ABOUT PMRY

I. GENESIS OF PMRY

1. Unemployment is considered as a bane of Indiaís development particularly the educated unemployed youth who become unproductive and frustrated are to be paid special attention. The small-scale sector includes village and cottage sectors are found out to be the best means to solve the growing unemployment problem. Self-employment is the only solution to the unemployment. Policy makers and economists studied and drew conclusion that setting up a small scale unit with a moderate investment has got the potential to provide employment to about 4 to 5 people directly and indirectly. The satisfaction of self-employment and the contentment of contributing to the National Income and proving livelihood to few unemployeds can have positive multiplier effect. Adding to it the SSI sector has got the inherent advantage of utilising the local resources, technologies for productive purposes and at the same time could satisfy the needs of the local people and exploit the local market at micro level.

2. Taking all these into consideration the Central Government initially launched Self Employment Scheme for Educated Unemployed Youth (SEEUY) popularly known as. Gramodaya Scheme introduced by Government of India in 1985 wherein financial assistance of not more than Rs.35000 was provided for industries, Rs.25000 for service units and Rs.15000 for business ventures by way of composite loans to eligible educated unemployed youth to start their small enterprises. District Industries Centre (DICs) operated this central scheme at the district level, where 25% of the sanctioned loan amount was granted as subsidy by Central Government to be deposited as fixed deposit in the name of the candidate. This scheme could not be continued successfully. It was estimated that more than 70% of the units became sick and subsequently closed down.

3. Honíble Prime Minister of India, announced a new scheme the Prime Ministersí Rozgar Yojana (PMRY) on 15th August, 1993

4. The scheme was launched on the auspicious day of 2nd October, 1993, the birth Anniversary of Mahatma Gandhi all over the country The main objective of the PMRY scheme was to provide easy subsidized financial assistance to educated unemployed youth for starting their own enterprises in manufacturing, business & service and trade sectors. Initially the scheme was aimed at providing self-employment to one million educated unemployed youth in the country by setting up 7 lakh micro enterprises through inducting service and business ventures over a period of 2 Ĺ years. The scheme was a stupendous success and caught the imagination of the youth. Overwhelmed with the response and ever-increasing need, the Government has decided to make it a permanent scheme and framed modalities & guidelines for its successful implementation and to fulfil the purpose for which it is designed.

  1. Salient features of PMRY Scheme:
    • This is a centrally sponsored scheme

    • The Development Commissioner (Small-Scale Industries) under Ministry of Small Scale, Rural and Agro, Industries Government of India is the apex body for this scheme.

    • The respective Commissioner/Director of Industries implements the scheme at the State level except the four metropolitan cities, with an overall monitoring by the concerned Secretaries of Industries.

    • The implementation agencies at the grass root level are District Industries Centre (DIC) who would be instrumental for the grounding of the units.

    • Small Industries Service Institute(SISI) located in the four Metropolitan cities of Delhi, Kolkata, Mumbai and Chennai are the implementing agencies of this scheme.

    • The DCSSI has setup a special PMRY division in the headquarters under the able guidance of an IAS officer. DCSSI formulates the rules, regulations and guideline instructions and provides clarifications on all the matters pertaining to PMRY scheme. It has also devised a complete feedback information by the means of getting monthly, quarterly and annual progress reports from all the states to closely monitor the implementation and progress of the scheme.

    • Similarly at the state level, State Level PMRY Committee meetings monitors the progress of the scheme every quarter.

    • The yearly targets for number of beneficiaries for each state is fixed by DCSSI.

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II. PARAMETERS OF PMRY

  1. Age: For all educated unemployed between the age group of 18-40 years, in general with a 10 years relaxation for SC/STs, ex-servicemen, physically handicapped and women.
  2. Educational Qualification: 8th passed. Preference will be given to those who have been trained for any trade in Government recognised/approved institutions for a duration of at least six months
  3. Family income: Neither the income of the beneficiary along with the spouse nor the income of parents of the beneficiaries shall exceed Rs.40000 pa
  4. Residence: Permanent resident of the area for at least 3 years.
  5. Defaulter: Should not be a defaulter to any nationalized bank / financial institution/cooperative bank. Further, a person already assisted under other subsidy linked government schemes would not be eligible under this scheme.
  6. Activities covered: All economically viable activities including agriculture and allied activities but excluding direct agricultural operations like raising crop, purchase of manure etc.
  7. Project cost: Rs.1.00 lakh for business sector. Rs. 2.00 lakhs for other activities. Loan to be of composite nature. If two or more eligible persons join together in a partnership, project upto Rs.10.00 lakhs are covered. Assistance shall be limited to individual admissibility.
  8. Subsidy and Margin money: Subsidy will be limited to 15% of the project cost subject to ceiling of Rs.7,500/- per entrepreneur. Banks will be allowed to take margin money from the entrepreneur varying from 5% to 16.25% of the project costs as to make the total of the subsidy and the margin money equal to 20% of the project cost.
  9. Collateral: No collateral for project upto Rs.1 lakh. Exemption from collateral in case of partnership project will also be limited to an amount of Rs.1 lakh per person participating in the project.
  10. Rate of interest and repayment schedule: Normal bank rate of interest shall be charged. Repayment schedule may range between 3 to 7 years after an initial moratorium as may be prescribed.
  11. Training and other assistance: the training expenses and operational expenditure to be covered within the ceiling of Rs.2,000 per case. The existing system of revising the scale of expenditure in consultation with the Finance for various activities and flexibility would be available to the implementing agencies of the state and central levels subjects to condition that over all training and operating expenses remain within the ceiling of Rs.2,000/- per case sanctioned.
  12. Implementing agency: the District Industries Centres and the Directorate of Industries shall mainly be responsible for scheme implementation along with banks
  13. Linkages of targets with recovery: Basic minimum targets based on the population and the number of educated unemployed, Additional targets would be linked to the recovery of loans sanctioned, past performance of sanctions or special circumstances prevailing in the state/UT.
  14. Reservation: Preference should be given to weaker sections including women. The scheme envisages 22.5% reservation for SC/ST and 27% for other Backward class (OBCs). In case SC/ST/OBC candidates are not available, States/UTs Government will be competent to consider other categories of candidates under PMRY.

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III. HOW THE SCHEME IS IMPLEMENTED

1. Fixing of Targets: Basically these targets are given for a year starting from April to March. These targets are fixed by DCSSI after carefully taking into consideration the important factors like population, unemployment and backwardness of the areas. The targets fixed for a year would be regularly monitored and may also be revised taking into consideration the recovery of loans and performance for the year. The state of Andhra Pradesh was allotted the basic target of achieving of 16,900 number of beneficiaries. DCSSI in its guidelines dated 8th June, 2000 allotted an additional target of 16,900 nos. totaling to 33,800 beneficiary to AP state for the year 2000-2001. Commissioner / Director of Industries, AP State Govt. is the implementing agency of the PMRY scheme in Andhra Pradesh

2. Allocation of Targets by States: The State Government reallocates the states targets to all District Industries Centres(DIC) of the district, where the scheme is in vogue. Andhra Pradesh is implementing the PMRY Scheme in all its 23 district including the twin cities of Hyderabad and Secunderabad.

3. Allocation of financial targets to banks: Along with DICs, the banks also form a part of the implementing agencies for sanction of loans. The Chief General Manager, RPCD of Reserve Bank of India is intimated about the targets allocated to the states, they intern issue the necessary guidelines and funds to the lead banks of the states. Lead banks of the states issue the necessary instructions to their respective bank branches of each district for the disbursement to be made in accordance with the fixed targets.

4. Calling for PMRY applications: The District Industries Centre ( DIC) along with banks being the implementing agency at the grass root level of each districts calls for people to apply for PMRY loans. The required application forms are available at DICs, with the local Industry Promotion Officers of the concerned areas as well as local banks. The application form is a simple format seeking the basic details of the candidate (Application form enclosed).

5. Constituting the Task Force Committee: The GM, DIC constitutes the task force committee and convenes meeting to conduct interview of the candidates. The members of the task force committee are GM DIC, all the financing bankers, officials of all other developmental agencies like SISI. The objective of the task force committee is to take interview of the applicants to assess their knowledge about the proposed project, aptitude, interest, and entrepreneur qualities so as to make the proposed project a success and to sincerely repay the proposed loan amount given under the PMRY scheme. The committee selects the candidates by the process of grading marks. Task Force Committee selects the candidate and allocate to the bank. The selected candidates, are duly intimated and directed to approach the selected bank branch for sanction of the loan, with this the selection process is completed.

6. Providing training to the selected candidates: As per the DCSSI guidelines all the selected candidates under PMRY have to undergo training. The GM, DICís have to provide the training to the candidates by making the necessary arrangements. They are provided with training materials, training schedule and good faculty and convenient training centres. The candidates get familiarized with the finer points of starting and successfully running their selective enterprises. The period of training is 15 to 20 working days for candidates setting up industry sector and 7 to 10 working days for business/service sector.

7. Monitoring and Reviewing of PMRY: The DCSSI has devised a procedure to review and monitor the progress of PMRY. Under this, every district has to furnish the information on sanctions, disbursements, training, grounding and recovery of loan sanctioned, and furnish the same in a prescribed format giving monthly, quarterly and annual progress reports to the Commissioner of Industries for preparing the same reports for the State. These reports are submitted to the DCSSI and RPCD of RBI for review. The State Level PMRY committee meetings are convened under the Chairmanship of Chief Secretary to State Government with Secretaries of Industries, Finance, Commissioner of Industries, General Manager, SLBC of Banks, lead bank managers, General Manager, RPCD of RBI, Director, SISI as members and all the related organisation, as invitees to discuss the progress of PMRY, category of units benefited and suggestions for improvement. The District Industries Promotion Committee (DIPC) meetings at the District level under the chairmanship of the District Collector are convened every month by the DICs to review the progress of the PMRY at the district level. All these measures are aimed to make the objective of the scheme i.e to provide employment to educated unemployed youth of the society for whom the scheme is formed.


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IV. HOW TO APPLY FOR LOAN

1. Project Idea and Preparation of a Project Report; Candidate desiring to get loan should have complete knowledge about the project proposed to be set up. The entrepreneur is free to seek the advice of developmental agencies like SISI and DIC, which has specially prepared viable project profiles for PMRY beneficiaries. Guidance and clarifications regarding the selection of project are also provided by these organisations.

The project idea is the most important step for availing PMRY loan. Based on the project idea the entrepreneur has to prepare a project report. A project report is a statement which contains the details of the proposed project like fixed assets, raw materials required, other contingencies like rent, wages/salaries, other expenditure etc., total cost of production, sales, profit, break-even analysis, profitability ratios, repayments schedules etc. This project report would reflect at a glance the details of capital required, cost of production, profit and various parameters of viability of the proposed project. SISIs and DICs have prepared project profiles for PMRY beneficiaries on various viable schemes, which can be adopted. Assistance, guidance can also be provided for new / updating of the project profiles.

As the PMRY facilitates to provide loans under manufacturing, service and business ventures, a Prospective Entrepreneur has to first prepare a project proposal. While deciding the ventures the following factors should be carefully considered.

a.The marketability of the product by market survey

b.The demand and supply position of raw materials required if any

c.The availability of infrastructure facilities like power, water and other Government

Clearances.

d. Technology and know how of manufacturing / business/ service procedures to be

adopted and where to set up the unit.

2. Applying for PMRY Loan

After finalizing the project idea, along with the project profile the applicant has to fill the form and duly submit it enclosing the necessary documents and photographs at the DIC and / or at the local bank.

All the applications received at DICs and banks are thoroughly scrutinized and selected applicants are called for interview. In order to facilitate the applicants, the interviews are planned at major convenient places of the district so that candidates can attend the interviews at a place that are near to their place of residence.

It has been observed that most of the prospective entrepreneurs desiring to avail the benefits of this scheme fail to utilise it, due to lack of proper guidance and awareness about the modalities and formalities to be followed to avail the scheme. With an aim to fill this void a step by step guidelines are explained about the eligibility relating to age, minimum educational qualifications, family income, resident proof and cast certificate for SC/ST/BC either by DIC/SISI/localbanks. A person willing to apply for PMRY should checkout all these aspects and should produce proof for all these parameters while applying for the scheme.

One can apply any time during the year. But the best time would be between April to June of the year. The normal practice is to hold PMRY interviews in three phases in a year in all the districts.

The Task Force Committee conducts the interview and select the candidates for the bank loan.

3. Bank Clearance for the Project.

After receiving the intimation letter of selection and allotment of bank, the applicant is advised to discuss the viability of the proposed project with the allotted banker regarding the aspect of the proposed project like alterations, changes and other financial aspects. After complying with all the required formalities with the banker the applicant can start the implementation of the project.

4. Training:

Selected Applicants are called for training. After the successful completion of the training the candidates are awarded certificates which they have to produce to the bank to get the sanctioned loan. The DIC and Bankers helps in the grounding of the project and supports for success of the project

5. Grounding of the unit: Now the applicant is financially prepared for grounding the proposed project. Before grounding the unit certain statutory and mandatory formalities are to be complied with which are as follows:

    • Arranging for the margin money as per the PMRY guidelines which could be 5% to 16.25% of the project cost.
    • Arranging for collateral security if required by the bankers and for projects costing more then Rs one lakh per person.
    • Taking permission from the local body like Panchayat or Municipality as the case may be for starting the unit
    • Getting the Pollution Control Board clearance, if required.
    • Getting the sales tax registration
    • Registering with DIC as a tiny sector unit to avail the State Government incentives.
    • Getting other statutory clearances like Factories Act, Labour Act, Boilers Act and Central excise if the unit is covered under these legiclation

In order to facilitate the Small entrepreneurs to get all the required clearances the District Industries Centre (DIC) has started the single window system where DIC would get all these clearances on behalf of the entrepreneur. The entrepreneur can avail these facilities

6. Repayment of loan:

After the unit is grounded and the unit starts its commercial production the repayment of the loan along with the interest is to be paid. The repayment schedule is worked out by the banker and intimated to the applicant which depends on the PMRY guidelines for repayment which are between 3 to 7 years with initial moratorium worked out as the case may be.

THE ENTREPRENEUR HAS TO FURTHER REMEMBER THAT HE HAS BEEN PROVIDED WITH A LOAN THAT HAS TO BE REPAID WITH INTEREST PROMPTLY IN TIME. IN CASE OF DEFAULT, THE BANK ALONG WITH THE DIC HAS BEEN PROVIDED POWERS TO RECOVER THE OUTSTANDING LOAN ALONG WITH INTEREST DUE BY SEEKING THE ASSISTANCE OF REVENUE DEPARTMENTAND POLICE DEPARTMENT.

Efforts are on to cover this loan under Revenue Recovery Act as was the case with CMEY programme. Hence sincere efforts are to be made by the entrepreneur to ground the unit and make all out efforts for repayment of the loan with interest in time.


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