Know All About Rural Employment Generation Program- How REGP Empowers Indian MSMEs

Know All About Rural Employment Generation Program- How REGP Empowers Indian MSMEs

The Rural Employment Generation Program was launched on the 1st of April, 1995, by the Khadi and Village Industries Commission (KVIC) to create two million jobs and address unemployment in rural areas.

Besides reducing unemployment, the Government aims to leverage the available rural resources through various employment generation programs. The REGP scheme also aims to enhance the skills of rural individuals, making them self-reliant in the long run.

Let us dive further to learn all about the Rural Employment Generation Program (REGP) scheme and how it succeeds in empowering MSMEs in India.

Brief Overview of The Rural Employment Generation Program (REGP)

Before Independence, the promotion of Khadi and Village Industries (KVI) was led primarily by Mahatma Gandhi as a non-governmental effort. Established in 1935, the All India Khadi and Village Industries Board played a pivotal role in coordinating these efforts. 

After independence, the Indian Government could formally take firm steps for developing the Khadi and Village Industries as an organized endeavor. This led to the establishment of the Khadi and Village Industries Commission (KVIC) in 1956 through an Act of Parliament.

Objectives Of The REGP Scheme

The REGP scheme launched by the central government aims to achieve the following objectives:

  1. Sustainable Employment- Merely creating jobs is insufficient for a country with a population as large as 140 Crores. Therefore, the government targets to generate jobs that would last in the long run. Sustainability in this case is a crucial aspect that it undertakes. Also, lasting job opportunities prevent the rural youth from migrating to big cities looking for one.
  2. Development of Micro-Enterprises- Micro businesses in rural areas can thrive even with minimal funding, enabling individuals with limited resources to start one. The government through such schemes as REGP aims to establish and empower numerous micro-enterprises in rural regions. 
  3. Accessible Financial Aids- To safeguard the financial interests of rural enterprises, the government provides credit support through commercial banks and financial institutions in India. With this support, such enterprises can flourish without the worries of capital shortages or expansion. 
  4. Heightened Demands for Local Products- By empowering rural enterprises, there's a direct and indirect boost in the demand for local products, reinforcing the government’s 'Make In India' initiative. This growth has a positive impact on the country’s GDP.

Rural Employment Generation Program (REGP): All You Need To Know

The Rural Employment Generation Program (REGP) is designed to foster rural entrepreneurship, supporting a diverse range of individuals and communities. Eligible recipients include adult rural traditional artisans, entrepreneurs, trusts, self-help groups (SHGs), foundations, and cooperative societies. 

However, partnership firms, private/public limited companies, joint ventures, joint borrowers, and co-obligators of Hindu Undivided Families (HUFs) are not entitled to the scheme. To assist REGP beneficiaries, the Khadi and Village Industries Commission (KVIC) organizes promotional activities, including exhibitions, buyer-seller meets, and discussions on marketing strategies, quality control, packaging, and design enhancement. REGP participants are also encouraged to participate in KVIC's regional, state, and national-level exhibitions throughout the year.

REGP also succeeds in offering margin money support, providing 25% of project costs for projects up to Rs. 10.00 lakhs and 25% of the initial Rs. 10.00 lakhs plus 10% of the remaining costs for projects up to Rs. 25.00 lakhs. 

Marginalized recipients and specific regions receive higher margin money i.e., 30% for projects up to Rs. 10 lakhs and 10% of the remaining costs up to Rs. 25 lakhs. Borrowers contribute 10% (or 5% for marginalized recipients), and banks assess project viability. 

They usually approve 90% or 95% of the project cost for general and marginalized borrowers, respectively. The per capita investment should not exceed Rs. 50,000. Bank loans include a term loan for capital expenses repayable in at least 7 years and a cash credit for working capital with regular interest payments based on the approved limit.

What Are The Different Government-Initiated Rural Employment Generation Programs?

Over the years, to address the unemployment scenario in the nation, the government has launched an array of employment generation schemes. The government has updated and integrated various schemes to optimize the management of these programs.

Recently, the Central Government introduced the Prime Minister’s Employment Generation Program (PMEGP), merging it with the Rural Employment Generation Program (REGP) and the Prime Minister’s Rozgar Yojana (PMRY). Following are the schemes initiated by the Indian Government to boost rural employment:

National Rural Employment Programme (NREP, 1980)

Launched in the year 1980, the National Rural Employment Programme aims to foster job opportunities and mitigate unemployment in the rural regions of India. To attain these core goals, the Government has focused on infrastructural and vital assets development.

Rural Landless Employment Guarantee (RLEG, 1983)

The Rural Landless Employment Guarantee Scheme was introduced during the sixth five-year plan and it intends to improve the economic prospects of landless individuals. It strives to provide at least 100 days of employment, with a primary focus on women and scheduled caste/tribe members. Of the program's funds, 25% goes to social forestry, 20% to housing, and 10% to scheduled caste/tribe communities.

Prime Minister Employment Generation Programmes (PMEGP, 2008)

The Indian Government merged Prime Minister Rojgar Yojana and the Rural Employment Generation Programme to create a scheme promoting self-employment in rural areas. It provides financial aid to local artisans and unemployed youth for starting non-farm micro-enterprises and boosts credit availability for rural businesses. 

The Khadi and Village Industries Commission (KVIC) oversees the scheme nationally, while state-level bodies, banks, and District Industries Centres handle implementation at the state level.

Sampoorna Gramin Rozgar Yojana (SGRY, 2001)

This initiative, introduced by the central government, aims to provide employment to rural individuals while also ensuring food security. It prioritizes achieving lasting assets like community infrastructure, education facilities, health services, and transportation. 

Beneficiaries who need wage-based work, receive manual labor in their villages, earning both cash (at least 25% of the wage) and food grains (a minimum of 5 kg) for their efforts.


The Rural Employment Generation Program was initiated to curb the migration of the rural populace to urban regions for job opportunities. This was to be attained by providing millions of jobs to people from rural India. REGP put earnest efforts to either secure them jobs for a certain period or help them set up self-sufficient business units. 

Acehours, your trusted business buddy, is dedicated to empowering Indian MSMEs through the Rural Employment Generation Programme (REGP). With expert guidance, business insights, and a tailored approach, Acehours ensures that your MSME qualifies for REGP funding, facilitating growth and employment generation in the country.

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