Performance Evaluation of the Prime Minister’s Employment Generation Programme in India

ABSTRACT The Prime Minister’s Employment Generation Programme (PMEGP), a flagship credit-linked subsidy scheme administered by the Khadi and Village Industries Commission (KVIC) under the Ministry of MSME, serves as a crucial macroeconomic tool for rural industrialization, social inclusion, and self-employment by transitioning traditional models into bank-linked micro-enterprises targeting youth, women, and marginalized groups. Since its inception in 2008–09, the scheme has achieved massive cumulative growth by establishing 10.73 lakh micro-enterprises, mobilizing ₹29,295 crore in Margin Money subsidies, and generating 87.37 lakh jobs, with strong structural inclusivity as 80% of units operate in rural areas and over 50% are owned by women, SC, and ST entrepreneurs. Over the 15th Finance Commission cycle (2021–22 to 2025–26), this upward trajectory was maintained as the program fully utilized its ₹13,554.42 crore budget, exceeded its target by setting up 4,03,706 units, and generated 36.33 lakh job opportunities. Analytical findings reveal a significant capital-intensive evolution within the program, characterized by a sharp rise in average project loan size from ₹8.49 lakh to ₹12.55 lakh and an increase in individual unit subsidies from ₹2.88 lakh to ₹3.70 lakh. However, this transition to higher-value investments coincided with severe cyclical performance volatility, where project execution peaked sharply in 2021–22 (1,03,219 units; 9.29 lakh jobs) before entering a multi-year contraction that bottomed out in 2024–25 (5.37 lakh jobs), followed by a resilient 11.37% operational recovery phase up to December 2025. Moving forward, strategic suggestions dictate that the scheme must broaden its decentralized digital bank credit outreach to curb these sharp annual fluctuations, optimize unit-to-subsidy ratios to balance broader beneficiary coverage with high individual funding thresholds, streamline institutional delivery to eliminate administrative bottlenecks, and enhance post-stabilization market linkages to ensure sustainable, long-term employment generation at the grassroots level.