PMEGP hope for NE employment landscape

The transformation of agricultural and allied activities in the Northeast region from subsistence scale to commercial scale has been slower than anticipated, due to which lakhs of youth belonging to farm families migrate outside the region for employment and alternative livelihoods. Reversing the migration requires huge transformation in the region’s employment landscape. Leveraging the implementation of the Prime Minister’s Employment Generation Programme (PMEGP) is a pragmatic option, but it requires a professional approach beyond statistical accounts of employment generation, budgetary allocation and other routine scheme details. The Parliamentary Standing Committee on Industry’s observation that there has been a decline in project support under PMEGP in the region, especially in Assam, Nagaland, Manipur and Mizoram from the 2021-22 financial year, points towards underutilisation of the scheme’s potential to create employment through growth of Micro, Small and Medium Enterprises (MSME). The Ministry of Micro, Small and Medium Enterprises (MSME) argues that the PMEGP is a demand-driven scheme, and the final sanction of the project and release of the loan is done at the level of the concerned bank, which implies that the region, as a whole, has fallen short in its efforts to tap the scheme benefits for boosting employment generation. The margin money subsidy provided under the scheme to the region has increased by just Rs 51 crore over a period of four years, from Rs 180 crore in 2021-22 to Rs 231 crore in 2024-25, which is indicative of the low demand. This is despite special incentives provided to uplift and support the performance of PMEGP in the region, which include providing scheme beneficiaries of the region margin money subsidy of 35% in rural areas and 25% in urban areas as against 25% in rural areas and 15% in urban areas in the case of beneficiaries in general category states outside the northeast region. Other advantages incorporated in PMEGP for targeted beneficiaries in the region are: the own contribution of beneficiaries belonging to the region is 5% of the project cost as against the own contribution of 10% under General Category states; a second loan tranche of up to Rs. 1 crore is provided for the upgradation and expansion of well-performing existing units with a subsidy of 20% for the Northeast region and hilly areas as against 15% in other areas; and there is no ceiling on the number of projects financed under transport activities in the region as against the 10% ceiling on the number of projects in other areas. The observation by the parliamentary panel that persistent barriers such as limited banking outreach and connectivity gaps appear to continue to discourage applicants in several states in the region calls for urgent action to overcome such administrative challenges. The Committee’s observation that the current loan application process under PMEGP involves extensive scrutiny, leading to delays, especially for small-value loans, led it to recommend that the Ministry must implement a self-certification mechanism for loan applications up to a loan amount of Rs 10 Lakh to streamline the process and reduce delays. The Committee recommendation that applicants submit a self-certified declaration of compliance with eligibility and documentation, with random sample testing conducted periodically for transparency, is rational and can be expected to motivate more youth in the region to set up MSME units to boost production and employment. Many youths nurturing entrepreneurial dreams often feel discouraged by the load of paperwork in banks for availing the margin money subsidy against their project and do not come forward to take advantage of the special incentives provided to proposed units under the scheme. It is heartening to know that since January 2024, all implementing agencies are accepting PMEGP applications in physical form (offline mode) in 12 scheduled languages, including Assamese, in addition to English. Giving wide publicity to such language support to overcome linguistic barriers in the application process is essential to boost the confidence of small and micro enterprises in Assam. The Ministry advising the Khadi and Village Industries Commission – the implementing agency – to examine the feasibility of automating the scrutiny process of applications and implementing a self-certification mechanism for projects involving loans less than Rs. 10 lakh to reduce procedural delays due to manual scrutiny is a laudable initiative. The KVIC’s findings that the grounds for rejection by banks were not valid in many cases in Assam reveal a critical gap which needs to be addressed in an urgent manner. Besides, non-receipt of margin money in many cases and the technical glitches in the PMEGP portal slowing down the progress of the scheme in the region speak volumes about larger systemic gaps in the implementation of the scheme. As availability of raw materials for MSME units set up in the region locally is crucial for their sustainability, boosting production in agriculture and allied sectors is equally essential to change the employment landscape and create more employment opportunities in Northeastern states. This calls for states in the region to prioritise PMEGP implementation.