• Introduction
• Main Objectives
• Salient Features of the Scheme
• Implementation
• Status and Progress of REGP
• New Initiatives
• REGP Circulars

INTRODUCTION

On the basis of recommendation of the High Power Committee report, submitted in May 1994, headed by the then Prime Minster of India, the KVIC launched Rural Employment Generation Programme (REGP) with effect from 1st April, 1995 for generation of two million jobs under the KVI sector in the rural areas of the country. The term rural areas has been defined under the KVIC Act, 1956 as under:

Any area classified as village as per the revenue records of the state, irrespective of population.

It also includes an area classified as town, provided its population does not exceed 20,000 as per 1991 census.

Similarly, the term village industries has been defined as "any industry located in rural area which produces any goods or renders any service with or without the use of power and in which the fix capital investment per head of artisan or worker does not exceed Rs. 50,000 or such other sum as may be specified by Central Government from time to time". All activities which do not appear in the negative list circulated by KVIC are eligible for financing under the scheme.

MAIN OBJECTIVES

To generate employment in rural areas.
To develop entrepreneurial skill and attitude among rural unemployed youth.
To achieve the goal of rural industrialization.
To facilitate participation of financial institutions for higher credit flow to rural industries.

SALIENT FEATURES OF THE SCHEME

The scheme is applicable to all village industries project set up in rural areas.

The eligible agencies under the scheme are (i) individuals (rural artisans/entrepreneurs) ii) institutions cooperative societies, Trusts & SHGS for projects upto Rs. 25.00 lakhs.

Partnership Firms Private/Public Limited companies, Joint ventures, Jt. Borrowers, Co-obligators of HUF are not eligible under the Scheme.

Under this programme, capital subsidy in the form of margin money is provided at the rate of 25% of the project cost upto Rs. 10 lakhs and 10% on the balance project cost upto Rs. 25 lakhs.

In case of weaker section beneficiary viz. SC/ST/OBC/ Women/Physically Handicapped/Ex-servicemen and for Hill border and Tribal Areas, North Eastern Region, Sikkim, Andaman & Nicobar Islands, Lakshadweep, Margin Money grant will be at the rate of 30 per cent of the remaining cost of the project. Cost of land should not be included in the project cost.

Under the scheme, the borrower is required to invest his own contribution of 10 per cent of the project cost. In case of SC/ST and other weaker section borrowers, the beneficiary’s contribution will be 5% of the project cost.

Banks will sanction 90 percent of the project cost in case of general category borrowers and 95 percent of the project cost to the weaker section beneficiaries/institutions and disburse full amount of the loan. After the sanction of the credit facility by the Bank branch, eligible amount of Margin Money will be kept in Term Deposit of two years in the account of the borrower at the leading bank branch, which will be credited to the borrower’s loan account after a period of two years from the date of first disbursement of loan.

IMPLEMENTATION

Presently KVIC is implementing REGP through :

• All Public Sector Banks,

• All regional Rural Banks,

• Co-operative Banks approved by the State/U.T.,  KVIBs, Private Commercial Banks approved by the state KVIBs; and

• Other Financing Institutions of State & Central Government as approved by KVIC.

Sponsorship – Sponsoring of Project by any agency is not mandatory. However, KVIC’s State/Regional Offices and State KVI Boards/DIC may sponsor the project if approached.

EDP Training - Once the project is sanctioned by financing branch of the Bank, before releasing the second installment of loan, beneficiary is to be imparted 3-day training arranged by the State/Regional Director.

STATUS AND PROGRESS OF  REGP

During the year 2004-05, the number of projects financed was 23,453 as against the 24,747 number of projects financed in the previous year. Further in Employment Generation through the Scheme, the Andhra Pradesh stood at No. 1 followed by Uttar Pradesh, Rajasthan, Madhya Pradesh, West Bangal and Haryana.

(a) Flow of Funds: For extending support to the entrepreneurs for providing margin money and other backward forward linkages, an amount of Rs. 292.40 crore was released to meet the margin money claims of the entrepreneurs and another Rs. 3.48 crore for the purpose of arranging backward, forward linkages for the REGP units in the Country. The banks which include the nationalized commercial banks as well as cooperative banks, extended financial assistance of about Rs. 665.21 crores which helped the entrepreneurs to establish the units.

(b) Categorywise distribution of projects: The number of projects sanctioned (category-wise) during 2004-05 are as under:-

From the above table, it may be seen that the percentage in each category to the total number of projects was fairly good for all the categories i.e. for Scheduled castes it 11.50%, for Scheduled Tribes 7.50%, OBCs 23.58%, Women Entrepreneurs 26.56% and Others which include ex-servicemen, Physically handicapped, hill and border areas 2.46%.

(c) Cost-wise Range of REGP Projects : Though the units that have been set up differ from State to State with respect to size and industry, the financing pattern shows that there has been a distribution of all type of industries with respect to project cost e.g. the share of projects upto 1.00 lakh was 23.41%, Rs. 1.00 lakh to Rs. 5.00 lakh was 50.04%, Rs. 5.00 Lakh to Rs. 10.00 lakhs was 17.61% and 10.00 lakhs to Rs. 25.00 lakh was 8.94%. This shows that the number of small projects on the whole was on the higher side.

(d) Industry-wise Development : The KVIC has broadly classified all village Industries into 7 groups and care is taken to see that the development in all industries is according to the availability of local needs, raw material, technical competency and the market requirement. The maximum number of units established was in the Agro and Food Processing followed by the services sector.

(e) Physical Performance of REGP :During the year 2004-05, a total of 23453 projects have been financed under the scheme generating 530025 number of employments. A sum of Rs. 292.40 crores have been utilized as margin money for this period. The State-wise performance under the scheme for the year 2004-05 is given at Table-I. The cumulative figures in respect of number of projects financed, cumulative employment generated, and cumulative margin money utilizes under the REGP scheme till 31.03.2005 are given at Table-II, Table-III and Table-IV, respectively.

f) Backward and Forward Linkages : The KVIC provided financial assistance to its State Offices as well as the State Khadi and Village Industries Boards for establishing backward and forward linkages of the entrepreneurs/institutions. Under this, an amount of Rs. 347.58 lakh was released which was utilized for organizing 92 Nos. of workshops, 209 Nos. awareness camps, 71 Nos. of exhibitions, 67 Nos of Bankers Meeting organized. 11525 No. of persons trained under Entrepreneur Development Programmes (EDPs) and 5156 No. of units were physically verified during the year 2004-05

NEW INITIATIVES

For smooth implementation of the programme, following new initiatives were taken by KVIC during the year 2004-05:-

• Decentralisation of the implementation of the scheme by making payment of margin money through State Offices and State KVI Boards.

• Fixation of targets for projects and Margin Money for all field offices based on Rural Population of the State.

• Financing of units based on coir as raw material is allowed.

• Financing of auto-rickshaws in Andaman and Nicobar Islands, house boat, shikara and tourist boat in Jammu and Kashmir are also allowed under rural transport, keeping in view the special requirement of these States.

• For providing information/guidance to the new entrepreneurs, REGP helping counters are opened in all the field offices of the KVIC and the State KVI Boards.

• 346 number of model branches of Public Sector Banks are identified. They are provided margin money in advance on quarterly basis.

• Training to all KVIC/KVIB’s field offices staff are provided to acquaint them with the implementation of the programme.

• Extensive publicity programme was made through workshops, awareness camps, exhibitions etc.

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PROGRESS MADE UNDER REGP DURING 2004-05 - STATE-WISE PERFORMANCE

Table-I

Sr.No.	State/Ut	No. of projects	Margin Money utilized  (Rs. lakh)	Employment generated
1	Andhra Pradesh	1988	3394.19	66463
2	Arunachal Pradesh	43	66.03	1219
3	Assam	1658	1277.42	25768
4	Bihar	254	281.69	5049
5	Goa	138	88.90	1670
6	Guajrat	376	530.55	8581
7	Haryana	1140	2142.25	35691
8	Himachal Pradesh	469	584.55	12256
9	Jammu & Kashmir	922	657.72	9406
10	Karnataka	934	1063.83	19478
11	Kerala	914	1027.95	16434
12	Madhya Pradesh	1361	2125.71	40539
13	Maharashtra	1773	1439.17	25040
14	Manipur	102	73.66	1313
15	Meghalaya	146	196.03	3789
16	Mizoram	162	257.48	5180
17	Nagaland	151	204.46	3851
18	Orissa	991	863.05	15241
19	Punjab	864	1834.63	30665
20	Rajasthan	1537	2064.33	38287
21	Sikkim	139	1147.28	3227
22	Tamilnadu	925	214.14	19159
23	Tripura	233	3596.64	3994
24	Uttar Pradesh	2210	1999.62	64900
25	West Bengal	2584	165.78	36581
26	A & N Island	6	4.16	93
27	Chandigarh	8	21.45	188
28	Delhi	9	8.09	144
29	Pondichery	7	9.05	146
30	Jharkhand	240	1000.91	6855
31	Chattisgarh	656	320.60	18347
32	Uttaranchal	513	578.63	10471
	Total	23453	29239.95	530025

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NUMBER OF PROJECTS FINANCED UNDER REGP UPTO 31 MARCH 2005 SINCE ITS INCEPTION

Table-II

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EMPLOYMENT OPROTUNITIES GENERATED UNDER REGP UPTO 31 MARCH 2005 SINCE ITS INCEPTION

Table-III

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MARGIN MONEY UTILISED UNDER REGP UPTO 31 MARCH 2005 SINCE ITS INCEPTION

Table-IV