Cost of the ready built as well as long lease or rental Work shed/ Workshop can be included in the project cost subject to restricting such cost of ready built as well as long lease or rental work shed/workshop to be included in the project cost calculated for a maximum period of 3 years only.
  4. Employment Criteria: The fixed capital investment per head of a full- time artisan or worker i.e. Capital Expenditure on workshop/ workshed, machinery and furniture divided by full time employment created by the project does not exceed Rs. 3 Lacs in plain areas and Rs. 4.50 Lacs in Hilly areas.
  5. Rate of interest and Repayment Schedule: Normal rate of interest shall be charged. Repayment schedule may range between 3 to 7 years after an initial moratorium as may be prescribed by bank/ FI.

2 thoughts on “Prime Minister’s Employment Generation Programme (PMEGP)- As per Amendment applicable from 01.06.2022

  1. Jeet says:

    Very Nicely explained bhagyshree.


    Kya me new Petrol pump ⛽ ke liye PMEGP me aavedan karke loan le sakta hu
    Me Rajsthan se hu

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