KVIC Outpassed Its Assigned Targets for PMEGP Scheme

While in 2008-09, the utilization of total subsidy allotted by the Ministry of Micro, Small and Medium Enterprises (MSME) for implementation of Prime Minister Employment Generation Program (PMEGP) was less than 50 percent, in 2016-17 – it even crossed the 100 percent mark, i.e. 100.37 percent. And, the credit for this success goes to Khadi and Village Industries Commission (KVIC), the nodal agency for PMEGP.

Notably, the Ministry of MSME had set a target of Rs 1,100 crore for PMEGP in 2016-17, but KVIC achieved it only on March 15. Later, the ministry added another Rs 100 crore in the target, which also was achieved on March 25. Again, Rs 50 crore was added in it, but KVIC’s overall achievement also crossed it with the annual figure of Rs 1,281 crore in 2016-17. Not only that, nearly 4 lakh new employments were generated, with an estimated project cost of Rs 4,800 crore, which is a huge growth of approximately 24 percent with respect to financial year 2015-16.

It was observed in an independent study done by a national-level agency Management Development Institute (MDI), Gurugram. After physical verification of 10044 PMEGP units (five percent of the total units) all over the country and collecting data from the beneficiaries, stakeholders and external sources, the evaluation study said that the average employment per project was 7.66 persons, with an average cost of Rs 94,855 for generating unit employment and an average cost per project of Rs 7,26,760. “The maximum and minimum costs for generating unit employment were Rs 2,65,412 (Nagaland) and Rs 25,070 (Tamil Nadu),” the report states.

The MDI study further indicates that the average age of the beneficiaries was 36.8 years and 42.39 percent of them were from SC, ST and OBC categories, besides 5.8 percent of minorities and 10 percent of women. “With 53 percent and 45 percent of beneficiaries involved in manufacturing and services respectively, collateral taken by the banks over and above hypothecation of assets by banks were recorded 46 percent and 54 percent respectively,” the report.

In connection with the units – not been able to perform and non-profitable assets (NPA), the MDI report categorically observed: “It could be lack of stringent or proper feasibility or viability analysis on the part of banks and other financial institutions at the time of sanctioning the unit. To a great extent, the key factors of NPAs are disconnect among stakeholders and beneficiaries, lack of knowledge of various facets of running or setting up a unit among beneficiaries. These facets are ‘importance of product quality’ and availability of skilled manpower etc. first generation entrepreneurs are more prone to such problems.”

In context with the consumption, the report indicated that while majority of the beneficiaries (79.53 percent) reported that their products/services are consumed domestically only, among the rural beneficiaries, the percentage was slightly higher (9.56 percent) with respect to their urban counterparts (5.84 percent). “Majority of the beneficiaries (75.07 percent) reported that the physical verification of their units had been done,” the report further said.

It may be noted here that the methodology of the study was designed to keep in view the all four objectives of PMEGP schemes and 14 points of the terms of reverence. In all the states, the number of DLTFC meetings was less than three specified value of three-quarter. While in North zone, the highest number of DLTFC meetings was highest in Chandigarh, i.e. 1.15, highest in East zone and North-east Zone were Jharkhand (1.05) and Assam (0.7) respectively.

In most of the cases, the loan sanction was delayed beyond the given limit of 30 days after the recommended application reached the banks. It was found that time taken to sanction loan was more for manufacturing sector than the service sector. While in North zone, no state was reported for collateral security over and above the hypothecated value of assets, in the East zone, only Odisha and West Bengal had reported for collateral security over and above the hypothecated value of assets. Similarly, in Northeast and South zones, Meghalaya/Mizoram and Amdhra Pradesh/Kerala had reported collateral security over and above the hypothecated value of assets. While in West zone, no state was reported for collateral security over and above the hypothecated value of assets, it was Uttarakhand in the Central zone.

Enthused with this report, KVIC Chairman Vinai K Saxena said that even the Central Government had taken cognizance the success rate of the KVIC in implementation of PMEGP. “In the recent budget of 2018-19, we have got a Rs 1,800 crore with respect to previous 2017-18 fiscal’s Rs 1,024 crore, which is 78 percent growth. Since the Prime Minister Narendra Modi has a lot of affection with Khadi as he considers it a tool of economical transformation of the country, we will leave no stone unturned to follow and implement his vision,” he said.