As of 2018, the unemployment rate of India stood at 6.1% as per the Periodic Labour Force Survey (PLFS) of the National Sample Survey Office (NSSO). The rate in rural regions was 5.3% and that in urban areas was 7.8%. The report released by the organisation said that 1/3rd of formally trained men and women were unemployed.
Availability of low employment compared to the high number of individuals looking for jobs is the primary reason behind these numbers. Hence, the Government of India provides unemployed loans through various schemes to help such individuals set up businesses.
Unemployment In India –
- Total – 31 million as of September 2018.
- Average unemployment as of April 2019 – 8.1%.
- Lowest unemployment rate – 3.53% in 2011.
Some of the government schemes targeting the unemployed include –
- Prime Minister's Rozgar Yojana (PMRY)
The Prime Minister's Rozgar Yojana was launched back in 1993 with the sole aim to provide employment to 10 Lakh unemployed youths by establishing 7 Lakh enterprises. This scheme had an intimal target of 2 years to reach this target.
The PMRY was extended indefinitely with minor revisions after it significantly resulted in a positive outcome.
Now, the scheme provides loan for unemployed and educated youth of the country.
Some of the features of this scheme include –
- Individuals between the ages of 18 and 40 years who have passed standard 8th are eligible for the loan.
- Loans up to Rs. 1 Lakh for business while up to Rs. 2 Lakh for other enterprises. Each individual will also enjoy the maximum amount in case of a partnership business.
- Repayment tenor ranges from 3 to 7 years. Financial institutions may also provide a moratorium period for repayment before the tenor begins.
The maximum subsidy available with loans under PMRY is 15% with an upper ceiling of Rs. 7,500.
Individuals can opt for a loan against property if they seek higher financing. Those looking for finance should know all about these loans before applying.
- Prime Minister's Employment Generation Programme (PMEGP)
The Prime Minister's Employment Generation Programme (PMEGP) came into effect in 2008; it provides loans for unemployed individuals looking to establish businesses. Note that eligibility depends on businesses offered in specific sectors. The primary body of this scheme is the Khadi and Village Industries Commission (KVIC).
Some of the features of this scheme include –
- Individuals above the age of 18 are eligible for unemployed loans under PMEGP.
- Loans up to Rs. 10 Lakh for businesses and services while up to Rs. 25 Lakh for the manufacturing sector.
- The amount is limited to Rs. 5 Lakh for businesses and services while up to Rs. 10 Lakh for the manufacturing sector in case the borrower is standard 6th pass.
- Charitable trusts, production co-operative societies, institutions registered under the Societies Registration Act and self-help groups are also eligible for loans under this scheme.
Subsidies provided under this scheme are 25% in rural areas and 15% in urban regions against the project cost.
The subsidy on a personal loan for unemployed is 35% for rural regions and 25% in urban areas for special category beneficiaries who are physically handicapped, women, SC/ST, OBC, minorities, etc. This subsidy is also applicable in north-eastern states, hilly regions, and border areas.
Opting for a secured loan will help entrepreneurs secure financing of up to Rs. 3.5 Crore, unlike the PMRY. A LAP can be an ideal option to start a business due to such substantial loan amounts on offer as well as the lower interest rates as a secured loan.
- New Entrepreneur Cum Enterprise Development Scheme (NEEDS)
The New Entrepreneur Cum Enterprise Development Scheme (NEEDS) was initiated by the State Government of Tamil Nadu in 2012.
As per this scheme, the educated unemployed youth of the state will enjoy benefits such as –
- Industry sector specific training via entrepreneurship development programmes.
- Assistance in preparation for business plans.
- Help to avail unemployed loans from financial intuitions to set up their own business or service enterprise.
This scheme provides subsidies of up to 25% for loans till Rs. 30 Lakh and only for projects with a total capital requirement of above Rs. 1.2 Crore.
Individuals have to be between the ages of 21 and 35 years to become eligible for these loans. Applying for a loan against property will be more beneficial for those who do not satisfy the age criteria.
NBFCs provides such loans up to Rs. 3.5 Crore. The company also provides pre-approved offers that simplify the process to avail loans and help borrowers save time. Pre-approved offers come with personal loans, home loans, business loans, and an array of other financial products. Check your pre-approved offer by providing only a few details.
Since 2014, several Central Government-sponsored schemes have generated 2.7 million jobs. The PMEGP has generated 65% of employment alone.