PMEGP: Rural Enterprises Surpass Urban Job Creation

January 11, 2025

The Prime Minister’s Employment Generation Programme (PMEGP) has shown remarkable success in rural job creation over the last sixteen years. Rural micro enterprises have generated more jobs per unit compared to urban enterprises. This trend marks the significance of PMEGP in enhancing rural livelihoods and providing sustainable employment opportunities.

Overview of PMEGP

PMEGP aims to promote self-employment and entrepreneurship in both rural and urban areas. The programme has supported the establishment of micro enterprises primarily in the non-farm sector. The Ministry of Micro, Small and Medium Enterprises (MSME) and the Khadi and Village Industries Commission (KVIC) oversee its implementation.

Job Creation Statistics

From 2008-09 to 2023-24, PMEGP has created an estimated 80.52 lakh jobs. Of these, 64.55 lakh jobs were generated in rural areas, while urban areas accounted for 15.97 lakh jobs. Rural enterprises created approximately 8.19 jobs per unit, surpassing the 8.07 jobs per unit from urban enterprises.

Impact of Covid-19

The Covid-19 pandemic affected employment patterns. In 2021-22, rural areas recorded the highest job creation under PMEGP with 6.77 lakh jobs. The migration of individuals from urban to rural regions during the pandemic necessitated this shift. Conversely, urban job creation peaked in 2023-24, with 1.61 lakh jobs, indicating a recovery phase.

Funding and Subsidy Structure

PMEGP provides subsidies to beneficiaries based on their category and location. General category beneficiaries receive a subsidy of 25% in rural areas and 15% in urban areas. Special category beneficiaries can receive up to 35% in rural areas and 25% in urban areas. The maximum project cost allowed is ₹50 lakh for manufacturing and ₹20 lakh for service sectors.

Support for Existing Enterprises

Since 2018-19, successful PMEGP/MUDRA enterprises have been eligible for a second loan to aid expansion. The maximum project cost for this second loan is ₹1 crore for manufacturing and ₹25 lakh for services. The subsidy for the second loan is 15%, increasing to 20% for projects in the North Eastern Region and hilly areas.

Financial Outlay and Demand-Based Allocation

PMEGP operates as a Central sector scheme, meaning no specific state budget allocations are made. Funds are allocated based on demand and loans sanctioned by financial institutions. An outlay of ₹13,554.42 crore has been approved for PMEGP for the financial years 2021-22 to 2025-26.

PMEGP – A programme initiated in 2008 to promote self-employment.
KVIC – Khadi and Village Industries Commission, responsible for implementing PMEGP.
CAGR – Compound Annual Growth Rate, measuring growth over time.
NER – North Eastern Region, receiving additional subsidies.
MUDRA – Micro Units Development and Refinance Agency, supporting small enterprises.

Key Objectives of PMEGP

PMEGP focuses on generating self-employment opportunities and integrating traditional artisans with unemployed youth. The programme seeks to encourage entrepreneurship in both rural and urban settings, enhancing economic stability and growth.

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