Expansion of MSMEs: Government’s Credit & Support Initiatives

The Ministry of Micro, Small and Medium Enterprises (MSME) has been actively implementing schemes to boost the sector’s growth and support entrepreneurs. One of the flagship initiatives is the Prime Minister’s Employment Generation Programme (PMEGP), a credit-linked subsidy program started in 2008-09. This scheme, managed by the Khadi and Village Industries Commission (KVIC), aims to create jobs by establishing micro-enterprises in the non-farm sector.

PMEGP: Financial Support to Entrepreneurs

PMEGP provides a 25% margin money (MM) subsidy for general category beneficiaries in rural areas and 15% in urban areas. For special categories, including SC/ST, women, ex-servicemen, and those in the Northeastern region, subsidies are higher at 35% for rural areas and 25% for urban areas.

The maximum project cost under PMEGP is ₹50 lakh for manufacturing and ₹20 lakh for services. Since 2018-19, the scheme also supported existing enterprises with second loans for upgradation. For this, the project cost is capped at ₹1 crore for manufacturing and ₹25 lakh for services, with a subsidy of 15% (20% for Northeastern and hill areas).

Approved Outlay & Regional Performance

For FY 2021-22 to 2025-26, the government has approved an outlay of ₹13,554.42 crore under PMEGP. In the current fiscal year, 430 beneficiaries in Uttarakhand received subsidies totalling ₹12.01 crore, though ₹8.08 crore in claims remain pending.

Broader MSME Support

Beyond PMEGP, the Ministry runs other programs like the Credit Guarantee Scheme (CGS), offering collateral-free loans of up to ₹500 lakh, and the Procurement and Marketing Support Scheme, promoting MSME participation in trade fairs. Under the Public Procurement Policy, 25% of government purchases are reserved for MSMEs, including quotas for SC/ST and women-led enterprises. The Union Budget 2024-25 introduced measures like upgraded MUDRA loan limits (from ₹10 lakh to ₹20 lakh) and the establishment of e-commerce export hubs.

With comprehensive initiatives like PMEGP and CGS, the government is providing financial and marketing support to strengthen MSMEs in order to support competitiveness and create employment opportunities nationwide.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.