PMEGP and CGTMSE | 28 Feb 2020

Why in News

Ministry of Micro, Small & Medium Enterprises (MSMEs), Finance Ministry and senior management of all banks held a meeting to review some of the key schemes of Ministry of MSME which generate a large number of jobs with low capital investment.

  • The focus of the meeting was on the Prime Minister’s Employment Generation Programme (PMEGP) and Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).
  • It was also emphasised that there is a need for providing support to the MSMEs by suitably restructuring the stressed loans at an early stage with the help of the banks.

Prime Minister’s Employment Generation Programme

  • Launched in 2008-09, it is a credit-linked subsidy scheme which promotes self-employment through setting up of micro-enterprises, where subsidy up to 35% is provided by the Government through Ministry of MSME for loans up to ₹25 lakhs in manufacturing and ₹10 lakhs in the service sector.
    • The balance amount of the total project cost will be provided by the banks in the form of term loan and working capital.
  • It is a flagship scheme of the Ministry of MSME.
  • Implementation:
    • National Level- Khadi and Village Industries Commission (KVIC) as the nodal agency.
    • State Level- State KVIC Directorates, State Khadi and Village Industries Boards (KVIBs), District Industries Centres (DICs) and banks.
  • Eligibility:
    • Any individual above 18 years of age, Self Help Groups, Institutions registered under Societies Registration Act 1860, Production Co-operative Societies and Charitable Trusts are eligible.
    • Existing Units and the units that have already availed Government Subsidy under any other scheme of Government of India or State Government are not eligible.
      • Only new projects are considered for sanction under PMEGP.
  • Discussions on PMEGP in the meeting-
    • Banks have supported setting up a large number of enterprises under PMEGP and it has particularly seen a two-fold increase in last Financial Year (2019-20) when more than 73,000 micro-enterprises were assisted.
    • Further, to boost the PMEGP, the target in the current year has been increased to support the establishments of 80,000 units.

Credit Guarantee Fund Scheme (CGS) for Micro and Small Enterprises

  • It was launched in 2000 by the Government of India (GoI) to make available collateral-free credit to the micro and small enterprise sector.
    • Both the existing and the new enterprises are eligible to be covered under the scheme.
  • The corpus of CGTMSE is being contributed by the GoI and SIDBI in the ratio of 4:1 respectively.
  • The Ministry of MSMEs, GoI and Small Industries Development Bank of India (SIDBI) established a trust named Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to implement the CGS.
  • Discussions on increasing the reach of CGTMSE in the meeting
    • Government has set a target of increasing credit guarantee to ₹50,000 crores under this scheme, which is a jump of about 67% over the last year.

Source: PIB