PMEGP to assist entrepreneurs financially: Dinesh Rai

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Saurabh Gupta | 25 Aug, 2009
In an exclusive interview with SME Times, Dinesh Rai, Secretary, Ministry of MSME said that PMEGP will provide financial assistance to the first generation entrepreneurs in the form of margin money subsidy for setting up of micro enterprises for which loans are provided by banks.

Excerpts of the interview...

We have lots of queries about Prime Minister's Employment Generation Programme (PMEGP). Please give us a brief details about the scheme? And also how MSMEs can benefit from this programme?
Dinesh Rai: PMEGP is one of the important schemes of Ministry of MSME which is a credit linked scheme implemented by Khadi and Village Industries Commission (KVIC) as the nodal agency at national level while at the field level, the State Offices of KVIC, State Khadi and Village Industries Boards (KVIBs), District Industries Centres (DICs) are the Principal implementing agencies.

KVIC/ KVIBs are implementing the Scheme in rural areas and DICs in urban as well as rural areas with the involvement of Banks. The applications received by implementing agencies are placed before the District Task Force Committees at the district level where the applications are screened and beneficiaries interviewed and the applications recommended to Banks for sanction of loan.

The Scheme provides financial assistance to the first generation entrepreneurs in the form of margin money subsidy for setting up of micro enterprises for which loan is provided by banks. Assistance under PMEGP is available for setting up of new micro enterprises under the MSME sector. The margin money subsidy levels under PMEGP are as under:

Categories of beneficiaries	Owner’s contribution	Rate of Subsidy ( of cost of project)
Area ( Location of project/unit)		Urban	Rural
General	10%	15%	25%
Special (including SC/ ST/ OBC/ Minorities/ Women, Ex-servicemen, PHs, NER, Hill and Border Areas)	05%	25%	35%

A total of Margin Money outlay of Rs. 4735 crore has been earmarked for four years beginning 2008-09 till 2011-12 for PMEGP which will enable around 3.74 lakh micro enterprises to be set up during this period helping generate estimated employment opportunities for 37.38 lakh persons.

State-wise targets for setting up of projects, utilization of margin money and generation of employment opporotunites for PMEGP allocated to States/UTs for 2008-09 and targets announced for 2009-10. The details are as under:-

Year

No of projects

Margin Money

(Rs. crore)

Employment

(lakh persons)

2008-09

61227

737.17

612245

2009-10

61697

740.33

616937

PMEGP is a big task and we have queries about the implementation of scheme. How is the ministry mplementing PMEGP?
Dinesh Rai: During the first year of implementation of PMEGP evoked massive response, 2.18 lakh applications were received up to 31.03.2009, of which a total of 36,287 projects were sanctioned by Banks which involved margin money subsidy of Rs. 506.03 crore helping generate estimated employment to 3.63 persons.

The Govt had already taken almost half a year in announcing the new scheme PMEGP in lieu of PMRY and REGP which was discontinued on 31st March, 2008. Even after the announcement of this scheme on 15th August, 08, detailed guidelines, formats and other details are yet to be notified. The industry is asking that the Govt should notify these details immediately so that the whole year may not be wasted. Your comment on this?
Dinesh Rai: PMEGP scheme was announced on 15 August, 2008 and the PMEGP guidelines approved on 26 September, 2008. Detailed guidelines and related formats are already available in the websites of Ministry and KVIC www.msme.gov.in, www.kvic.org.in and www.pmegp.in.

MSMEs are also complaining that banks are not doing their job as per the scheme. What is your comment on this?
Dinesh Rai: There have been some instances where beneficiaries have complained of difficulties in getting their loans sanctioned. Immediate action was taken by the Ministry with the CMDs of the concerned Banks to remedy the situation. Matter has also been taken up at the level of CEO, KVIC in this regard with all Banks to ensure that there is no delay or problem in sanctioning loans under PMEGP.

Efforts in this regard will continue to be made by the Ministry through monitoring committee meetings with Senior Officers of State Govt., State KVIBs and KVIC and representatives of banks. CEO, KVIC at his level is also regularly reviewing the performance of PMEGP with the implementing agencies. KVIC has also taken up the matter with RBI to impress upon banks to provide loans under PMEGP without delay.

Some small businessmen also claimed that DICs are not entertaining new applications saying that their target of loans have already been met. Could you please shed some light on this?
Dinesh Rai: DICs are not the only implementing agencies under PMEGP in rural areas. The beneficiaries in such a situation can approach KVIC/ State KVIBs with their applications. Targets have been distributed among KVIC/ KVIBs and DIC in the ratio of 60:40. However, if specific instances are brought to the notice of the CEO, KVIC and the Ministry, immediate action will be taken in consultation with the Principal Secretary (Industries) of the concerned State to ensure that applicants do not face problems.

To make equity capital available to the Small and Medium Enterprises (SMEs), the government has decided to set up a separate stock exchanges for SMEs. What do you think is the reason of delay?
Dinesh Rai: Securities Exchange Board of India (SEBI) has already issued a framework for recognition and supervision of Stock Exchanges/ Platforms of Stock Exchanges for SMEs. This framework provides details with respect of the eligibility criteria for setting up of new stock exchange/ platform of an existing stock exchange for the SMEs, trading, clearing and settlement. However, in order to enable a separate stock exchange/ platform of an existing stock exchange for SME to function in an effective manner, separate listing requirements, listing agreement and disclosure requirements will have to be worked out by SEBI in association with the existing stock exchanges and other stakeholders in the light of the special characteristics of SMEs.

During the launch of B2B portal of NSIC, you have said that the ministry has finalized Rs. 160 crore worth of stimulus package for the IT industry. Please give some details about the package?
Dinesh Rai: One of the components under the National Manufacturing Competitiveness Programme relates to "Promotion of Information & Communication Tools (ICT)" in Indian MSME sector. The programme envisages identification of some of those clusters of SMEs, which have quality production and export potential, for assisting them in adopting ICT applications to achieve competitiveness in the national and international markets. The total GoI contribution is stipulated as Rs.160 crore for this scheme. The broad activities planned under the scheme include identifying target clusters for ICT intervention, setting up of e-readiness infrastructure, developing web portals for clusters, skill development of MSME staff in ICT applications, preparation of local software solutions for MSMEs to enhance their competitiveness, construction of e-catalogue, e-commerce, etc. and networking of MSME cluster portals on the National Level Portals.

When will this package come in to reality?
Dinesh Rai: The detailed project report is under preparation and the scheme would be launched during the current year.

The ministry gives Market Development Assistance (MDA) to MSMEs to market their products. Similarly do you have plans to make B2B portals eligible for MDA because B2B portals too act as platforms for MSMEs to showcase their products similar to trade fairs?
Dinesh Rai: No...I don't think that there is any need for MDA while registering in a B2B portal. It is a very low cost activity. We have recently launched a B2B web portal of NSIC India and registration on our web portal is absolutely free.