More than 10,000 people in Jharkhand are awaiting jobs due to lack of loan approval and disbursal from public and private sector banks in the state under Prime Minister’s Employment Generation Programme (PMEGP) — a scheme for providing financial assistance to set up new enterprises, mainly in rural areas.
Data suggests that PMEGP has provided jobs to 1.07 lakh people in these enterprises in the last 12 years.
Khadi and Village Industries Commission (KVIC), the nodal agency to implement PGEP under MSME department, said that the aim in 2020-21 stands at starting 1,863 “new” enterprises, which will “employ 14,904 people” in Jharkhand.
However, data says that in the last more than eight months only 380 enterprises took off – eligible for Rs 10.94 crore subsidy – mainly due to lack of loan availability.
Moreover, 574 such applications are pending at various banks where sanctions have been given, but are awaiting disbursal.
MSME department and KVIC pulled up state-level bankers and directed to start the work on ‘war footing’.
Sources in the department said that “per lakh” of loan means a person employed in the enterprise. “So if a Rs 10 lakh loan is availed, it is assumed that 10 people including the owner will be the strength of the enterprise,” a source said.
As per a release issued by KVIC, Ranchi, KVIC Deputy CEO (Eastern Zone) SS Sil said, “…If the target is not achieved then the subsidy money will be transferred to other states and it will have an adverse effect on Jharkhand’s development.”
The targeted subsidy under PMEGP stands at Rs 55.89 crore in 2020-21, as per data provided.
At the state level, the scheme is implemented through State KVIC Directorates, State Khadi and Village Industries Boards, District Industries Centres with a 30:30:40 ratio of the application being forwarded to banks concerned. The maximum project cost allowed under PMEGP is Rs 25 lakh for starting a manufacturing unit – such as soap – and Rs 10 lakh for service units, such as a salon. The margin money — government subsidy — ranges from 15% to 35%, based on the community availing services and the place of starting the enterprises.
KVIC routes the government subsidy through designated banks for “eventual disbursal to the beneficiaries entrepreneurs directly into their bank accounts.”
There are 27 public sector banks, regional rural banks, cooperative banks and private scheduled commercial banks that have been approved for any individual to mention their choice for such scheme.
State KVIC director J K Gupta said: “Collectively, 2656 applications are pending at banks, if the banks approve all we may achieve beyond our target. The banks have approved only 380 applications. Also, 574 files have been sanctioned, but are waiting for disbursal…Banks have cited COVID and other issues for the delay and they have promised to work on this.”
Sources said that the issue was discussed at a recent meeting and bankers were told that more than 40 per cent of loans are secured through subsidies. However, a source in KVIC said among nationalised banks, the top four banks (as per the number of applications forwarded) with 4,800 applications disbursed loans to only 223 applicants.
“Out of seven private banks to whom 185 applications were forwarded, loans were disbursed to three applicants with an amount of Rs 14.7 lakh,” the source said.