Prime Minister's Employment Generation Programme (PMEGP): Subsidy and Eligibility

Last updated: 2026-11-13 · MockMentor

The Prime Minister's Employment Generation Programme (PMEGP), started in 2008-09 by merging the PM Rojgar Yojana and the Rural Employment Generation Programme, is a credit-linked subsidy scheme for setting up new micro enterprises. The Khadi and Village Industries Commission (KVIC) is the national nodal agency.

In one line: a bank loan plus a Government subsidy, so that first-time entrepreneurs in villages and towns can start a small business.

At a glance

Item Details
Started 2008-09
Ministry MSME
Nodal agency Khadi and Village Industries Commission (KVIC)
Project limit ₹50 lakh (manufacturing), ₹20 lakh (service)
Age 18 and above
Education Class 8 pass for projects above ₹10 lakh (manufacturing) or ₹5 lakh (service)
Collateral None for loans up to ₹10 lakh (CGTMSE cover)

Subsidy

Category Own contribution Subsidy (urban) Subsidy (rural)
General 10% 15% 25%
Special (SC/ST/OBC, minorities, women, ex-servicemen, transgender, disabled, North-East, hill and border areas, aspirational districts) 5% 25% 35%

The subsidy is held in a term deposit for three years and adjusted only after the unit is verified as running.

Second loan for expansion

Existing PMEGP units can get up to ₹1 crore (manufacturing) or ₹25 lakh (service) for upgrading, with a 15% subsidy (20% in North-Eastern and hill States).

Possible exam questions

  1. How effective are credit-linked subsidies in creating sustainable self-employment?
  2. Why do many micro enterprises fail in their first few years, and how can schemes like PMEGP help?

Complete notes in our courses: this page gives the essentials. The Super-Elite and Elite courses carry the full chapter with every update merged in, plus practice MCQs. Compare the courses.

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