Annual Report 2005-06 - Ministry of Micro, Small and Medium ...

Annual Report 

Ministry of Agro and 

Rural Industries 


2005-2006 


105

CONTENTS 

CHAPTER 

PAGE NO. 

1. OVERVIEW 01-11 

2. KHADI AND VILLAGE INDUSTRIES SECTOR / KVIC 12-35 

3. RURAL EMPLOYMENT GENERATION PROGRAMME (REGP) 36-48 

4. COIR SECTOR / COIR BOARD 49-67 

5. PRIME MINISTER’S ROZGAR YOJANA 68-80 

6. ARI ACTIVITIES IN THE NE REGION 81-89 

7. SUMMARY OF THE C&AG REPORT 90-93 

8. USE OF OFFICIAL LANGUAGE 94-96 

9. VIGILANCE ACTIVITIES 97-99 

10. CITIZENS CHARTER 100-104

1.1.0 BACKGROUND 

OVERVIEW 

Most people living in the rural areas of the country draw their 

livelihood from agriculture and allied sectors. Accordingly, the 

strategy of the Government has been to improve the economic 

and social conditions of the underprivileged sections of the rural 

population with emphasis on agricultural production and also 

the non-farm sector to promote productive employment 

opportunities, by integrating traditional production infrastructure, 

skills and locally available raw material. 

1.1.2 The rural non-farm sector in India has been growing in aggregate 

size and increasingly contributing to rural income generation. The 

growing pace of international trade and globalisation presents both 

opportunities and challenges for the Indian economy, including 

the small enterprises sector, which consists of small scale, agro & 

rural industries and service/business entities. 

Chapter 

1 

1.1.3 Recognising that long-term development of Indian economy 

depends critically on the effective exploitation of the productive 

potential of the rural non-farm sector and development of village 

industries, the Ministry of Agro and Rural Industries (ARI) was 

set up in September, 2001. This was done with the objectives of 

facilitating - co-ordinated and focused policy formulation and 

effective implementation of programmes, projects, schemes, etc., 

for improving supply chain management, enhancing skills, 

upgrading technology, expanding markets and capacity building 

of the entrepreneurs/artisans and their groups/collectives. 

1

Annual Report 2005-2006 

1.2.0 ORGANISATION OF THE MINISTRY 

The Ministry deals with the khadi and village and coir industries 

through the Khadi and Village Industries Commission (KVIC) 

and the Coir Board (CB) and coordinates implementation of 

two countrywide employment generation programmes, namely, 

the Rural Employment Generation Programme (REGP) and 

the Prime Minister’s Rozgar Yojana (PMRY) with the cooperation 

of State Governments, Reserve Bank of India (RBI) 

and other banks. 

1.3.0 KHADI AND VILLAGE INDUSTRIES COMMISSION 



1.3.1 The Khadi & Village Industries Commission (KVIC), 

established by an Act of Parliament, is a statutory organisation 

engaged in promotion and development of khadi and village 

industries for providing employment opportunities in the rural 

areas, thereby strengthening the rural economy. The KVIC 

has been identified as one of the major organisations in the 

decentralised sector for generating sustainable rural non-farm 

employment opportunities at low per capita investment. It 

undertakes activities like skill improvement, transfer of 

technology, research & development, marketing, etc., in the 

process of generating employment/self-employment 

opportunities in the rural areas. 

1.3.2 KVIC has taken a number of steps for effectively 

implementing its schemes/programmes. These include 

categorisation of institutions, improved raw material 

management by optimising production of slivers/rovings in 

its Central Sliver Plants (CSPs), introduction of product 

development intervention scheme for quality and design 

improvement of khadi and village industry products and 

improved packaging, fostering backward-forward linkages 

for successful implementation of REGP, increased marketing 

2


promotion efforts, enlarging the training network, introducing 

better quality standards for village industries (VI) products, 

increasing the productivity of the Khadi and Village Industries 

(KVI) clusters through setting up of Common Facility Centres 

(CFCs), etc. 

1.3.3 The khadi and village industries sector makes a significant 

contribution to the Indian economy. As per the data available, 

KVIC was able to help generate 76.78 lakh employment 

opportunities up to 2004-05 compared with the preceding year’s 

level of 71.19 lakh, registering a growth of 7.85 per cent. In 

village industries, employment increased significantly by 8.5 

per cent while in khadi, the increase was only 0.5 per cent. 

1.3.4 During 2004-05, khadi cloth worth Rs.461.54 crore was produced, 

generating employment for 8.63 lakh persons. In the VI sector, 

the achievement during 2004-05 in respect of production and 

employment was Rs.10458.89 crore and 68.14 lakh persons 

respectively. The performance in the KVI sector is as under: 

(Value - Rs. crore) 

(Employment - lakh persons) 

Year Production Employment 

Khadi V.I. Total Khadi V.I. Total 

Value Value Value 

Rs. Rs. Rs. 

2002-03 443.07 8126.30 8569.37 8.58 57.87 66.45 

2003-04 451.93 9228.27 9680.20 8.61 62.57 71.18 

2004-05 461.54 10458.89 10920.43 8.63 68.14 76.77 

2005-06* 471.00 12193.00 12664.00 8.70 73.50 82.20 



*Targets 

1.3.5 During 2005-06, the khadi sector recorded production of Rs. 

371.69 crore and provided employment to 8.69 lakh persons 

up to January 2006. Similarly, the VI sector recorded production 

of Rs. 8778.96 crore and provided employment to 71.47 lakh 

persons up to January 2006. 

3


1.4.0 COIR BOARD 

1.4.1 The coir industry is a labour-intensive and export-oriented 

industry. It uses a by-product of coconut, namely, coir husk. The 

Coir Board, a statutory body established under the Coir Industry 

Act 1953, looks after the promotion, growth and development 

of the coir industry, including export promotion and expansion 

of the domestic market. The Coir Board implements a number 

of schemes, which include assistance for participation in 

exhibitions, training for skill development and assistance under 

Mahila Coir Yojana, training, financial assistance for 

modernisation of existing units, undertaking R&D activities, etc. 

1.4.2 The estimated total turnover of coir and coir products in 2004- 

05 was Rs. 1900 crore. About 6.06 lakh persons are engaged 

in this industry. While the coir industry has deep roots in the 

State of Kerala, it is now also spreading to other coconut growing 

States like Tamil Nadu, Karnataka, Andhra Pradesh, Kerala, 

Orissa, Tripura, Goa, etc. 



1.4.3 Details of production of coir and coir products during the last 

three years are as under: 

(Quantity -MTs) 

Item 2002-03 2003-04 2004-05 

Coir Fibre 3,53,700 3,64,000 4,30,000 

Coir Yarn 2,26,800 2,32,500 2,80,000 

Coir Products 75,750 77,900 98,000 

Coir Rope 50,000 50,000 57,000 

Curled Coir 28,000 29,500 38,000 

Rubberised Coir 50,250 51,000 64,000 

1.4.4 During 2004-2005, a total quantity of 122926.79 MTs valued at 

Rs. 473.40 crore was exported, as against the total quantity of 

1,02,253 MTs valued at Rs. 407.49 crore during 2003-04. The 

exports during 2004-05 thus recorded a growth of 16.81 per 

cent in quantity and 16.17 per cent in value over those during 

4


2003-04. This is the highest ever export figure for the coir 

industry. During 2005-06 (up to January 2006), as per 

provisional estimates, a total quantity of 108041 MTs of coir 

and coir products valued at Rs. 406.27 crore were exported as 

against 98333 MTs valued at Rs. 394.22 crore exported during 

the same period of 2004-05. 

1.5.0 EMPLOYMENT GENERATION SCHEME BEING 

IMPLEMENTED BY THE MINISTRY 

1.5.1 The Ministry of Agro and Rural Industries (ARI) implements 

two nation-wise employment generation programmes, namely, 

Rural Employment Generation Programme (REGP) and Prime 

Minister’s Rozgar Yojana (PMRY). Both these programmes are 

credit-linked subsidy schemes which are implemented through 

commercial banks. While the REGP is implemented by the 

KVIC, the PMRY is implemented by the State Governments 

through the District Industries Centres (DICs). Recognising the 

importance of village industries, the Planning Commission has 

earmarked a target of generating 41.5 lakh additional 

employment opportunities during the 10 th Five Year Plan. 



1.5.2 Under the Rural Employment Generation Programme 

(REGP), implemented by the KVIC, capital subsidy in the form 

of margin money is provided for setting up labour-intensive 

village industries in rural areas and small towns with population 

up to 20,000. The objective of this programme is to provide 

productive employment to the people in these areas, thereby 

also help reduce migration from the rural to urban areas. 

1.5.3 Under the REGP, 2,09,705 units have been set up and 28.06 

lakh additional job opportunities created since its inception in 

1995 up to March 2005. Of these, approximately 12.4 per cent 

of the projects have benefited persons from the scheduled 

5


castes, 5.7 per cent from the scheduled tribes and 23.8 per 

cent from the OBC. The percentage of women entrepreneurs 

securing gainful employment under the programme is about 

25.8 per cent. During 2004-05, against the target of 5.25 lakh 

under the REGP, 5.30 lakh employment opportunities were 

generated, thus recording a 12.5 per cent growth as compared 

with that during 2003-04 (4.71 lakh against the target of 

generating 5 lakh job opportunities). During 2005-06 (up to 

January 2006), 14808 projects have already been set up, 

generating 3.33 lakh additional employment opportunities, as 

against the target of creation of 5.50 lakh. 



Minister of SSI & ARI Shri Mahabir Prasad, reviewing the progress 

of the KVI programmes at Mumbai. 

1.5.4 Prime Minister’s Rozgar Yojana (PMRY) was started in 

1993 with the objective of making available institutional 

finance to the educated unemployed youth for setting up 

self employment ventures for all economically viable activities 

and creating new employment opportunities in both rural and 

urban areas of the country. A number of modifications have 

been made in this scheme since its beginning in 1993 to 

make it more effective. These include increase in the upper 

age limit from 35 years to 45 years for SCs/STs, ex- 

6


servicemen, women and physically disabled persons, 

reducing the minimum educational qualifications, enhancing 

the annual family income ceiling and project size of industry 

and service projects, relaxation of residency criteria for 

married women applicants, enhancing subsidy for 

beneficiaries of the N.E. States, etc. 

1.5.5 Under the PMRY, loans have been disbursed to 22.80 lakh 

self-employment ventures since its inception to 31 March 2005, 

leading to estimated employment generation for 34.20 lakh 

persons. Of these, 15.37 per cent were from the SCs and STs, 

20.33 per cent from the OBCs and about 12 per cent from 

women. As per the data made available by the RBI, there was 

significant improvement in the implementation of the yojana in 

2004-05 as compared with that during 2003-04. Thus, while 

an estimated 3.29 lakh employment opportunities were 

generated during 2003-04, in the year 2004-05 (up to November 

2005) an estimated 3.56 lakh such opportunities were 

generated. The final figure is likely to be higher. As per the 

latest information received from the RBI, during 2005-06 (up to 

November 2005), 99204 cases have been sanctioned, of which 

loans have been disbursed in 56812 cases. 



1.6.0 TENTH PLAN OUTLAY 

1.6.1 The total Tenth Plan outlay for the Ministry of Agro and Rural 

Industries is Rs. 2950 crore. During first three years of the Tenth 

Plan, an expenditure of Rs. 1186.03 crore was incurred and 

Rs. 871.52 crore have allocated for 2005-06, at the Revised 

Estimates (RE) stage. During 2004-05, against the Plan budget 

provision of Rs. 700 crore (RE) for the Ministry, an amount of 

Rs. 695.98 crore (99.4 per cent) was utilised. This is the highest 

percentage utilisation recorded in any year since the beginning 

of the Tenth Plan. Further, Plan outlay of Rs. 967 crore has 

7


been approved in the Budget Estimates (BE), 2006-07. Thus 

the actual outlay for the Tenth Plan would finally be more than 

what was envisaged at the beginning. 

1.6.2 A summary of the outlays and actual utilization of Plan funds is 

given below: 

(Rs. crore) 

Sr. Name of the Tenth Plan 2002-03 2003-04 2004-05 2005-06 2006-07 

No. Organisation/ (2002-07) (actual) (actual) (actual) (RE) (BE) 

Scheme 

1. KVIC 2080.00 340.55 423.60 460.99 560.82 592.93 

2. Coir Board 115.00 13.77 14.52 16.80 35.51 23.00 

3. PMRY 755.00 168.10 168.01 218.19 273.69 325.10 

4. Others – 

Scheme of - - - 1.50 25.97 

Fund for 

Regeneration 

of Traditional 

Industries 

(SFURTI) 

Total 2950.00 522.42 606.13 695.98 871.52 967.00 



1.7.0 NATIONAL COMMON MINIMUM PROGRAMME 

(NCMP) 

1.7.1 In the NCMP, it has been declared that the UPA Government 

will revamp the functioning of the Khadi and Village Industries 

Commission (KVIC) and launch new programmes for the 

modernisation of coir, handlooms, powerlooms, garments, 

rubber, cashew, handicrafts, food processing, sericulture, wool 

development, leather, pottery and other cottage industries. The 

Government has taken the following initiatives for fulfilment of 

these NCMP declarations: 

1.7.2 REVAMPING OF THE KHADI AND VILLAGE 

INDUSTRIES COMMISSION 

Considering the steep decline in employment in the khadi sector 

and also the declaration made in the National Common 

8


Minimum Programme (NCMP) to revamp KVIC, the 

Government dissolved the Commission in October 2004 and 

constituted a ten-member Expert Committee (EC) in December 

2004 to recommend suitable measures for its revamping, after 

reviewing the structure, functioning and performance of the 

KVIC in the existing Act. This Committee submitted its report 

in April 2005. 

After carefully considering the recommendations of the EC, 

the Government introduced the Khadi and Village Industries 

Commission (Amendment) Bill, 2005 in Lok Sabha on 

22.08.2005 to suitably amend the existing Khadi and Village 

Industries Commission Act, 1956, so that the statutory 

provisions governing the organisational structure and functions 

of the KVIC could be made more professional and in keeping 

the present requirements. The Bill was referred to the 

Department-Related Parliamentary Standing Committee 

(DRPSC) on Industry for examination and report. The DRPSC 

submitted its report to Parliament on 13 December 2005. 

The KVIC (Amendment) Bill, 2005 was considered and passed 

by the Lok Sabha on 27 February 2006 alongwith the official 

amendments (based on the accepted recommendations of the 

DRPSC). The Rajya Sabha considered and passed the Bill on 

11 March 2006. 



1.7.3 SCHEME OF FUND FOR REGENERATION OF 

TRADITIONAL INDUSTRIES (SFURTI) 

In pursuance of the NCMP declaration and the announcement 

of Finance Minister in his Budget speech of July 2004, the 

Government has approved a scheme titled the “Scheme of Fund 

for Regeneration of Traditional Industries” (SFURTI), for the 

integrated development of traditional clusters of khadi, coir and 

village industries, including leather and pottery. It is proposed 

9


His Excellency President of India Shri APJ Abdul Kalam presenting Awards for 

2004-05 at National Award function held at New Delhi on 28th Oct. 2005 



to take up development of hundred clusters (25 khadi, 50 village 

industries and 25 coir) over the next five years (beginning 2005- 

06). For implementation of the scheme, a detailed office 

memorandum has been issued on 03.10.2005. The Nodal 

Agencies (KVIC and Coir Board) have been requested to submit 

proposals to the Ministry for development of clusters under 

SFURTI. So, far 50 cluster development proposals (khadi 25, 

village industries 9 and coir 16) have been received. These 

proposals are being considered by the Ministry. 

1.8.0 DISTRIBUTION OF AWARDS TO THE BEST 

PERFORMING KHADI AND VILLAGE 

INDUSTRIES INSTITUTIONS, SMALL-SCALE 

INDUSTRIES AND COIR INDUSTRIES 

The annual National Convention on Small, Agro and Rural 

Industries and Award Ceremony, 2005 was held at Hotel 

Ashoka, New Delhi on 28 October 2005. His Excellency Shri. 

10


A.P.J. Abdul Kalam, President of India, distributed 96 awards 

to the best performing khadi and village industries institutions, 

small-scale industries and coir industries. This was the first 

composite National Convention for small scale and agro and 

rural industries. 



11

KHADI AND VILLAGE INDUSTRIES 

SECTOR / KVIC 

2.1.0 INTRODUCTION 

Chapter 

2 



2.1.1 The Khadi & Village Industries Commission (KVIC) under the 

Khadi and Village Industries Commission Act, 1956 (61 of 

1956), is a statutory organization engaged in promoting and 

developing khadi and village industries for providing 

employment opportunities in the rural areas, thereby 

strengthening the rural economy. 

2.1.2 It took over the activities from the erstwhile All India Khadi and 

Village Industries Board on 01 April 1957. 

2.1.3 The KVIC has been identified as one of the major 

organisations in the decentralised sector for generating nonfarm 

employment opportunities in the rural areas at low per 

capita investment. 

2.2.0 MAIN OBJECTIVES 

2.2.1 The KVIC through its programems and policies seeking to 

achieve following objectives: 

• The social objective of providing employment in rural areas; 

• The economic objective of producing saleable articles; and 

• The wider objective of creating self-reliance amongst the 

people and building up a strong rural community spirit. 

12


2.3.0 FUNCTIONS 

The functions of KVIC as prescribed under the KVIC Act, 

1956 (No. 61 of 1956) and Rules made thereunder are as 

follows: 

(i) 

(ii) 

(iii) 

(iv) 

(v) 

(vi) 

(vii) 

to plan and organise training of persons employed or 

desirous of seeking employment in khadi and village 

industries; 

to build up reserves of raw materials and implements 

and supply them to persons engaged or likely to be 

engaged in production of handspun yarn or khadi or 

village industries at such rates as the Commission may 

decide; 

to encourage and assist in the creation of common 

service facilities for the processing of raw materials or 

semi-finished goods and for otherwise facilitating 

production and marketing of khadi or products of village 

industries; 

to promote the sale of khadi or products of village 

industries or handicrafts and for this purpose forge links 

with established marketing agencies wherever necessary 

and feasible; 

to encourage and promote research in the technology 

used in khadi and village industries, including the use of 

non-conventional energy and electric power with a view 

to increasing productivity, eliminating drudgery and 

otherwise enhancing their competitive capacity and to 

arrange for dissemination of salient results obtained from 

such research; 

to undertake directly or through other agencies studies 

of the problems of khadi or village industries; 

to provide financial assistance to institutions or persons 

engaged in the development and operation of khadi or 



13




village industries and guide them through supply of 

designs, prototypes and other technical information for 

the purpose of producing goods and services for which 

there is effective demand in the opinion of the 

Commission; 

(viii) to undertake experiments or pilot projects which in the 

opinion of the Commission are necessary for the 

development of khadi and village industries; 

(ix) to establish and maintain separate organisations for the 

purpose of carrying out any or all of the above matters; to 

promote and encourage cooperative efforts among the 

manufacturers of khadi or persons engaged in village 

industries; 

(x) to ensure genuineness and to set up standards of quality 

and ensure that products of khadi and village industries 

do conform to the said standards, including issue of 

certificates or letters of recognition to the concerned 

persons; and 

(xi) to carry out any other matter incidental to the above. 

2.4.0 ORGANISATIONAL SET UP 

2.4.1 The Central Office of the KVIC is at Mumbai with one Zonal 

Office at Guwahati and 29 State Offices. Functional directorates 

have been constituted to coordinate the functions like training, 

marketing, accounts, khadi, economic research, Rural 

Employment Generation Programme, etc. 

2.4.2 The KVIC also undertakes training activities through its 43 

departmental and non-departmental training centers. Marketing 

is taken up through its 12 departmentally run Khadi Gramodyog 

Bhawans and 7050 institutional sales outlets located in different 

part of the country. Six sliver plants provided quality raw material 

to khadi institutions. 

14


2.5.0 IMPLEMENTING AGENCIES 

2.5.1 Khadi and Village Industries (KVI) programmes are 

implemented through 5549 registered institutions, cooperative 

societies, 33 State/Union Territories (UTs) Khadi and Village 

Industries Boards (KVIBs) and 27 public sector banks, their 

regional rural banks and a few selected cooperative banks. 

2.5.2 The Khadi programme is implemented through institutions 

registered either with the KVIC or the State KVIBs. 

2.5.3 In the case of village industries, the KVIC implements the Rural 

Employment Generation Programme (REGP). 

2.6.0 GROUP OF INDUSTRIES 

2.6.1 While the khadi programme comprises hand spun and hand 

woven cotton, woollen, muslin and silk varieties, the village 

industries programmes have been classified into seven broad 

groups. These are: 

(i) Mineral Based Industry; 



(ii) 

(iii) 

(iv) 

(v) 

(vi) 

(vii) 

Forest Based Industry; 

Agro and Rural Industry; 

Polymer and Chemical Based Industry; 

Rural Engineering and Bio Technology; 

Hand Made Paper & Fibre Industry; 

Service Industry. 

2.6.2 Industries connected with meat (slaughter) i.e. processing, 

canning and/or serving items made of it, production/ 

manufacturing or sale of intoxicant items like beedi/pan/cigar/ 

cigarette, etc., any hotel or dhaba or sales outlet serving liquor, 

15


preparation/producing tobacco as raw materials, tapping of 

toddy for sale, manufacturing of polythene carry bags of less 

than 20 microns thickness and manufacturing of carry bags or 

containers made of recycled plastics for storing, carrying, 

dispensing or packaging of food-stuff etc. are not assisted under 

KVI programme as these are against the ideology and ethos of 

Mahatma Gandhi. 

2.7.0 BUDGETARY SUPPORT TO KVIC 

2.7.1 The Government of India provides funds for the activities of 

the KVIC under Plan and Non-Plan heads,. 



2.7.2 These funds are provided primarily by way of grants and loans 

and in turn KVIC re-allocates them to implementing agencies, 

namely the State KVIBs, institutions registered under the 

Societies Registration Act. 1860 and cooperative societies 

registered under the Cooperative Acts of the State 

Governments implementing banks, etc. The Commission’s 

administrative expenditure including pension payment, is met 

out of Government budgetary support. 

2.7.3 The details of funds provided from Budgetary Source (both under 

Plan and Non-plan) during the 10 th plan period are as under: 

(Rs. crore) 

BUDGET 

YEAR ALLOCATION (RE) FUND RELEASED 

Plan Non- Plan Plan Non- Plan 

2002-2003 394.67 84.87 340.55 83.36 

2003-2004 444.75 83.75 423.60 63.70 

2004-2005 462.00 84.91 695.98 83.90 

2005-2006 560.82 84.82 475.95 68.93 

2006-2007 592.93 84.82 - - 

* Released as on 31 January 2006 

16


Minister of SSI & ARI Shri Mahabir Prasad, interacting with the officials 

of KVIC / State Govt. Officials. 



A view of deliberations of the Departmental Related Parliamentary 

Standing Committee on Industry 

2.8.0 PHYSICAL PERFORMANCE OF THE KVI SECTOR 

2.8.1 The KVI sector recorded an improved performance during 2004- 

05 in comparison to the previous year. There was a growth of 

1.77 per cent in terms of value of production and 5.24 per cent 

in terms of sales in the khadi sector while the growth in terms 

of value of production and sales have been 13.33 per cent and 

13.64 per cent, respectively in the VI sector. 

17


2.8.2 Thus the total KVI production (current prices, as estimated by 

KVIC) stood at Rs. 10920.43 crore in 2004-2005 as against 

Rs. 9681.77 crore in 2003-2004, reflecting an increase of 12.79 

per cent. Similarly, sales of KVI products increased to 

Rs.13105.19 crore as compared to Rs. 11575.21 crore, 

registering a growth of 13.22 per cent during 2004-05. 

2.8.3 The total employment in the KVI sector is estimated to have 

increased to 76.78 lakh in 2004-2005 as against the previous 

year’s level of 71.19 lakh, registering a growth of 7.85 per cent. 

2.8.4 The total KVI production during 2005-06 (up to January 2006) 

is estimated at Rs. 9150.65 crore as compared to Rs. 8461.49 

crore in 2004-05 (up to January 2006), registering a growth of 

8.14 per cent. Sales increased to Rs. 11140.76 crore in 2004- 

05 (up to January 2006) as compared with Rs. 10,982.05 crore 

during the corresponding period of 2004-05, reflecting a growth 

of 1.4 per cent. 



2.8.5 Total employment in KVI sector is estimated to have increased 

to 80.16 lakh in 2005-2006 (up to January 2006) as compared 

with 74.01 lakh persons during the corresponding period of 

2004-05, registering a growth of 8.3 per cent. 

2.9.0 MAJOR SCHEMES BEING IMPLEMENTED BY 

KVIC 

2.9.1 RURAL EMPLOYMENT GENERATION 

PROGRAMME 

The Rural Employment Generation Programme(REGP), is 

implemented by the KVIC to generate more employment 

opportunities in rural areas, thereby reducing the rural - urban 

migration. Under REGP capital subsidy in the form of margin 

money is provided for setting up labour-intensive projects in 

18


rural areas as well as in small towns with population up to 

20,000. Details of the REGP are given in Chapter III. 

2.9.2 INTEREST SUBSIDY ELIGIBILITY CERTIFICATION 

(ISEC) SCHEME 

The Interest Subsidy Eligibility Certificate (ISEC) Scheme is 

the major source of funding for the khadi programme. It was 

introduced in May 1977 to mobilize funds from banking 

institutions to fill the gap in the actual fund requirement and its 

availability from budgetary sources. 

Under the ISEC Scheme, credit at the concessional rate of 

interest of 4 per cent p.a. for capital expenditure as well as 

working capital is given as per the requirement of the 

institutions. The difference between the Actual Lending Rate 

and 4 per cent is paid by the Central Government through KVIC 

to the lending bank and funds for this purpose are provided 

under the khadi grant head. 

Institutions registered with the KVIC/State Khadi and Village 

Industries Boards (KVIBs) can avail of financing under the 

ISEC scheme. Initially, the entire KVI sector was covered, 

but with the introduction of REGP for village industries (VI), 

the ISEC scheme now supports only the khadi and the 

polyvastra sector. However, all V.I. units existing on 31.03.95, 

have been allowed to avail of this facility for the amount of 

bank finance availed as on that date or actuals, whichever is 

less and funds for this purpose are provided under the VI 

grant head. 



The Institutions were able to improve their credit situation during 

the year under report. The credit flow to the institutions under 

the scheme during 2002-03 to 2004-05 were Rs. 329.73 crore, 

Rs. 362.70 crore and Rs. 278.74 crore and subsidy provided 

19


by the Government through KVIC were Rs. 21.99 crore, 

Rs. 18.77 crore and Rs. 26.09 crore respectively. Interest 

Subsidy Eligibility Certificates worth Rs. 469.01crore have been 

issued up to January 2006 to meet part of their working capital 

requirement during 2005-06. 

2.9.3 REBATE SCHEME 

Rebate on sales of khadi and khadi products is made available 

by the Government so as to make the price of khadi competitive 

with other textiles. Normal rebate all over the year and an 

additional special rebate for 108 days is given to the customers 

from funds available through budgetary support of the Ministry 

of ARI under the Khadi Grant head. 



Rebate is allowed only on the sales made by institutions/centres 

run by the Khadi and Village Industries Commission, the Khadi 

and Village Industries Boards and also at the sales centers run 

by the registered institutions who are engaged in the production 

of khadi and polyvastra. 

Under Rebate Scheme, the KVIC during the years 2002-03, 

2003-04 and 2004-05 released Rs. 111.84 crore, Rs. 81.99 crore 

and Rs. 81.18 crore respectively. In the year 2005-06, Rs. 76.81 

crore has already been released towards rebate till January 2006. 

2.9.4 PRODUCT DEVELOPMENT, DESIGN 

INTERVENTION AND PACKAGING (PRODIP) 

The Product Development, Design Intervention and Packaging 

(PRODIP) scheme was launched in November 2002 with a 

view to improve the quality of khadi products and also to 

diversify into new products. The scheme envisages 

improvement in product quality, introducing new designs and 

better packaging of products. 

20


The scheme has gained acceptance as would be evident 

from the progress achieved so far. During 2003-04 and 2004- 

05, 121 projects and 69 projects were sanctioned under 

PRODIP. During 2005-06, a target of 195 projects has been 

set up under PRODIP against which 177 projects have also 

been sanctioned under KVI Sector till January 2006. 

Secretary (SSI & AIR) Shri Anupam Dasgupta having a view of new & innovative 

products displayed by artisans / REGP entrepreneurs 



Products by REGP entrepreneurs 

21


2.9.5 RURAL INDUSTRIES SERVICE CENTERS (RISC) 

The KVIC is implementing the Rural Industries Service Centers 

(RISC) Scheme from 2004-05 onwards to provide infrastructural 

support and services to units to upgrade their production 

capacity, skill upgradation and market promotion. RISC inter 

alia provides for: 

• testing facilities by establishing laboratory to ensure 

quality of the products. 

• improved machinery/equipment to be utilised as 

common utility facilities by the nearby units /artisans to 

enhance production capacity or value addition of the 

product 

• attractive and appropriate packaging facilities and 

machineries to the local units/artisans for better marketing 

of their products. 



• training facilities to upgrade artisans’ skills in order to 

increase their earnings. 

• new design or new product, diversified product in 

consultation with experts /agencies for a value addition 

of rural manufacturing units. 

This scheme implemented through KVIC/KVIBs, National level/ 

State level Khadi and VI Federations, Khadi and VI Institutions 

affiliated to KVIC and KVIBs and NGOs who have already 

worked in the implementation of programmes relating to rural 

industries. 

Under this scheme, financial assistance for establishing 

projects up to Rs.5 lakh is provided to KVI units. Each RISC 

programme up to Rs.5 lakh should provide benefit to 25 

individuals. 

22


Under the RISC programme, 3 projects have been 

sanctioned for which Rs. 15.00 lakh have been released by 

the KVIC to its implementing agencies by the end of January 

2006. 

2.9.6 JANASHREE BIMA YOJANA 

To provide insurance cover to Khadi artisans, a scheme of 

group insurance in the name of Janashree Bima Yojana (JBY) 

was launched with effect from 15 August 2003. Under this 

scheme, about 3.90 lakh artisans are to be covered during 

10 th Plan period. 

This scheme has been formulated by Life Insurance of India 

(LIC) with annual premium of Rs. 200/- per beneficiary would 

be shared as per the following details: 

“Rs. 100/- by Central Government Security Fund, Rs. 50/- by 

Khadi Institution and Rs. 25/- each by khadi artisan and KVIC/ 

GOI.” 



The compensation will be as under:- 

Natural death : Rs. 20,000/- 

Accidental death : Rs. 50,000/- 

Full permanent disability due to accident : Rs. 50,000/- 

Part permanent disability due to accident : Rs. 25,000/- 

2.34 lakh khadi artisans have already been covered under this 

scheme by December 2005. 

As an add on benefit, school going children of insured artisans 

between Class Nine to Twelve are also eligible to get a 

scholarship of Rs. 100/- per month up to two children. 

23


2.10.0 QUALITY CONTROL IN KHADI 

2.10.1 In order to increase the appeal of Khadi while maintaining its 

handcrafted quality, KVIC had a tie-up with the National Institute 

of Design (NID), Ahmedabad, Dastakar, Andhra Pradesh, IIT, 

Delhi, and Textiles Committee, Mumbai. The IIT, Delhi 

developed stiff and soft processing techniques as distinct 

characteristics for Khadi. The process was implemented as a 

pilot project at Kshetriya Shree Gandhi Ashram, Barabanki in 

U.P. Building on the success of the project, replication of such 

facilities as common facility centers in other parts of the country 

is also being done. 



2.10.2 The Memorandum of Understanding (MOU) signed between 

KVIC and the Textiles Committee, a statutory body under 

Ministry of Textiles has been continued in 2004-05. Under the 

MoU, facilities of their 13 laboratories situated across the 

country are being used for testing khadi and polyvastra. During 

2004-05, 1500 khadi institutions took the benefit of this 

arrangement and about 2000 cloth samples were tested on 

cost sharing basis as 75 per cent of testing charges borne by 

the KVIC and 25 per cent by the khadi institutions. Under the 

arrangement, the quality of khadi would receive a fillip thus 

further increasing its marketability. 

2.11.0 EXHIBITIONS 

Apart from promoting sales through a network of Khadi 

Gramodyog Bhavans, effort has also been made to organise a 

number of exhibitions, conducted in different parts of the 

country. Exhibitions considered as a cost effective publicity and 

market promotion instrument. In 2004-05, special efforts were 

made to oragnise such exhibitions in different places and 229 

exhibitions have been organised in various parts of the country 

in 2004-05. During 2005-06 under report KVIC has already 

24


organised 62 exhibitions (up to January 2006) in various parts 

of the country. 

2.12.0 GOVERNMENT SUPPLY 

2.12.1 The KVIC has been executing supply of its products under Rate 

Contract of Director General of Supplies and Disposal (DGS 

&D) to various Government Departments/Agencies. 

2.12.2 Based on DGS&D rate contract, items like dasuti khadi, dungari 

cloth, dusters, long cloth, bunting cloth and sheeting cloth, etc., 

are being supplied to Government Agencies and bed rolls, 

curtains, pillow covers, kulhars, etc. to Railways. In 2004-05 

supplies worth Rs. 22.03 crore were made under DGS&D. 

During 2005-06 (up to January 2006), supply worth Rs. 11.51 

crore has already been made. 

2.12.3 During 2005-06 (up to January 2006), KVIC has received orders 

of khadi/polyvastra bed-sheets worth Rs. 3.26 crore from 

Railway. Against this, bed sheets worth Rs. 1.86 crore have 

already been supplied. 



2.13.0 RESEARCH AND DEVELOPMENT 

2.13.1 The KVIC undertakes research and development activities 

through in-house research and also by sponsoring projects to 

other R&D orgainsations. The main objectives of the S&T 

programme are: 

(i) 

(ii) 

(iii) 

(iv) 

(v) 

Increase in productivity, 

Increase in wages, 

Improvement in quality 

Efficient use of local skills and local raw materials, 

Reduction of human drudgery 

25


2.13.2 EXISTING INFRASTRUCTURE 

The following institutions exist in KVI Sector: 

Jamnalal Bajaj Central Research Institute (JBCRI) now 

renamed as Mahatma Gandhi Institute for Rural Industrialization 

(MGIRI), Wardha, Central Bee Research and Training Institute 

(CBRTI), Pune, Dr. Ambekar Institute of Rural Technology and 

Management (AIRTM), Nashik, Kumarappa National 

Handmade Paper Institute (KNHPI), Sanganer, Jaipur, Central 

Village Pottery Institute (CVPI), Khanapur, Karnataka, Khadi 

Gramodyog Prayog Samiti (KGPS), Ahmedabad. 

2.13.3 REVAMPING OF JBCRI, WARDHA 



An agreement was signed between KVIC and IIT, Delhi, to 

revamp JBCRI, Wardha (now known as Mahatma Gandhi 

Institute for Rural Industrialization (MGIRI) and convert it into 

an autonomous body under the Ministry of ARI. The vision 

envisaged is “To upgrade and accelerate the process of rural 

industrialization of our country so that we can move towards 

the Gandhian vision of sustainable village economy, and the 

products of the KVI sector can have its pride of place amongst 

the large industrial sector and become popular in the country 

and abroad”. The revamping of the MGIRI is being carried out 

by IIT, Delhi. The Planning Commission has already given “in 

principle” approval to the proposal and the meeting for 

consideration of this proposal would be held shortly. 

2.13.4 MOU WITH TECHNICAL INTERFACE INSTITUTES 

2.13.4.1 The KVIC has built up a large network of rural cottage 

industrial units producing a wide range of goods and 

articles catering the rural and partly urban markets. 

Some of them have achieved high standards for 

26


export as well but majority of them lack support in 

maintaining standard quality for want of technical 

Back-up to upgrade the quality of their products. 

Keeping this in view, KVIC has set up Technical Back 

Up Units which will provide S&T inputs to the 

entrepreneurs engaged in KVI activities. 

A view of signing ceremony of MOU’s with technical institutions 



2.13.4.2 The KVIC has also undertaken certain activities in 

various outsourcing interfaces at Engineering and 

Technological institutes of repute to meet perceived 

needs to make the products more marketable either 

through design interventions or quality assurance 

system. These are: 

(i) 

(ii) 

(iii) 

Vishweshwarayya National Institute of Technology 

(VNIT), Nagpur 

Birla Institute of Technology (BIT), Ranchi 

North Eastern Region Institute of Science and 

Technology (NERIST) 

27


(iv) 

(v) 

(vi) 

(vii) 

College of Technology and Engineering (CTAE) 

Udaipur. 

Indian Institute of Science (IISc), Bangalore 

Indian Institute of Technology (IIT) Roorkee 

National Institute of Technology(NIT) Rourkela 

(viii) Indian Institute of Technolgoy, Delhi 

(ix) 

(x) 

(xi) 

(xii) 

Indian Institute of Technology(IIT), Kanpur 

Indian Institute of Technology (IIT), Mumbai 

Indian Institute of Technology(IIT), Guwahati 

National Institute of Tehnology(NIT), Calicut 

(xiii) Quality Implementation Programme. 

2.13.5 RURAL INDUSTRIES CONSULTANCY SERVICE 

(RICS) 



2.13.5.1 The KVIC launched a Rural Industries Consultancy 

Service (RICS) in order to help the potential 

entrepreneurs for providing guidance for technical 

and managerial support to the prospective 

entrepreneurs which includes preparation of 

projects, Liaison with banks/other agencies/ 

organisation/local authorities in respect of the 

project, assistance and support to implement the 

project, procurement of raw materials, machineries, 

installation, etc., quality control for acceptability and 

reliability, packaging and design for better 

marketing, marketing support for sustainability of 

the unit, etc. 

2.13.5.2 As on 31 March 2005, 49 such RICS have been 

opened in various parts of the country and another 

25 are under process. 

28


2.14.0 OTHER INITIATIVES 

2.14.1 CATEGORISATION OF INSTITUTIONS 

To streamline the payment of rebate, release of interest subsidy, 

supply of raw materials, etc., khadi institutions are categorized 

as A+, A, B, C and D on the basis of their production, sales, 

marketing, etc. As on January 2006, the break up of 1860 

categorised khadi institutions is as under: 

S.No. Type A+ A B C D Total 

1. Affiliated to KVIC 106 285 318 302 224 1235 

2. Affiliated to State 

Boards 26 158 171 219 51 625 

Grand Total 132 443 489 521 275 1860 

2.14.2 KHADI ARTISANS WELFARE TRUST FUND 

(KAWTF) 

The KAWTF is conceptually meant to run on the lines of a 

provident fund. Membership is mandatory for all khadi and 

polyvastra producing institutions affiliated to KVIC and State 

KVIBs. Institutions categorized as A+, A, B and C are eligible 

to join the trusts. During the year 2004-05, 21 states have been 

covered under these trusts mobilizing the contributions of 

artisans and the institutions to the tune of Rs.171.25 lakh. 

Cumulatively the credit to the trusts added up to Rs.2359.00 

lakh up to 31.3.2005. KVIC has provided Rs.30.03 lakh as on 

31 March 2005 as grants to the ‘trust’ to meet part of the 

administrative expenditure. 



2.14.3 NATIONAL FLAG PRODUCTION CENTRE 

Khadi is the pride and joy of our nation and can be easily 

understood from the fact that the Bureau of Indian Standards 

(BIS) gave it the first place in 15 specification by way of national 

flag specification. As per BIS, khadi is the only fabric that is used 

29


for production of India’s national flag. One national flag production 

project has been started in consultation with South Indian Textile 

Research Association (SITRA) at Karnataka Khadi Gramodyog 

Samyukta Sangh, an NGO of KVIC at Bengeri, Hubli (Karnataka) 

at an estimated cost of Rs. 51.10 lakh. The first phase of the 

project was commissioned during 2004-05. BIS completed 

necessary formalities for giving the project clearance on 

specifications. The project would be fully commissioned in 2006- 

07 and would produce 5000 flags per day in different sizes. 

2.14.4 MISSION PROJECT FOR PRODUCTION OF 

“READY TO USE KHADI”. 



The KVIC has initiated a Ready to Use Mission for khadi products. 

Under the scheme, a major khadi institution will work as a lead 

institution where all modern facilities for production of garments 

including covering, designing, finishing, packaging, etc., will be 

installed. Other institutions (at least 9) working in the nearby 

area will be associated in a concentric manner with the activities 

of the lead institution. As a result, all of them will be able to 

upgrade their product quality by sharing their experiences and 

common facilities installed at the lead institution. National Institute 

of Fashion Technology is the technical consultant for the projects 

being set up under the scheme. KVIC has identified 5 mission 

projects for production of “Ready to use Khadi” in the country. 

During the year under report, 2 projects at Murshidabad (West 

Bengal) and Padiyur (Tamil Nadu) at a cost of Rs. 57.50 lakh 

each have already been started. NIFT Kolkata & Chennai have 

been enlisted to provide hand-holding support in the areas of 

design inputs, training, etc. 

2.14.5 CENTRAL SLIVER PLANTS 

2.14.5.1 As a step towards improving the quality of raw 

material and in order to enable the khadi institions 

30


to access these sources of quality raw material, 

KVIC continued to operate its 6 CSPs at Kuttur, 

Chitradurga, Sehore, Raibareilly, Etah and 

Hajipur. During the year 2004-05, the khadi 

institutions purchased slivers/rovings from these 

plants to the extent of 22.66 lakh kgs valued at 

Rs. 22.03 crore. 

2.14.5.2 During the year 2005-06 up to December 2005, 

17.51 lakh kgs of sliver amounting to Rs.15.60 crore 

was produced in 6 Central Sliver Plants and 16.66 

lakh kgs of sliver worth Rs.14.92 crore supplied to 

khadi institutions. 

2.14.6 SETTING UP OF RAW MATERIAL GODOWNS 

In order to facilitate continuous offtake of slivers/rovings by khadi 

institutions faced with resource crunch, the KVIC operated local 

godowns during the year 2004-05. At the end of 31.3.2005, 

the following 8 local raw material godowns provided the above 

service: 



1. Dausa – Rajasthan. 

2. Nanded – Maharashtra. 

3. Surendranagar – Gujarat. 

4. Bijnour - Uttar Pradesh. 

5. Wavilal - Andhra Pradesh. 

6. Metapalli, Karimnagar - Andhra Pradesh. 

7. Sangaralingapuram - Tamil Nadu. 

8. Murshidabad - West Bengal. 

2.14.7 PEOPLE EDUCATION PROGRAMME (PEP) 

As a part of its publicity programme aimed at informing the 

people through direct interaction between the KVIC on the one 

31


hand and people on the other, the KVIC during the year under 

report, held 175 PEP events at the field level. Besides 

dissemination of the policies and schemes of the KVIC on rural 

industrialization, essay competition, debate and seminars drew 

a good deal of participation from academic institutions, students 

Panchyati Raj Institutions, NGO’s, etc. on issues of topical 

interest concerning Khadi and Village Industries. The KVIC 

provides financial assistance for the purpose through budgetary 

allocation. 

2.14.8 MOU WITH ITC LTD. 



An MoU signed between KVIC and ITC Ltd. (Agarbatti 

Division) envisages marketing of “MANGLDEEP” Agarbatti 

manufactured by khadi and village industry units. The MoU 

envisages (i) one of the manufacturing units functioning as 

the nodal agency for quality assurance, perfuming and 

packaging of the product in accordance with ITC’s 

specifications and (ii) ITC buying the entire produce of 

agarbatties from these KVI units and undertaking their 

marketing through its own outlets and the outlets in KVI sector. 

It is expected that this MoU would be beneficial to the KVI 

units concerned by assured offtake of the product, additional 

marketing channels becoming available to the KVI units, 

promotion of the product as a distinct brand, expansion of 

production base resulting in employment generation a 

sustainable basis in the rural areas, etc. 

2.14.9 CREDIT GUARANTEE TRUST FUND FOR SMALL 

INDUSTRIES (CGTSI) 

Credit Guarantee Trust Fund for Small Industries (CGTSI) 

approved extension of the credit guarantee of loans advanced 

by banks under the KVIC/REGP schemes under its Credit 

Guarantee Fund Scheme. 

32


2.14.10 SYSTEM FOR PROGRAMME ANALYSIS AND 

REPORTING FOR KVIC (SPARK) 

The SPARK (System for Programme Analysis and Reporting 

for KVIC) software has been developed by KVIC for data 

collection and documentation of programmes being 

implemented by it. This will facilitate better analysis of 

programmes being implemented by KVIC for making KVI 

programmes more effective with its target group. 

2.15.0 REVAMPING OF KHADI AND VILLAGE 

INDUSTRIES COMMISSION 

2.15.1 In the National Common Minimum Programme, the 

Government has declared to revamp the Khadi and Village 

Industries Commission (KVIC). This has been necessitated 

because of the steep decline in employment in the khadi sector, 

nearly stagnant sales of khadi over the years, the need to take 

effective measures to introduce modern management practices 

in the KVIC and to make khadi and village industry products 

competitive in the globalised economy. Towards this objective, 

the Government dissolved the KVIC on 14 October 2004 and 

constituted a ten-member Expert Committee on 01 December 

2004 to review the existing structure, functioning and 

performance, etc., of the KVIC and recommend suitable 

measures for its revamping. The Expert Committee submitted 

its report on 06 April 2005. 



2.15.2. Among other things, the Expert Committee recommended 

amendments to the KVIC Act, 1956, mainly with regard to 

change in the composition of the Commission, provision of 

a consultative mechanism at the zonal level, provision for 

reconstitution of the Commission after dissolution, 

redefinition of the powers of Chief Executive Officer (CEO), 

KVIC, etc. 

33


2.15.3 To give effect to the accepted recommendations of the Expert 

Committee, a Bill was introduced in the Lok Sabha on 22 August 

2005 to amend the existing Khadi and Village Industries 

Commission (KVIC) Act, 1956 after it was approved by the 

Cabinet at its meeting of 04 August 2005. 

2.15.4 The said Bill was referred to Department-Related Parliamentary 

Standing Committee (DRPSC) on Industry for examination and 

report. The DRPSC submitted its report on 13 December 2005. 

Of the fourteen clauses in the Bill, the Committee recommended 

amendments to four clauses and adopted the remaining clauses 

without any change. These recommendations of the DRPSC 

were accepted with minor changes and were passed by both 

Houses of Parliament in February – March 2006. 

2.15.5 The KVIC (Amendment) Bill, 2005, as passed by both Houses 

of Parliament, seeks to- 



(a) 

(b) 

(c) 

(d) 

amend the existing fixed capital investment per head of 

an artisan or a worker under the definition of “village 

industry” from “fifteen thousand rupees” to “one lakh 

rupees” ; 

raise the fixed capital investment limit per head of an 

artisan or a worker to the tune of rupees one lakh fifty 

thousand for hilly areas and raising the population limit 

for small town to twenty thousand in the definition of “rural 

areas”; 

provide for requirement of ten years of experience in 

appropriate fields for appointment as a member of the 

Commission and also widen the fields of expertise for 

appointment as a member of the Commission; 

provide for four non-official expert members in the Khadi 

and Village Industries Commission for enhancing 

professional expertise in relevant fields; 

34


(e) make specific provisions for clearer demarcation of the 

functions and powers among the Commission, the Chief 

Executive Officer of the Commission and the Financial 

Adviser of the Commission ; 

(f) rename the Khadi and Village Industries Board under the 

KVIC Act, as “National Khadi and Village Industries Board” 

and provide for regular meetings of the Board ; 

(g) confer voting rights on the ex-officio members of the 

Commission; 

(h) provide for constitution of Zonal Committees, its functions 

and meetings; 

(i) clarify that the Chairman and members of the Commission 

shall hold office at the pleasure of the Central Government 

which shall not exceed a continuous period of five years 

as such in the Commission; 

(j) make specific provisions for undertaking certain functions 

by the Commission through specified agencies; and 

(k) confer powers on the Central Government to re-establish 

the Commission after its dissolution. 

2.15.6 These suggested changes will not alter the basic objectives, 

powers and functions of the KVIC in the existing Act. In fact, it 

is expected that with these proposed changes, the KVIC will 

become more professional and relevant in time to come and 

shall be better equipped in the discharge of its key role in 

facilitating generation of sustainable and wide-spread 

employment in the rural areas of the country. 



35

RURAL EMPLOYMENT GENERATION 

PROGRAMME (REGP) 


The KVIC launched the Rural Employment Generation 

Programme (REGP) on 01 April 1995. 

Chapter 

3 



3.2.0 MAIN OBJECTIVES 

The main objectives of REGP are as under: 

• To generate employment in rural areas. 

• To develop entrepreneurial skills and aptitude among 

rural unemployed youth. 

• To achieve the goal of rural industrialization. 

• To facilitate participation of banks in the village industries 

sector so as to ensure higher credit flow to these 

industries. 

3.3.0 SALIENT FEATURES OF REGP 

• The programme is applicable to all village industry projects 

set up in rural areas. 

• The eligible beneficiaries under the programme are (i) 

individuals (rural artisans/entrepreneurs), ii) institutions, 

cooperative societies, trusts & Self Help Groups (SHGs) 

for projects costing upto Rs.25 lakh. 

36


• Partnership firms private/public limited companies, joint 

ventures, joint borrowers, co-obligators of HUF are not 

eligible. 

• The permissible margin money assistance is as detailed 

in the table below: 

Margin Money Assistance under REGP 

S. Category of Project cost Margin money 

No. beneficiary assistance 

1. General Up to Rs. 10 lakh 25 per cent of project cost 

Above Rs. 10 lakh Rs. 2.5 lakh plus 10 per 

and up to Rs. 25 cent of balance project 

lakh 

cost. 

2. SC/ST/OBC/ Up to Rs. 10 lakh 30 per cent of project cost 

Women/PH/ 

Ex-servicemen/ 

NE Region / 

Hill areas 

Above Rs. 10 lakh Rs. 3 lakh plus 10 per 

and up to Rs. 25 cent of balance project 

lakh cost. 

Note: SC/ST – Scheduled Caste/Scheduled Tribe; PH – Physically 

Handicapped: NE – North Eastern 

• 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 is 5 per cent of the project cost. 



• Banks will sanction loan of 90 per cent of the project cost 

in case of general category borrowers and 95 per cent of 

the project cost to the weaker section beneficiaries/ 

institutions. 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. 

37


3.4.0 DEFINITION OF “RURAL AREA” AND “VILLAGE 

INDUSTRIES” 

3.4.1 The term rural area has been defined as under: 

(i) 

(ii) 

Any area classified as a village as per the revenue records 

of the State, irrespective of population. 

Any area classified as a town, provided its population 

does not exceed 20,000 as per 1991 census. 

3.4.2 Similarly, the term “village industries” has been defined as 

“any industry located in a rural area which produces any 

goods or renders any service with or without the use of 

power and in which the fixed 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”. 



3.4.3 All activities which do not appear in the negative list 

circulated by KVIC are eligible for financing under the 

scheme. 

3.5.0 IMPLEMENTATION 

KVIC is implementing REGP through: 

• All Public Sector Banks, 

• All Regional Rural Banks, 

• Co-operative Banks approved by State/U.T Governments, 

KVIBs, Private Commercial Banks approved by the State 

KVIBs; and 

• Other Financing Institutions of State & Central 

Government as approved by KVIC. 

38




Products of the units of REGP beneficiary entrepreneurs 

3.6.0 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. 

39


3.7.0 ENTREPRENEURSHIP DEVELOPMENT 

PROGRAMME (EDP) 

Once the project is sanctioned by financing branch of the Bank, 

before releasing the second installment of loan, beneficiary is 

to be imparted a 3-day EDP training arranged by the State/ 

Regional Director. 

3.8.0 STATUS AND PROGRESS OF REGP 

3.8.1 Since the commencement of REGP, 2,09,705 projects have 

been financed and 28.05 lakh job opportunities have been 

created up to 31.03.2005. Keeping in view REGP’s potential, 

the Government revised the target of creating 20 lakh 

additional jobs to 25 lakh additional jobs during the 10 th Plan 

period. 



3.8.2 During 2004-05, against the target of generating 5.25 lakh 

additional job opportunities under Rural Employment 

Generation Programme (REGP), 5.30 lakh job opportunities 

have been generated, thus recording a 12.5 per cent growth in 

employment generation as compared to that during 2003-04 

(4.71 lakh against the target of generating 5 lakh job 

opportunities). The target for generating additional employment 

opportunities for 2005-06 and 2006-07 are 5.50 lakh and 5.90 

lakh, respectively. 

3.8.3 During 2005-06 (up to January 2006), 14808 projects have 

already been set up, generating 3.33 lakh additional 

employment opportunities as against the target of creation of 

5.50 lakh job opportunities. It has been reported that a number 

of projects are at sanction stage and it is expected that the 

target set under the programme would be achieved. 

40


3.8.4 The achievements during the 10 th Plan period are as under: 

Year Target for Employment Number Margin 

employment generated of projects money 

generation during year set up released 

(lakh persons) (lakh persons) (Rs. crore) 

2002-03 4.00 3.61 21024 193.71 

2003-04 5.00 4.71 24747 264.38 

2004-05 5.25 5.50 23454 292.36 

2005-06 5.50 3.33 14808 322.47 

(up to Jan. 06) 

3.8.5 CATEGORY- WISE DISTRIBUTION OF PROJECTS 

Under the REGP, 2,09,705 units have been set up since its 

inception to 31.03.2005. Of these, approximately 12.4 per 

cent of the projects have benefited persons from the 

Scheduled Castes, 5.7 per cent from Scheduled Tribes and 

23.8 per cent from OBCs, while 25.8 per cent have helped 

women entrepreneurs secure gainful employment. During 

2005-06, 14,808 number of projects sanctioned up to 

January 2005 under which the category-wise share are as 

under:- 



Sr. No. Category No. Projects Percentage 

1. Scheduled Castes 893 6.0 

2. Scheduled Tribes 984 6.7 

3. OBC 3143 21.3 

4. Minority Community 1900 12.8 

5. Ex-Servicemen / physically 226 1.5 

handicapped 

6. General 7662 51.7 

Total 14808 100 

Women 3972 26.8 

41


3.8.6 STATE-WISE PERFORMANCE OF REGP 

State-wise performance in respect of project sanctioned, margin 

money utilised and employment generated during 2005-06 are 

given at Table-I, Table-II and Table-III, respectively. 

3.8.7 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. These linkages include EDP 

Trainings, exhibitions of products manufactured by REGP 

entrepreneurs, district/state level workshops and awareness 

camps, identification of success stories and its dissemination, 

etc. An amount of Rs. 667.84 lakh have been released towards 

backward-forward linkages which has utilised for organizing 

55 workshops, 215 awareness camps and 40 exhibitions. 8712 

persons have under gone EDP training during the year 2005- 

06 (up to January 2006). 

3.9.0 OTHER INITIATIVES 

3.9.1 For better implementation of the REGP, the KVIC has taken 

the following initiatives: 

(i) 

(ii) 

(iii) 

decentralisation of the implementation of the scheme by 

making payment of margin money through State Offices 

and State KVI Boards; 

financing of units based on coir, as raw material allowed; 

financing of auto-rickshaws in Andaman and Nicobar 

Islands, house boat, shikara and tourist boat in Jammu 

and Kashmir also allowed under rural transport, keeping 

in view the special requirement of the State/UT: 

42


(iv) for providing information/guidance to the new 

entrepreneurs, REGP helping counters were opened 

in all the field offices of the KVIC and the State KVI 

Boards; 

(v) 10 per cent of the total budget under REGP allocated 

exclusively for the States of North Eastern Region; 

(vi) 40 per cent of the total target to be for the Agro & Food 

Based Industries in each State/Division/UT; 

(vii) 30 per cent of the total target to be from women 

entrepreneurs; 

(viii) self-help sroups (SHGs) also to be provided assistance 

under REGP Scheme; 

(ix) state level Task Force Committees constituted for better 

monitoring and implementation of REGP; 

(x) Rural Industries Consultancy Service Cells (RISCs) 

opened in 49 places so far for guiding and preparing 

projects for first generation entrepreneurs. Another 25 

RICS Cells in the process of being set up; 

(xi) 178 Training Centers identified for providing EDP training 

to REGP employment throughout the country; 

(xii) for placing margin money in advance with nodal branches 

of banks at state level, 214 nodal branches of public sector 

banks identified by state/divisional offices and 132 nodal 

branches of public sector banks identified by State/UT 

KVI Boards in the country; 

(xiii) funds provided to State/Divisional Offices for 

conducting awareness camps, workshops, and 

exhibitions, etc. as support services under backward - 

forward linkages. 50 per cent of the same allocated to 

State/UT KVI Boards; 

(xiv) 25 per cent of the stalls in each exhibition of REGP to be 

allotted for disadvantaged section beneficiaries including 

women beneficiaries; 



43


(xv) to mitigate the problems of the rural entrepreneurs, who 

are otherwise required to furnish collateral security for 

projects under REGP, coverage under Credit Guarantee 

Fund Trust for small industries (CGTSI) provided; 

(xvi) convergence with Army Wives Welfare Association (AWWA) 

to create awareness about REGP among ex-servicemen 

and war widows and also to provide the marketing support 

for its products in sales outlets of army cantonments; 

(xvii) Nehru Yuvak Kendra Sangthan (NYKS), which carries 

out self-development programme for Rural Youth through 

clubs to conduct awareness camps and entrepreneurs’ 

workshop for REGP amongst the Rural Youth with focus 

on SC/ST /minority and women category; 

(xviii) MoU signed by KVIC with Department of Women and 

Child Development, Ministry of HRD, New Delhi for 

convergence in the area of credit linkages, marketing tieup, 

etc., through SHGs for bettering the cause of SHGs 

and rural employment, etc. 



TABLE-I 

GROUPWISE PROJECTS SET UP UNDER REGP DURING 2005-06 ( UP TO JANUARY 2006) 

Sr. No. State/UT Food Forest HMP/FI MBI PCBI REBT Ser/ Tex Total 

Proc.& Based 

Agro Based Ind. 

NORTH ZONE 

1 UT Chandigarh 1 0 0 0 0 0 2 3 

2 Delhi 3 4 0 0 2 1 1 11 

3 Haryana 191 39 34 75 83 169 160 751 

4 Him.Pradesh 92 11 1 35 14 83 178 414 

5 Jammu& Kashmir 227 50 30 93 68 188 479 1135 

6 Punjab 240 12 10 106 29 75 150 622 

7 Rajasthan S.O 229 81 31 176 74 140 154 885 

8 Bikaner D.O 12 2 1 56 7 11 6 95 

TOTAL 995 199 107 541 277 667 1130 3916 

EAST ZONE 

9 A & N Islands 67 53 2 25 2 24 425 598 

10 Bihar 110 43 7 30 10 56 37 293 

44



Proc.& Based 

Agro Based Ind. 

11 Jharkhand 32 3 5 54 4 15 11 124 

12 Orissa 44 12 8 29 12 23 44 172 

13 West Bengal 516 186 61 285 118 348 394 1908 

TOTAL 769 297 83 423 146 466 911 3095 

N.E.ZONE 

14 Aru.Pradesh 15 12 0 7 0 3 14 51 

15 Assam 494 76 40 159 101 228 180 1278 

16 Manipur 2 3 0 3 0 5 2 15 

17 Meghalaya 18 19 3 19 5 4 29 97 

18 Mizoram 22 8 5 6 2 36 42 121 

19 Nagaland 17 5 2 4 2 16 54 100 

20 Tripura 23 5 9 8 7 15 44 111 

21 Sikkim 10 5 1 1 0 8 30 55 

TOTAL 601 133 60 207 117 315 395 1828 

SOUTH ZONE 

22 And.Pradesh S.O 296 78 28 330 97 226 302 1357 

23 Visakhapatnam D.O 8 9 4 48 4 9 8 90 

24 Karnataka 96 48 9 68 19 99 161 500 

25 Kerala 134 57 14 98 52 111 62 528 

26 Lakshadweep 0 0 0 0 0 0 0 0 

27 Pondicherry 15 0 0 5 0 5 11 36 

28 Tamilnadu (S.O.) 55 2 5 46 12 52 57 229 

29 Madurai D.O 32 2 3 6 1 6 16 66 

TOTAL 636 196 63 601 185 508 617 2806 

WEST ZONE 

30 Goa 35 0 0 19 12 18 49 133 

31 Gujarat 80 1 3 36 38 148 83 389 

32 Maharashtra S.O 220 34 32 112 73 146 75 692 

33 Nagpur D.O 4 3 3 5 2 5 7 29 

TOTAL 339 38 38 172 125 317 214 1243 

CENTRAL ZONE 

34 Chattisgarh 137 21 6 60 25 79 64 392 

35 Madhya Pradesh 71 14 8 46 15 46 28 228 

36 Uttaranchal 43 8 7 18 5 27 47 155 

37 Uttar Pradesh S.O 356 35 26 108 98 126 132 881 

38 Varanasi D.O 10 0 0 3 2 6 6 27 

39 Meerut D.O 73 13 6 34 15 50 35 226 

40 Gorakhapur D.O. 7 1 0 1 0 1 1 11 

TOTAL 697 92 53 270 160 335 313 1920 

G.TOTAL 4037 955 404 2214 1010 2608 3580 14808 



45


TABLE –II 

GROUPWISE M.M.UTILISATION UNDER REGP DURING 2005-06 

(UP TO JANUARY 2006) 

(Rs. lakh) 




Proc.& Based 

Agro Ind. 

Based 

NORTH ZONE 

1 UT Chandigarh 1.23 0.00 0.00 0.00 0.00 0.00 2.40 3.63 

2 Delhi 4.11 5.31 0.00 0.00 2.98 0.64 0.84 13.88 

3 Haryana 375.85 59.66 61.82 145.49 187.63 343.77 307.65 1481.87 

4 Him.Pradesh 153.78 15.74 0.23 54.59 18.32 125.06 168.24 535.96 

5 Jammu& Kashmir 183.96 38.38 23.44 76.93 53.94 146.63 332.62 855.90 

6 Punjab 243.85 14.47 25.62 98.08 46.76 130.17 146.25 705.20 

7 Rajasthan S.O 312.77 55.56 45.99 303.01 89.13 172.75 121.96 1101.17 

8 Bikaner D.O 31.39 6.00 0.95 157.07 18.45 26.03 13.30 253.19 

TOTAL 1306.94 195.12 158.05 835.17 417.21 945.05 1093.26 4950.80 

EAST ZONE 

9 A & N Islands 23.21 14.21 1.11 24.76 1.29 17.69 136.60 218.87 

10 Bihar 123.37 37.35 9.07 37.19 13.74 61.77 47.33 329.82 

11 Jharkhand 52.59 5.92 11.20 87.13 3.60 20.57 16.73 197.74 

12 Orissa 50.68 13.87 9.15 35.23 14.51 33.63 43.78 200.85 

13 West Bengal 485.93 89.56 62.99 275.69 112.32 343.85 240.41 1610.7 

TOTAL 735.78 160.91 93.52 460.00 145.46 477.51 484.85 2558.03 

N.E. ZONE 

14 Aru.Pradesh 27.50 19.88 0.00 13.51 0.00 7.88 23.19 91.96 

15 Assam 497.32 81.22 42.47 157.85 102.70 231.95 167.67 1281.18 

16 Manipur 0.75 2.10 0.00 1.64 0.00 2.70 0.75 7.94 

17 Meghalaya 26.04 22.40 3.85 32.94 3.29 0.95 26.19 115.66 

18 Mizoram 41.72 16.10 11.13 9.77 3.47 44.49 62.53 189.21 

19 Nagaland 19.88 4.93 2.80 4.02 2.06 17.20 49.38 100.27 

20 Tripura 24.15 5.95 3.90 9.17 9.82 16.20 44.61 113.80 

21 Sikkim 12.68 8.80 1.29 2.15 0.00 10.35 23.21 58.48 

TOTAL 650.04 161.38 65.44 231.05 121.34 331.72 397.53 1958.50 

SOUTH ZONE 

22 And.Pradesh S.O 417.68 127.80 53.65 476.79 166.93 345.81 364.23 1952.89 

23 Visakhapatnam D.O 22.17 25.30 8.90 138.79 9.90 25.91 18.50 249.47 

24 Karnataka 116.76 58.00 11.42 84.11 27.78 128.39 182.47 608.93 

25 Kerala 190.13 89.18 25.22 172.31 90.74 173.12 110.15 850.85 

26 Lakshadweep 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

27 Pondicherry 2.59 0.00 0.00 0.55 0.00 0.62 1.89 5.65 

28 Tamilnadu (S.O.) 64.19 2.17 7.29 58.53 15.06 61.69 66.78 275.71 

29 Madurai D.O 27.27 1.58 2.91 5.99 0.52 8.73 19.25 66.25 

TOTAL 798.25 296.94 102.57 915.80 296.75 715.91 741.71 4009.75 

46



Proc.& Based 

Agro Ind. 

Based 

WEST ZONE 

30 Goa 25.75 0.00 0.00 14.75 9.20 12.80 39.89 102.39 

31 Gujarat 138.68 2.72 8.04 63.28 87.45 213.55 53.43 567.15 

32 Maharashtra S.O 544.33 59.95 67.69 213.01 141.14 283.56 106.63 1416.31 

33 Nagpur D.O 3.79 3.84 3.36 8.24 5.11 12.04 11.00 47.38 

TOTAL 712.55 66.51 79.09 299.28 242.90 521.95 210.95 2133.23 

CENTRAL ZONE 

34 Chattisgarh 286.97 41.27 11.86 131.73 51.69 155.91 83.75 763.18 

35 Madhya Pradesh 175.96 37.13 19.32 122.34 34.19 95.59 62.58 547.11 

36 Uttaranchal 69.31 12.79 11.93 37.23 10.61 47.65 69.38 258.90 

37 Uttar Pradesh S.O 539.29 43.76 35.87 171.48 137.76 184.32 175.53 1288.01 

38 Varanasi D.O 22.81 0.00 0.00 7.23 3.30 12.12 12.72 58.18 

39 Meerut D.O 143.68 25.16 12.72 73.63 27.85 104.99 72.78 460.81 

40 Gorakhapur D.O. 14.75 1.25 0.00 2.10 0.00 2.59 1.00 21.69 

TOTAL 1252.77 161.36 91.70 545.74 265.40 603.17 477.74 3397.88 

G.TOTAL 5456.33 1042.22 590.37 3287.04 1489.06 3595.31 3406.04 19008.19 

TABLE III 

GROUPWISE EMPLOYMENT OPPORTUNITIES GENERATED UNDER REGP 

DURING 2005-06 ( UP TO JANUARY 2006) 

(Empl. : No of persons) 

Sr. No. State/UT Food Forest HMP MBI PCBI REBT Ser/ Tex Total 

Proc.& Based /FI 

Agro 

Based Ind. 



NORTH ZONE 

1 UT Chandigarh 16 0 0 0 0 0 20 36 

2 Delhi 30 34 0 0 21 9 12 106 

3 Haryana 4453 795 784 3078 1369 4024 3810 18313 

4 Him.Pradesh 1760 242 3 1242 170 2353 3239 9009 

5 Jammu& Kashmir 3014 576 378 1352 766 2217 5229 13532 

6 Punjab 5441 483 395 2437 1090 2838 3484 16168 

7 Rajasthan S.O 5307 955 822 6926 1237 2970 2464 20681 

8 Bikaner D.O 851 195 15 3658 279 813 532 6343 

TOTAL 20872 3280 2397 18693 4932 15224 18790 84188 

EAST ZONE 

9 A & N Islands 345 233 18 591 9 263 3036 4495 

10 Bihar 1805 608 136 654 196 897 767 5063 

11 Jharkhand 657 81 184 2046 32 321 170 3491 

12 Orissa 743 217 149 801 102 497 987 3496 

47


Sr. No. State/UT Food Forest HMP MBI PCBI REBT Ser/ Tex Total 

Proc.& Based /FI 

Agro 

Based Ind. 

13 West Bengal 7940 2790 1105 4526 2566 5034 6113 30074 

N.E.ZONE 

TOTAL 11490 3929 1592 8618 2905 7012 11073 46619 

14 Aru.Pradesh 340 287 0 239 0 103 424 1393 

15 Assam 8886 1439 762 3380 1529 4096 3776 23868 

16 Manipur 11 34 0 39 0 18 16 118 

17 Meghalaya 338 308 33 654 23 13 409 1778 

18 Mizoram 397 168 150 204 24 731 1240 2914 

19 Nagaland 198 65 17 57 14 207 917 1475 

20 Tripura 361 97 63 220 68 240 904 1953 

21 Sikkim 80 53 8 10 0 59 397 607 

SOUTH ZONE 

TOTAL 10611 2451 1033 4803 1658 5467 8083 34106 

22 And.Pradesh S.O 8433 2430 1064 10096 2706 5802 9449 39980 

23 Visakhapatnam D.O 178 376 146 3229 69 331 256 4585 

24 Karnataka 1692 920 180 1758 273 1791 3894 10508 

25 Kerala 2974 1294 321 3206 670 2500 1718 12683 

26 Lakshadweep 0 0 0 0 0 0 0 0 

27 Pondicherry 102 25 27 165 0 77 170 566 

28 Tamilnadu (S.O.) 964 35 119 1348 122 922 1401 4911 



29 Madurai D.O 527 25 47 139 12 110 401 1261 

TOTAL 14870 5105 1904 19941 3852 11533 17289 74494 

WEST ZONE 

30 Goa 385 0 0 331 78 191 860 1845 

31 Gujarat 2280 44 90 1286 926 4033 2265 10924 

32 Maharashtra S.O 8109 981 1104 5010 1053 4224 2203 22684 

33 Nagpur D.O 57 63 55 198 35 150 200 758 

TOTAL 10831 1088 1249 6825 2092 8598 5528 36211 

CENTRAL ZONE 

34 Chattisgarh 4387 549 167 2841 618 2333 1850 12745 

35 Madhya Pradesh 3579 696 357 2388 612 1856 1413 10901 

36 Uttaranchal 1127 198 202 827 173 746 1655 4928 

37 Uttar Pradesh S.O 7596 640 516 3173 1904 2342 3463 19634 

38 Varanasi D.O 273 0 0 111 23 139 147 693 

39 Meerut D.O 2371 476 178 1392 443 1668 1286 7814 

40 Gorakhapur D.O. 107 20 0 50 0 38 66 281 

TOTAL 19440 2579 1420 10782 3773 9122 9880 56996 

G.TOTAL 88114 18432 9595 69662 19212 56956 70643 332614 

48

COIR SECTOR / COIR BOARD 

4.1.0 COIR INDUSTRY 

4.1.1 India is the largest coir producer in the world accounting for 

more than 80 per cent of the total world production of coir fibre. 

The coir sector in India is very diverse and involves households, 

co-operatives, NGOs, manufacturers and exporters. 

4.1.2 The coir industry employs more than 6 lakh persons of 

whom a majority are from rural areas belonging to the 

economically weaker sections of society. Nearly 80% of 

the coir workers in the fibre extraction and spinning sectors 

are women. 

4.1.3 The development of coir industry has all along been in areas 

where there is a concentration of coconut trees and 

availability of coconut husks. Historically the coir industry 

started and flourished in Kerala which has a long coast line, 

lakes, lagoons and backwaters providing natural conditions 

required for retting. However, with the expansion of coconut 

cultivation, coir industry is coming up in the States of Tamil 

Nadu, Karnataka, Andhra Pradesh, Orissa, West Bengal, 

Assam, Tripura, Pondicherry and the Union Territories of 

Lakshadweep and Andaman & Nicobar Islands. The 

production and processing methods in coir industry still 

continue to be mainly traditional. For instances spinning is 

mainly carried out on traditional ratts which require walking, 

forward and backward. 

Chapter 

4 



49


4.1.4 Details showing production of Coir and Coir Products during 

the 10 th Plan period are as under: 

(Quantity in MTs) 

Item 2002-03 2003-04 2004-05 2005-06 

(projected) 

Coir Fibre 3,53,700 3,64,000 3,85,000 4,30,000 

Coir Yarn 2,26,800 2,32,500 2,45,500 2,80,000 

Coir Products 75,750 77,900 98,000 98,000 

Coir Rope 50,000 50,000 50,000 57,000 

Curled Coir 28,000 29,500 36,500 38,000 

Rubberised Coir 50,250 51,000 60,000 64,000 

4.1.5 Similarly, the consumption of coir and coir products during the 

10 th Plan period are as under: 

(Quantity in MTs) 



Item 2002-03 2003-04 2004-05 

Coir Fibre 89,200 38,400 3,65,750 

Coir Yarn 1,25,300 1,96,959 2,22,500 

Coir Products 26,500 19,469 22,500 

Coir Rope 49,700 49,692 49,500 

Curled Coir 27,500 29,424 35,700 

Rubberised Coir 49,700 50,538 54,000 

Coir Pith 

50


Garden articles 


4.2.1 The Coir Board is a statutory body established under the 

Coir Industry Act, 1953 for promoting the overall 

development of the coir industry and upliftment of the living 

conditions of the workers engaged in this traditional 

industry. 



4.2.2 The Coir Board consists of a full-time Chairman and 40 parttime 

members, as provided in section 4 of the Coir Industry 

Act, 1953. All sections interested in the welfare of the coir 

industry are represented on the Coir Board. 

4.2.3 The functions of the Coir Board for the development of coir 

industries include undertaking scientific, technological and 

economic research and development activities; collection of 

statistics relating to exports and internal consumption of coir 

and coir products; development of new products and designs; 

publicity for promotion of exports and internal sales; marketing 

of coir and coir products in India and abroad; preventing unfair 

competition among producers and exporters; assisting in the 

51


establishment of units for the manufacture of products; 

promoting co-operative organisations among producers of 

husks, coir fibre, coir yarn and manufacturers of coir products; 

ensuring remunerative returns to producers and manufacturers, 

etc. 

4.3.0 THRUST AREAS FOR DEVELOPMENT OF COIR 

INDUSTRY 

The thrust areas for development of coir sector in the country 

are as follows: 



(i) 

(ii) 

(iii) 

(iv) 

(v) 

(vi) 

(vii) 

Modernisation of production infrastructure by means 

of appropriate technology without displacement of 

labour. 

Expansion of domestic market through publicity and 

propaganda. 

Promotion of export of coir and new products by 

undertaking market promotion abroad. 

Promotion of research and development activities like 

process improvement, Product development and 

diversification and elimination of drudgery and pollution 

abatement. 

Development of manpower through training. 

Extension of Research and Development findings through 

field demonstration. 

Development of coir industry in all the coir producing 

States in association with the State Governments. 

4.4.0 ACTIVITIES OF THE COIR BOARD 

The activities being carried out by the Coir Board for the overall 

development of coir sector are as under: 

52


4.4.1 RESEARCH & DEVELOPMENT 

Central Coir Research Institute, Kalavoor, Alleppy, and Central 

Institute of Coir Technology, Bangalore, undertake research 

activities for the different aspects of coir industry beginning 

from the method of extraction of fibre to the processing and 

manufacture of end products. Identification of new user areas 

for potential utilisation of coir, coir waste, coir pith and 

improvements in processing for better quality are the areas 

of special attention. Coir Testing Laboratories have been set 

up at Pollachi and Bhubneswar to cater to the testing 

requirements of the trade. The activities under the R&D 

programmes of the Coir Board during the year 2005-2006 are 

as under: 

4.4.2 MODERNISATION OF EXTRACTION AND 

PROCESSING OF COIR FIBRE 

(i) 

Pilot Scale Laboratory: The facilities of the Pilot Scale 

Laboratory set up in CCRI was extended to the coir 

entrepreneurs. In this laboratory, 200 KG of coirret and 

3550 KG of pithplus were produced. 



(ii) 

Research Activities: Experimental studies on the 

treatment of phenolytic strain of bacteria Mycoplana 

bullatta and lygnolytic strains, Phenerochaete 

chrysosporium and Coriolus versicolor were applied 

on coir fibre for biobleaching and biosoftening. Further 

experiments on these are being carried out. This 

would lead to economic utilisation of brown fibre 

produced in the non-traditional coconut growing states 

of India. 

(iii) 

Training: Field trial demonstration on composting of coir 

pith using perforated PVC pipes(‘insitu’ composting) was 

53


carried out successfully in Common Facility Centre, 

Kattukada under Kanjikuzhy Panchayat in Alleppey district 

in Kerala. Similarly, trainees from Lakshadweep, Tamil 

Nadu, Karnataka, Orissa and the North East were trained 

on fibre treatment using Coirret & composting of coir pith 

using Pithplus. 

(iv) 

Testing: As per the request received from different coir 

entrepreneurs analysis of 57 coir pith samples were 

carried out in laboratories of Coir Board for Nitrogen, 

Phosphorous, Potassium (NPK), ph, Salinity, Organic 

Carbon, Lignin and phytosanitary certification for the 

presence of E. Coil & Salmonella bacteria in the 

laboratory. The percentage of elemental copper in coir 

pith and composted pith were also estimated using Atomic 

Absorption Spectrophotometer. 



(v) 

Vanilin Project : A project for extracting vanillin from coir 

pith was undertaken with varying percentage of yield. 

Further experiment is being carried out to have the best 

yield. Successful implementation of the project would lad 

to manufacture of vanillin, which has diverse use from 

coir by-products. 

(vi) 

Regeling Handels Potgronden (RHP) Laboratory: 

Equipments like Nitrogen estimation system, Socs-plus 

solvent extraction systems, Electronic Balances, Atomic 

Absorption Spectrophotometer, UV spectrophotometer, 

Freeze Dryer, Moisture analyzer, Scanning electron 

Microscope GC-MS & HPLC have been installed in the 

RHP Laboratory. 

(vii) 

Awareness Generation: In order to generate an 

awareness on the economic utilization of coir and coir 

pith, various R&D products were displayed at the First 

54


National Expo of Small Scale Agro & Rural Industries, 

New Delhi from 26 - 29 September 2005, International 

Coconut Seminar & Exhibition in Goa in December 2005 

and World Expo -2005 at Mumbai. 

4.4.3 DEVELOPMENT OF COIR MACHINERY 

(i) 

A mild steel handloom ”Anugraha” for weaving coir 

mattings and geotextiles has been developed and 

fabricated by CCRI at a cost of Rs.5000. In this loom, the 

frames are moved up and down by a mechanism which 

is operated by a wire-rope and cable. The effort needed 

to operate this system is negligible. The loom can thus 

be operated even by women workers who are normally 

not engaged in the weaving operation on conventional 

handloom due to drudgery involved. The output of the 

loom is 10 metres per hour for geotextiles. Coir Board 

has commercialised the technology. 

(ii) 

A fully automatic spinning machine and slivering machine 

has been developed in collaboration with PSG College 

of Technology. Further field trial is being undertaken for 

commercialisation of this product. 



(iii) 

A collaborative project with PSG College of Technology 

has also been undertaken for development of Platform 

mounted mobile defibering machine. Successful 

implementation of the project would help to mechanise 

the fibre extracting process in the coir sector leading to 

improved productivity. 

4.4.4 PRODUCT DEVELOPMENT AND DIVERSIFICATION 

(i) 

The development of blended yarn of coir fibre and sisal 

fibre at 80:20 respectively and manufacturing of novel 

55


products with blended yarns and weaving mats on power 

loom, jacquard and semi mechanised loom with new 

patterns continued to be a thrust area for R&D activities 

of Coir Board as part of product development and 

diversification effort. Altogether 183 numbers of different 

blends of coir products were produced which included 

products manufactured with coir yarn dyed with vegetable 

dyes. 

4.4.5 TESTING AND SERVICE FACILITY 

(i) 

Technical staff have been deputed in the field for 

popularisation of research products as per as PITHPLUS, 

COIRRET, etc. and also for the utilisation of Coir 

Bhoovastra for soil erosion control. 



(ii) 

During the period under report, CCRI has undertaken 

testing of different types of coir products as per the 

requirements of Bureau of Indian Standards and 

exporters and tested the samples as per the standards 

formulated by BIS and ASTM. A total number of 245 

samples of coir and coir products were tested in the 

Physical Testing laboratory & ASTM laboratory of CCRI 

& CICT. Details of products tested in these laboratories 

are: 

(a) Rubberised Coir : 27 Sets 

(b) Testing of light fastness : 20 Nos. 

(c) Testing of Fibre : 1 No. 

(d) Testing of Geotextiles : 84 Nos. 

(e) Break load of Rope : 10 Nos. 

(f) Break load of yarn : 15 Nos. 

(g) Strength of Hydrogen peroxide : 2 Nos. 

(h) Testing of Curled Coir Rope : 1 No. 

(i) Shade matching : 35 Nos. 

56


4.5.0 DOMESTIC MARKET PROMOTION 

4.5.1 Promotion of the sales of coir products in India and 

elsewhere is one of the important functions of the Coir Board. 

The Domestic Market Promotion includes efforts for 

enhanced sale of coir products through Board’s showrooms 

and sales outlets, and also popularising coir and coir 

products by way of publicity by way of organising exhibitions 

in different parts of the country through audio and visual 

media, sales campaign, press advertisement and through 

pamphlets, hoardings etc. The Coir Board has participated 

in 75 exhibitions during 2005-06 (up to January 2006) for 

popularization of coir and coir products in the domestic 

market. 

4.5.2 To promote the sale of coir and coir products manufactured 

by the Co-operatives and Public Sector Enterprises a 

Market Development Assistance (MDA) Scheme was 

launched in 2001-2002. During 2005-2006, an amount of 

Rs. 253.00 lakh (provisional) has been released under the 

Scheme. 



4.5.3 The Coir Board has 31 Showrooms and Sales Depots as 

marketing outlets. The sales through the Board’s Showrooms 

during the year (up to January 2006) has been of the order 

of Rs 553 lakh. The total sales of coir and coir products 

through Coir Board’s showrooms and sales depots during 10 th 

Plan period are as under: 

(Rs. Lakh) 

2002-03 2003-2004 2004-05 2005-06 


692.45 727.29 762.55 553.00 

57


4.6.0 EXPORT MARKET PROMOTION 

4.6.1 India retained the position as the largest producer and supplier 

of coir and coir products. The share of India in the global 

production of coir is 80 per cent (in terms of fibre). Although 

Srilanka has a monopoly in the supply of coir fibre to the world 

market, India continues to be the major supplier of coir yarn 

and coir products with a share of 70 per cent and 75 per cent 

respectively in the total global trade in these items. 

4.6.2 During the year 2005-2006, 108041 MTs (April 2005 to January, 

2006) of coir and coir products valued at Rs. 406.27 crore have 

been exported from India registering a growth of 9.87 per cent 

in terms of quantity and 3.05 per cent in terms of value as 

against the export made during the same period of last year. 

The details of exports of coir and coir products made during 

the 10 th Plan period are as under: 



Year Quantity Value 

(Metric Tonnes) (Rs. crore) 

2002-2003 84183 352.70 

2003-2004 102253 400.40 

2004-2005 122927 473.40 

2005-2006 108041 406.27 


4.6.3 During the year 2005-2006 (up to January 06), the Coir Board 

participated in the following fairs and exhibitions for 

promotion of exports coir and coir products abroad: 

(i) New York Home Textile Show, New York City, USA (8-11 

April, 2005) 

(ii) 

National Hardware Show, Las Vegas, USA (17-19 May, 

2005) 

58


(iii) Indian Home Furnishing Fair, Tokyo, Japan (31May to 2 

June, 2005) 

(iv) Impex, Melbourne, Australia (7-9 June, 2005) 

(v) India Expo, Warsaw, Poland (16-18 June, 2005) 

(vi) National Floor Show, Harrogate, UK ( 6-8 September, 2005) 

(vii) SAITEX, 2005, Johannesburg, South Africa (27 – 30 

September, 2005) 

(viii) Made in India Show, Shanghai (17-20, October, 2005) 

In all these exhibitions visitors and buyers evinced keen interest 

on the range of products exhibited. The exporters participating 

in these events were able to get confirmed orders. 

4.7.0 DEVELOPMENT OF PRODUCTION 

INFRASTRUCTURE 

4.7.1 The Brown Fibre Sector of the coir industry in India has 

progressed rapidly during the past 3 decades. 

4.7.2 Under this scheme, Coir Board is extending financial assistance 

of 25 per cent of the cost of equipments and infrastructural 

facilities subject to ceiling of Rs. 1.5 lakh for setting up coir 

units and Rs. 50,000 for modernisation of existing coir units 

and for installation of generator sets in fibre/curled coir units. 



4.7.3 Financial assistance given to the units during the 10 th Plan 

period is as under: 

Year Amount Number of Units 

(Rs. lakh) 

2002-2003 28.71 25 

2003-2004 73.16 58 

2004-2005 69.94 48 


(upto Jan.06) 50.34 36 

59


4.8.0 CO-OPERATIVISATION 

Cooperativisation is the only Centrally Sponsored Scheme in 

the Ministry of Agro and Rural Industries. In view of the low 

level of response from the various State Governments towards 

this scheme, it has been decided to phase out the scheme by 

the end of the 10 th Plan period. 

4.9.0 TRAINING, EXTENSION, QUALITY 

IMPROVEMENT, MAHILA COIR YOJANA AND 

WELFARE MEASURES 

4.9.1 TRAINING 

The Coir Board continued to impart training in processing of 

coir to the artisans and workers engaged in the coir industry 

through its training centre located at Kalavoor, Alleppey. The 

following training programmes were conducted:- 



(i) 

(ii) 

(iii) 

(iv) 

(v) 

(vi) 

Advanced Training Course 

Artisans Training Course 

Training in Motorised Ratt Spinning 

Training in Motorised Traditional Ratt Spinning 

Training in Pith Composting 

Short term training in spinning and dyeing, weaving frame 

mats, loom, mats and matting 

The Board is also conducting training activities in different 

field training centres to suit the convenience of coir 

workers at far off places who cannot attend the training 

activities at NCT&DC, Kalavoor. The Field Training Centres 

are run with the help of NGOs/Co-operative Societies 

engaged in coir activities. The training activities are given 

in spinning motorised ratt and motorised traditional ratt. 

60


The number of persons trained during the 10 th Plan period 

are as under: 

Year 

Number of persons trained 

2002-2003 3371 

2003-2004 6829 

2004-2005 13318 


(upto Jan.06) 12864 

4.9.2 QUALITY 

The Coir Board has been organising Quality Improvement 

Programmes (QIPs) every year to motivate entrepreneurs to 

take up coir production and to create quality consciousness 

among the coir workers in various processing activities viz:, 

spinning, dyeing and on improving the quality of yarn and coir 

products. During the year 2005-2006, 16 QIPs/EDPs have been 

conducted. 



Training to workers on motorised Ratt on 30.1.06 at Wayanada Distt. of Kerala 

61


4.9.3 MAHILA COIR YOJANA 



The Mahila Coir Yojana is the first women oriented self 

employment scheme in the coir industry which provides self 

employment opportunities to the rural women artisans in 

regions producing coir fibre. Conversion of coir fibre into yarn 

on motorised ratt in rural households provide scope for large 

scale employment, improvement in productivity and quality, 

better working conditions and higher income to the workers. 

The scheme envisages distribution of motorised ratts for 

spinning coir yarn to women artisans after giving training. Not 

more than one artisan per household is eligible to receive 

assistance under the scheme. Women spinners are trained 

for two months in spinning coir yarn on motorised ratt at the 

Board’s training centres. A stipend of Rs.500/- is paid to the 

trainees. A trainee who passes the test conducted at the end 

of the training is also eligible for subsidy for purchasing a 

motorised ratt. The beneficiary under the scheme sets a 

subsidy of 75 per cent of the cost of the ratt subject to a 

maximum of Rs.7,500/-. Details of distribution of ratts and the 

assistance sanctioned during the 10 th Plan period are as 

under: 

Year No. of ratts distributed Assistance sanctioned 

2002-2003 1303 38,79,000 

2003-2004 1556 64,25,554 

2004-2005 3212 1,12,79,588 


(up to Jan.06) 2783 87,19,321 

4.10.0 BUDGETARY SUPPORT TO THE COIR BOARD 

4.10.1 For implementing the various schemes/programmes, the 

Government has provided the following budgetary support to 

the Coir Board during the 10 th Plan period: 

62


(Rs. crore) 

Name of the Scheme 2002-03 2003-04 2004-05 2005-06 2006-07 

(RE) (BE) 

Plan – (Science & 4.25 4.25 5.00 5.50 5.50 

Technology) 

Plan-(General) 

Training, Extension & 

Quality Improvement 

including Mahila Coir 

Yojana and Welfare 

Measures 0.95 0.95 2.25 12.00 2.90 

Domestic Market 

Promotion 2.70 3.70 5.41 9.00 5.50 

Export Promotion 1.50 1.25 1.00 2.00 2.00 

Trade Information Service, 

Information Technology 

and Strengthening of H.Q 2.15 1.80 1.20 3.00 3.00 

Development of Production 

Infrastructure 1.40 1.20 1.30 3.50 3.50 

Economic Market Research - 0.10 0.11 0.50 0.50 

Plan - Cooperativisation 0.04 0.83 — 0.01 0.10 

Plan - Development of NE 

Region (adjusted from 

DMP) 0.76 0.44 0.53 — — 

Total 13.75 14.52 16.80 35.51 23.00 



4.11.0 INTEGRATED COIR DEVELOPMENT PROJECT 

(ICDP) 

4.11.1 The ICDP is being implemented in the coir producing states 

as a modernisation component of the Centrally sponsored 

scheme of co-operativisation. The ICDP is being implemented 

in the States of Kerala, Tamil Nadu and Karnataka. All coir 

producing states are persuaded to implement ICDP in their 

States. 

4.11.2 The scheme provides for assistance like share capital, 

managerial subsidy, equipment assistance etc. The scheme 

has helped in many ways for formation of viable coir co- 

63


operatives and bring the coir workers into the co-operative fold 

to protect them from exploitation by the middlemen. 

4.11.3 The Government of India has provided Rs.100 lakh towards 

Co-operativisation during the year 2004-2005. 

4.12.0 HINDUSTAN COIR 

As per Government of India’s decision to mechanise 1/3 rd of 

coir matting sector, the Hindustan Coir, a powerloom coir 

matting manufacturing factory under Coir Board was 

established in the year 1968 as a Pilot Project. The total 

production of Hindustan Coir matting during the 10 th Plan period 

are as under: 



(Quantity = Sq. Mtrs.) 

(Value = Rupees in Lakhs) 

2002-03 2003-04 2004-05 2005-06 

(upto Jan.06) 

Quantity 1,54,270.06 1,96,269.00 2,12,536.14 1,34,983.65 

Value 144.06 183.00 245.26 180.00 

4.13.0 CLUSTER AREA DEVELOPMENT 

The Coir Board under the recently concluded UNDP Sponsored 

Project had promoted consortias of small scale coir 

manufacturers and small and medium exporters for 

manufacture of products in a cost effective manner by sourcing 

the raw material in bulk and also marketing the products through 

the consortium by reducing the marketing expenditure. Based 

on the success of the consortium movement, UNIDO has 

selected Alleppey as a cluster for development and initiated 

activities for promotion of consortium. Already 60 consortia 

have been formed in the coir cluster with the technical support 

of Coir Board. This has facilitated small manufacturers to 

produce coir products in a cost effective manner. 

64


4.14.0 NEW INITIATIVES 

4.14.1 ENTREPRENEURSHIP DEVELOPMENT 

PROGRAMMES (EDPS) 

It is reckoned that at present only about 37 per cent of the total 

production of coconut husk is being utilized in the coir industry. 

For generating employment avenues in the coir sector the 

utilization of husk has to be increased considerably for which 

more new units are required to be set up. In order to motivate 

and to identify prospective entrepreneur for setting up of new 

coir units and managing the unit, the Coir Board has decided 

to organise EDPs by engaging professionally competent and 

reputed organisations. 

4.14.2 COIR BOARD COIR WORKERS GROUP 

PERSONAL ACCIDENT INSURANCE SCHEME 

The Insurance scheme for coir workers was introduced by Coir 

Board w.e.f. 01.12.1998 and is being renewed year after year. 

The Insurance scheme was renewed w.e.f. 01.12.2005 by 

doubling the existing assistance and by providing assistance for 

finger cut, etc. with the New India Assurance Company Limited. 

Insurance premium for Rs.9,96,208/- for a period of one year 

w.e.f. December 2005 was paid to the Insurance Company. 



The compensation payable was as under: 

(i) Accidental Death : Rs. 50,000.00 

(ii) 

Permanent Total Disability 

(a) Loss of two limbs/two eyes : Rs.50,000.00 

(b) Loss of one limb and one eye : Rs. 50,000.00 

65


(iii) 

Permanent Partial Disability 

(a) Loss of one limb/one eye : Rs. 25,000.00 

(b) Provision for finger cut : Depending upon the 

finger and limited to 

applicable 

percentages of 

capital sum insured of 

Rs. 40,000/- as per 

Personal Accident 

Policy conditions. 

During the financial year 2005-06, six insurance claims were 

settled and an amount of Rs. 1,37,500/- has been paid towards 

compensation. Seven cases were also recommended for 

payment of compensation during December 2005. 

4.14.3 PRODUCTION ENHANCEMENT LINKED COIR 

WORKERS WELFARE SCHEME 



The Ministry has approved a Scheme “Production 

Enhancement Linked Coir Workers Welfare Scheme” in 

replacement of the welfare scheme titled “Model Coir Village 

Scheme”. This new scheme has the following objectives: 

(a) 

(b) 

(c) 

Mitigate the hardship of workers and to ameliorate their 

living and working conditions. 

Enhance productivity and employment generation through 

the production oriented welfare scheme. 

Improve the working and living conditions of the coir 

workers so as to attract the younger generation to the coir 

industry thereby creating new employment opportunities. 

The Production Enhancement Linked Coir Workers Welfare 

Scheme will be implemented by the Coir Board on an 

66


experimental basis during 2005-06 at a total cost of Rs.130 

lakh. The Board has received proposals from the States of 

Kerala, Karnataka and Orissa. Proposals from Tamil Nadu 

and Andhra Pradesh are also expected. The Coir Board has 

already taken intiitiatives for implementation of various 

proposals under the scheme and to fully utilize the fund 

available under this head. 

4.15.0 ALAPPUZHA COIR CLUSTER DEVELOPMENT 

PROJECT 

The Alappuzha Coir Cluster Development Project was launched 

by the Minister (SSI&ARI) on 8 October 2005 at Central Coir 

Research Institute, Kalavoor, Alleppey for creating planned 

infrastructure facilities under the project. This project with an 

outlay of Rs. 56.80 crore has been sanctioned by the 

Department of Industrial Policy and Promotion (DIPP) for 

cluster-based development of coir industry in Kerala, with 

central grant of Rs. 42.60 crore (75 per cent of project cost), 

under the Industrial Infrastructure Upgradation Scheme of the 

DIPP. 



67

PRIME MINISTER’S ROZGAR 

YOJANA 


Chapter 

5 



5.1.1 The Prime Minister’s Rozgar Yojana (PMRY) was launched on 

02 October 1993 to assist educated unemployed youth in setting 

up self-employment ventures. Initially, the PMRY was 

implemented only in the urban areas of the country. Since 1994- 

95, it has been implemented in both urban and rural areas. 

The Yojana has been continued in the 10 th Five Year Plan with 

a Plan target of 11 lakh units, generating 16.5 lakh employment 

opportunities. 

5.1.2 The Common Minimum Programme (CMP) of the UPA 

Government envisages creation of additional employment 

opportunities in the rural non-farm sector. Accordingly, the 

targets for the years 2004-05 & 2005-06 under the Yojana have 

been enhanced from 2.20 lakh beneficiaries to 2.50 lakh 

beneficiaries for generating 3.75 lakh self-employment 

opportunities per annum. 

5.2.0 IMPLEMENTATION OF THE SCHEME 

5.2.1 Under PMRY, an educated unemployed person living in any 

part of the country and eligible under the scheme, has to apply 

for assistance to the General Manager, DIC in the district to 

which he belongs. In cases where the applicant belongs to 

the cities of Kolkata, Chennai, Mumbai and Delhi, the 

application has to be filed directly with the office of the Director 

68


of Industries in the cities of Kolkata, Chennai and Mumbai and 

in the office of Deputy Commissioner of the respective zones 

in Delhi. 

5.2.2 The Task Force Committees set up at district level or the Task 

Force Constituted at sub-divisional level/block level are 

entrusted with the work of scrutinising the applications and 

interviewing the candidates. The names of approved candidates 

by Task Force Committee are sponsored to the bank branches 

for sanction of loans. 

5.2.3 In addition to sponsoring of applications by Task Forces, bank 

branches themselves may also receive applications directly 

from the eligible persons under the scheme. However, such 

applications should be sent to sponsoring agencies with their 

observations on the viability and bankability of the projects. 

Sponsoring agencies would formally sponsor such applications 

back to the bank branches for sanction of loan. 

5.3.0 ELIGIBILITY NORMS UNDER THE SCHEME 

5.3.1 Age: 



• 18 to 35 years for all educated unemployed in the country 

except for North Eastern States, Uttaranchal, Himachal 

Pradesh and Jammu & Kashmir. 

• 18 to 40 years for all educated unemployed in North 

Eastern States, Himachal Pradesh, Uttaranchal and J&K. 

• 18 to 45 years for Scheduled Caste/Scheduled Tribes, 

Ex-servicemen, Physically Handicapped and Women. 

5.3.2 Educational Qualifications: 8th Passed. Preference will be 

given to those trained in any trade in Government recognised/ 

approved institutions for at least six months. 

69


5.3.3 Family Income: The income of the beneficiary and the spouse 

along with the income of the parents of the beneficiary should 

not exceed Rs. 40,000/- per annum. 

5.3.4 Residency: Beneficiary should be a permanent resident of the 

area for at least 3 years (relaxed for married men in Meghalaya 

and for married women in rest of the country. For married men 

in Meghalaya and for married women in rest of the country, the 

residency criteria applies to the spouse or in-laws. 

5.3.5 Defaulter: Should not be a defaulter to any Nationalisd Bank/ 

Financial Institution/Cooperative Bank. Further, a person 

already assisted under other subsidy linked Government 

schemes would not be eligible under the Scheme. 



5.3.6 Reservation: Preference should be given to the weaker 

sections including women. The Scheme envisages 22.5 per 

cent reservation for SC/STs and 27 per cent for other Backward 

Classes (OBCs). In case SC/ST/OBC candidates are not 

available, State/Union Territories (UT) Govternment will be 

competent to consider other categories of candidates under 

PMRY. 

5.4.0 FINANCIAL TERMS UNDER PMRY 

5.4.1 Project Cost: 

• Rs. 1.00 lakh for business sector. 

• Rs. 2.00 lakh for other activities. 

• Loan to be of a composite nature. 

• If two or more eligible persons join together in a 

partnership, projects costing up to Rs. 10.00 lakh can be 

covered. However, assistance shall be limited to individual 

admissibility. 

70


• Self Help Groups (SHG) can be considered for assistance 

under the Scheme. 

5.4.2 Subsidy & Margin Money: Subsidy is provided @ 15 per cent 

of the project cost subject to a ceiling of Rs. 7,500/- per 

beneficiary. In the North Eastern (NE) States, subsidy is 

provided @ 15 per cent of the project cost, subject to a ceiling 

of Rs. 15,000/- per beneficiary). Banks will be allowed to take 

margin money from the entrepreneur varying from 5 per cent 

to 16.25 per cent of the project cost so as to make the total of 

the subsidy and the margin money equal to 20 per cent of the 

project cost. 

5.4.3 Collateral: No collateral for units in industry sector with project 

cost upto Rs.2 lakh (the loan ceiling under the PMRY) is 

required. For partnership project under industry sector, the 

exemption limit for obtention of collateral security will be Rs.5 

lakh per borrowal account. For units in service and business 

sectors no collateral for project upto Rs.1.00 lakh is required. 

Exemption from collateral in case of partnership project will 

also be limited to an amount of Rs.1.00 lakh per person 

participating in the project. 



5.4.4 Rate of interest & Repayment schedule: Normal bank rate 

of interest shall be charged. Repayment Schedule may range 

between 3 to 7 years after an initial moratorium as may be 

prescribed. 

(Note:As per the Reserve Bank of India guidelines, rate of interest on 

loans up to Rs.2.00 lakh should not exceed the Prime Lending Rate 

(PLR) of the banks). 

5.4.5 Training of beneficiaries: The beneficiaries sanctioned loan 

under the Scheme have to undergo entrepreneurial development 

training of 15-20 working days for projects under the Industry 

Sector and of 7-10 working days for projects under Service & 

71


Business Sectors. The ceiling on training expenditure for project 

under the Industry Sector is Rs. 1,000/-per case inclusive of 

stipend of Rs.300/- per beneficiary and Rs.500/- per case 

inclusive of stipend of Rs.150/- per beneficiary for service and 

business sectors to be made available to the States/UTs. 

State/UT Governments have been asked to involve reputed 

NGOs, ITIs, Polytechnic colleges in the training of PMRY 

beneficiaries. Banks are to be given preference for providing 

training. State/UT Govts. may also consider possibilities of 

organising special training courses exclusively for SC/STs and 

women entrepreneurs. 

5.4.6 Contingency funds for scheme Administration: Contingency 

funds @ Rs.250/- per case sanctioned are released to States/ 

UTs based on the cases sanctioned under PMRY from 1996-97 

onwards (enhanced from an earlier rate of Rs.100 per beneficiary). 

The funds are meant for utilisation for meeting expenditure in 

administrating and supervising PMRY at the DIC level. 



In order to provide greater flexibility in utilisation of contingency 

funds under PMRY to the States/UTs, the expenditure norms 

have been modified and the ambit of expenditures admissible 

widened. 

5.5.0 NUMBER OF PERSONS TRAINED UNDER PMRY 

DURING 10 TH PLAN PERIOD 

Year 

No. of beneficiaries trained 

2002-03 235558 

2003-04 247087 

2004-05 267808 

2005-06* 72518 

Total 822971 

*up to November 2005 

72


5.6.0 PROJECT PROFILES 

For the guidance of entrepreneurs in selecting the projects, 

project profiles have been prepared by the SISIs & State/ 

UT Governments. 7 volumes of project profiles have been 

centrally circulated to the DICs, which were prepared by 

SISIs/NISIET. In addition 22 volumes of project profiles have 

been prepared for SISIs for local circulation. Profiles have 

also been prepared by the state/UT Governments. Thus a 

bank of profiles for assisting entrepreneurs exist at the 

district level. A Training & Trainers manual has been 

circulated to all the field formations. Training cassettes have 

also been prepared & sent to the States. The Ministry has 

got revised ‘Training Curriculum’, ‘Methodology of Training’ 

by Rural Development & Self Employment Training Institute 

(RUDSETI), Karnataka. Banks are given preference if they 

come forward to arrange training for the PMRY 

beneficiaries. 

5.7.0 ASSISTANCE FROM STATES/UTS 

State/UT Governments may provide necessary infrastructure 

support like provision of industrial sites, shops, water on 

preferential basis to these entrepreneurs. Provisions of sites 

and sheds at concessional rate to service ventures in urban 

areas will be essential for their success. Priority in electric 

connections and other general tax concessions/incentives may 

also be provided. 



5.8.0 MONITORING & GUIDANCE FOR PMRY 

5.8.1 The District, being a well-established geographical unit for 

many State/Central promotional programmes, is the basic unit 

for implementation of the Prime Minister’s Rozgar Yojana. In 

all the districts, District Industries Centre is the implementing 

73


agency except in the metropolitan cities of kolkata, Mumbai & 

Chennai where the Directorate of Industries themselves are 

implementing the scheme. In the case of Mumbai, the SISI 

also receives the applications, In Delhi, the applications are 

received in the office of the Deputy Commissioner of the 

respective zones. The field agencies in consultation with the 

banks of the respective areas are responsible for the 

formulation of self-employment plans, their implementation 

and monitoring under the overall guidance of the District 

PMRY Committee. They are required to formulate location 

specific plans of action, based on realistic demand 

assessment for various activities. 



5.8.2 Monitoring and Guidance for PMRY at district level: The Prime 

Minister’s Rozgar Yojana is being monitored and guided at 

district level by the district PMRY Committee under the 

Chairmanship of District Collector/Dy. Commissioner. The 

Committee is supposed to meet once in a month and send 

monthly progress report in the prescribed Proforma to the 

Directorate of Industries of the State/UT concerned. 

5.8.3 Monitoring and Guidance for PMRY at State/UT level: 

Monitoring and guidance for the Prime Minister’s Rozgar 

Yojana at State/UT level is undertaken by the State/UT PMRY 

Committee under the Chairmanship of the Chief Secretary. 

The Committee is supposed to meet once in a quarter to 

review the progress and send the report along with remarks 

to the Ministry of Agro & Rural Industries, Government of India, 

New Delhi. 

5.8.4 Monitoring and Guidance for PMRY at Government of India 

level: Prime Minister’s Rozgar Yojana is monitored at Central 

Government Level by the High Powered Committee on PMRY 

under the Chairmanship of Secretary (SSI & ARI). 

74


5.9.0 CUMULATIVE STATUS OF PROGRESS UNDER 

PMRY DURING 10 TH PLAN PERIOD 

The details of applications sanctioned & disbursed and 

credit flow under PMRY during 10 th Plan period are as 

under: 

(As reported by RBI) 

Year Target Applications Cases Sanctioned Cases Disbursed 

(No.) Received No. Amount No. Amount 

(Rs. crore) 

(Rs. crore) 

1 2 3 4 5 6 7 

2002-2003 220000 414001 228031 1497 190521 1198 

2003-2004 220000 436679 264012 1679 219444 1368 

2004-2005 250000 490229 297187 1915 239399 1471 


(upto Nov. 2005) 250000 224919 99204 636 56812 342 

Total: 940000 1565828 888434 5727 706176 4379 

5.10.0 EMPLOYMENT GENERATION UNDER PMRY 



The estimated employment generation under PMRY during the 

10 th Plan period are as under: 

(Employment in number) 

Year 

Estimated Empl. Generated 

2002-2003 2,85,782 

2003-2004 3,29,166 

2004-2005 3,59,099 

2005-2006* 85,218 

Total 10,59,265 

* up to November 2005. 

75


PMRY beneficiary 

5.11.0 BUDGETARY ALLOCATION AND EXPENDITURE 

UNDER PMRY 



The Central Government assists the entrepreneurs through 

capital subsidy and provides funds to States for entrepreneurial 

development, contingencies, etc. The details of budget 

allocations and expenditure incurred under the Scheme during 

the Tenth Plan period are as under: 

(Amount Rs. crore) 

Year Budget Funds Released 

Allocation 

Subsidy Entrepreneurial Total 

Development Programme 

2002-03 169.00 152.55 15.55 168.10 

2003-04 169.00 147.63 20.20 167.83 

2004-05 218.90 190.48 27.69 218.17 

2005-06* 273.46 194.20 20.41 214.61 

*Upto January 2006 

76


5.12.0 EVALUATION STUDIES OF PMRY 

5.12.1 Two rounds of evaluation (first round conducted in 1996-97 for 

the programme years 1993-94 and 1994-95 and second round 

conducted in 2000-01 for the programme years 1995-96 to 

1997-98) of the PMRY have been conducted by the Institute of 

Applied Manpower Research (IAMR), New Delhi. The third 

round of the evaluation has been carried out for 1998-99 to 

2001-02 through the IAMR. The report submitted in December 

2005 is under examination. 



PMRY beneficiaries 

77


5.12.2 A comparative position of some of the important findings of 

these three rounds of evaluation indicates: 

- The share of SC/STs as well as OBCs has steadily 

improved. The proportion of SC/STs improved from 

about 12 per cent in the first round to 13 per cent in 

the second and 21 per cent in the third. Similarly, the 

share of OBCs increased from 21 per cent to 26 per 

cent. However, the share of women has not shown 

much improvement (11 per cent in the first round, 14 

per cent in the second and 13 per cent in the third 

round). 

- The average amount of loan disbursed has been 

increasing. It was Rs. 57000 in the second round and 

Rs. 64000 in the third round. 



- The employment generation was higher in the first round 

at 2.5 per unit. In the second and third round it is found to 

be around 1.95 per functioning unit. 

- The proportion of rural beneficiaries has come down from 

49.9 per cent in the second round to 39.1 per cent in the 

third round. 

- Assets have been created in 89.7 per cent of the cases 

disbursed. 

- About 36.4 per cent of beneficiaries were repaying the 

loan installment on time. 

- The average rate of recovery of loans was 29 per cent in 

the second round. It improved to somewhat 38 per cent 

in the third round. 

78


5.13 INITIATIVES TAKEN FOR STRENGTHENING OF 

PMRY 

5.13.1 The ‘Training Curricula’ and ‘Methodology of Training’ under 

the PMRY has been comprehensively revised in consultation 

with the Rural Development & Self Employment Training 

Institute (RUDSETI), Ujire, Karnataka and circulated to all State 

Governments. The training manual is extremely useful as it 

illustrate why the session, session objectives, duration, training 

aids, method of delivery, tips to the trainer, process of handling 

the sessions, handout for the trainer, simulation games, case 

studies, role plays, illustrative cases and exercises. It is 

expected that this manual would proof to be a valuable resource 

for the trainer in training the PMRY beneficiaries for successfully 

setting up self-employment units. 

5.13.2 The quarterly schedule for sponsoring and sanctioning of 

applications and disbursement earlier provided that while the 

sanctioning of the cases would be completed in hundred per 

cent cases by the end of the financial year, the hundred per cent 

disbursement in all such sanctioned cases would be completed 

by the end of the first quarter of succeeding year. This period for 

loan disbursement used to be further extended up to second or 

third quarter. In the quarterly schedule fixed for the year 2005- 

06, it has been directed that applications to the extent of 125 per 

cent of the target would be sponsored by the end of the third 

quarter ( 100 per cent by the end of the second quarter), loans 

would be sanctioned in 90 per cent of the sponsored cases by 

the end of the third quarter (100 per cent by the end of 4 th quarter). 

The quarterly schedule further prescribes that loans would be 

disbursed in 75 per cent cases by the end of the third quarter 

and the loan disbursement in the entire target of 100 per cent 

cases would be achieved by the end of 4 th quarter. The RBI has 

also issued instructions to all implementing banks reiterating the 

above decision of the Government. 



79


This new pattern of quarterly schedule of sponsoring, 

sanctioning and disbursement of cases would not only ensure 

that the applications are not bunched in any quarter, but would 

also ensure that the entire target is achieved in the financial 

year itself. 

5.13.3 Several suggestions were received from State Governments 

for change in various parameters of PMRY to make it more 

effective. These included increase in family income ceiling, 

project cost ceiling, increasing subsidy for individuals, raising 

the training cost reimbursement per beneficiary, etc. In order 

to consider all the suggestions, the Government of India 

constituted a Committee under the chairmanship of Adviser 

(VSE), Planning Commission, Government of India. The 

Committee has been asked to review the Design and 

Implementation practices of the PMRY and also introduce better 

practices in its implementation. The report of the Committee is 

awaited. Further necessary action for strengthening the PMRY 

would be undertaken as soon as the report is received. 



5.14.0 NATIONAL PROGRAMME FOR RURAL 

INDUSTRIALISATION (NPRI) 

5.14.1 This Ministry has been implementing for the development of 

rural clusters since 1999-2000. The NPRI Scheme has a 

provision for extending financial assistance up to Rs.5 lakh for 

interventions in the cluster. 

5.14.2 The Ministry has reviewed the National Programme for Rural 

Industrialisation Programme (NPRI) and decided to subsume 

this under the Scheme of Fund for Regeneration of Traditional 

Industries (SFURTI), which provides a much more 

comprehensive approach to cluster development. 

80

ARI ACTIVITIES IN THE NE REGION 

6.1 The North Eastern (NE) Region consists of the States of 

Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, 

Nagaland, Tripura and Sikkim. This region, inspite of having 

excellent potential for economic development, has remained 

under-developed due to inadequate communication facilities, 

varied topographical features, poor infrastructure, etc. 

6.2 The Ministry of Agro and Rural Industries (ARI) implements 

a number of developmental schemes in the NE Region 

through Khadi and Village Industries Commission (KVIC) 

and Coir Board. The various schemes under implementation 

in the North Eastern Region include Prime Minister’s Rozgar 

Yojana (PMRY), Rural Employment Generation Programme 

(REGP), schemes relating to khadi activities and schemes 

relating to promotion of coir and coir products. 

Chapter 

6 



6.3 KVI PROGRAMMES IN NORTH EASTERN STATES 

6.3.1 In order to have better implementation and monitoring of Khadi 

and Village Industries (KVI) programmes in the NE Region, Khadi 

and Village Industries Commission (KVIC) has established a Zonal 

Office at Guwahati and other field offices in all the NE States. 

6.3.2 KVI programmes are being implemented in these areas through 

State KVI Boards, registered institutions, cooperative societies 

and entrepreneurs. 

6.3.3 The village industries which are being set up in this hilly and 

backward areas are pottery, beekeeping, processing of cereals & 

81


pulses, fibre, fruit & vegetable processing industries, soap, activities 

like carpentry and blacksmithy and also khadi and polyvastra. 

6.3.4 The programmes of KVIC for rural industrialisation is expected to 

further increase the earnings of artisans, weavers, spinners and 

individuals entrepreneurs and also output of high quality KVI 

goods from this region. This will also help to reduce drudgery in 

the labour intensive activities, ensure optimum utilisation of locally 

available raw materials and the up-gradation of skill of artisans. 

6.3.5 For the development of NE Region, the Ministry has earmarked 

separate budget allocation for KVI programmes. The funds 

released to KVIC under Plan for the NE Region during 2004- 

2005 was Rs. 34.90 crore and in 2005-06 Rs. 31.54 crore have 

already been released (up to January 2006). For the period 

2006-07, a budget provision of Rs. 60.60 crore has been made. 



6.3.6 Over the years there have been considerable increase in 

production and employment in the KVI sector in the NE Region. 

The achievements made in terms of production and 

employment in the KVI sector during the first three years 10 th 

Plan period are as under: 

(Production value: Rs. lakh) 

(Employment: lakh persons) 

S. States 2002-2003 2003-2004 2004-2005 

No. Prod. Emp. Prod. Emp. Prod. Emp. 

1 Arunachal 

Pradesh 317.88 0.01 524.67 0.01 794.55 0.03 

2 Assam 6074.74 1.22 8368.55 1.39 9576.05 1.65 

3 Manipur 5997.52 0.62 6197.16 0.62 6520.07 0.64 

4 Meghalaya 3100.46 0.25 3709.57 0.27 4495.16 0.31 

5 Mizoram 3769.44 0.23 3936.02 0.24 4648.13 0.29 

6 Nagaland 4583.94 0.30 4962.48 0.32 5715.15 0.35 

7 Tripura 2235.29 0.28 3145.11 0.33 3350.47 0.37 

8 Sikkim 373.51 0.06 767.26 0.08 972.47 0.11 

Total 26452.78 2.97 31610.82 3.26 36072.05 3.75 

82


6.3.7 To cater to the needs of skill development in NE Region, a 

multi-disciplinary training center at Doimukh, Arunachal 

Pradesh, Multi Discipline Training Centre, Kohima, 

Nagaland, Multi Disciplinary Training Centre, Aizwal, 

Mizoram are being run by a KVIC assisted institution. In 

addition, another training center is being run by a registered 

institution at Rembark in Mizoram, Khadi Gramodyog 

Vidyalaya, Nalbari Assam, Kumrikata Assam. Further, the 

Assam State KVI Board and Mizoram KVI Board are also 

operating training centres in their respective areas of 

operation. Under Training programme, the candidates from 

NE Region are provided second class Railway fare for 

attending training programmes and also the daily allowance 

during the training period. A total of 3416 persons were 

trained during the year 2004-05 and 1475 persons in 2005- 

06 (up to January 2006). 

6.3.8 A number of exclusive sales outlets are functioning for 

promotion of KVI products in NE Region. The State-wise 

numbers of such sales outlets are as under: 



S.No States No. of sales outlets 

1 Arunachal 

Pradesh 09 

2 Assam 96 

3 Manipur 09 

4 Meghalaya 04 

5 Mizoram 02 

6 Nagaland 07 

7 Tripura 02 

8. Sikkim 07 

Total 136 

83


6.4.0 RURAL EMPLOYMENT GENERATION 

PROGRAMME IN NORTH EASTERN REGION 

6.4.1 Under REGP, concessional facilities are extended to the weaker 

sections and to the entrepreneurs of the N.E. region. 

Accordingly, 30 per cent margin money in place of 25 per cent 

in general is provided to the entrepreneurs form this region. 

For setting up of projects in NE Region, the own contribution 

from entrepreneur is only 5 per cent of project cost in place of 

10 per cent of project cost in other areas. 

6.4.2 Special attention has been given for implementation of REGP 

in NE States by providing additional funds for conducting 

workshops and awareness camps. 24 exhibitions for display 

and sale of products manufactured by REGP entrepreneurs 

were also organised in the North East Zone up to January 2006. 



6.4.3 During the first three years of the 10 th Plan, 5755 number of 

projects have been set up generating 97060 number of 

employment. During the year 2005-06 (up to January 2005), 

the number of projects set up in the NE Region alongwith 

amount of margin money utilized and employment generated 

are as under: 

S.No States Project MM utilized Employment 

(Rs. lakh) generated 

(No. of persons) 

1 Arunachal 51 23.19 1393 

Pradesh 

2 Assam 278 167.67 23868 

3 Manipur 15 0.75 118 

4 Meghalaya 97 26.19 1778 

5 Mizoram 121 62.53 2914 

6 Nagaland 100 49.38 1475 

7 Tripura 111 44.61 1953 

8 Sikkim 55 23.21 607 

Total 828 397.53 34106 

84


6.5.0 NEW INITIATIVES 

6.5.1 To improve the technology used in the KVI sector as also the 

quality of products, the KVIC has entered into a tie-up 

arrangement with IIT Guwahati as part of its nation-wide 

programme for having S&T interfaces with reputed National 

level technical institutes. The following areas have been 

identified for taking up R&D Programmes in collaboration with 

IIT, Guwahati: 

• Non-conventional Energy (Biogas Digester, Gasifier and 

Vermi Compost). 

• Development of loin looms. 

• Design and development in cane & bamboo. 

• Packaging design for KVI products. 

• Testing of KVI products. 

6.5.2 The IIE Guwahati has been recognized as Nodal Agency for 

North Eastern Region with the objective to implement and 

monitor REGP projects being set up in North East Zone and 

imparting training to the REGP beneficiaries. 



6.5.3 To and fro transportation charges have been provided to 

intuitions and REGP entrepreneurs of North Eastern Region 

who are participating in the exhibitions, melas, etc, conducted 

in placed other than North Eastern Region. 

6.5.4 10 per cent space was reserved in all Departmental Khadi 

Gramodyog Bhawans for the products of the intuitions in North 

Eastern Region to marketing of their KVI products. 

6.5.5 In order to popularise the KVI products like silk fabrics, cane & 

Bamboo products, wall hangings, hand woven, wall paintings, 

etc., produced in North Eastern Region, 4 Uttarpurva melas 

85


were organised by KVIC at Metropolitian cities, i.e., New Delhi, 

Mumbai, Kolkata and bangalore during 2004-05 

6.6.0 COIR BOARD IN THE NORTH EASTERN REGION 

The activities carried out by the Coir Board during 2005-06 (up 

to January 2006) for popularising coir and coir products in the 

North Eastern Region are as under: 

• An MoU was signed between Coir Board and IIE, 

Guwahati to conduct a study on coir related activities, 

existing market and potential for coir based products, 

availability of raw material and the scope for starting coir 

based activities in the States of Assam, Manipur, 

Arunachal Pradesh, Tripura and Nagaland. 



Coir Geo Textile Seminar held on 22.2.06 at Guwahati 

• In order to popularise coir and coir products in the North 

Eastern Region, Coir Board participated in the Tezpur 

Expo, Assam, Itanagar Exhibition, 1 st Shillong Mega Fair 

and 6 th National Expo, 2005, Guwahati. 

86


• Seminars on Coir Geo-textiles were organised by the 

Coir Board in Meghalaya, Sikkim, Assam, Tripura and 

Nagaland for popularising application of coir geo-textiles 

in soil erosion control in North East Region. 

6.7.0 PRIME MINISTER’S ROZGAR YOJANA (PMRY) 

6.7.1 The Prime Minister’s Rozgar Yojana was launched on 02 October 

1993 in the entire country including the North Eastern Region. 

Under the scheme, eligible educated youth are provided 

assistance to set up tiny units in all economically viable activities. 

6.7.2 As a part of the package for the North East States, 

certain parameters of the PMRY were relaxed in April 

1998. These parameters include enhancement in family 

income ceiling from Rs. 24,000/- per annum to Rs. 

40,000/- per annum, relaxation in upper age limit from 

18-35 years to 18-40 years and expansion of PMRY to 

cover areas of Horticulture, Piggery, Fishing, Forestry so 

as to cover all economically viable activities. 

Subsequently, parameters of the scheme were modified 

for the entire country with special relaxation for the North 

Eastern States as under: 



6.8.0 SPECIAL RELAXATION FOR NORTH EASTERN 

STATES 

6.8.1 Eligible Age Limit : The eligible age limit for North Eastern 

States is 18-40 years as compared to 18-35 years for rest of 

the country. 

6.8.2 Subsidy : The subsidy is provided @ 15 per cent of the 

project cost subject to a ceiling of Rs. 15,000/- per beneficiary 

(as compared to Rs. 7,500/- per beneficiary in rest of the 

country). 

87


6.8.3 Margin Money Contribution : The margin money contribution 

from the beneficiary varies from 5 per cent to 12.5 per cent of 

the project cost so as to make the total of subsidy and margin 

money contribution equal to 20 percent of the project cost in 

the North Eastern States (as compared to 5 per cent to 16.25 

per cent in rest of the country). 

6.9.0 PROGRESS OF THE SCHEME 

The State-wise targets and the progress of the scheme in the 

North Eastern States in the last three years, viz, 2003-04, 2004- 

05 and 2005-06 (up to November 2005) as reported by Reserve 

Bank of India (RBI) are given at Table - I. 

TABLE I 

ACHIEVEMENT IN NORTH EASTERN STATES IN RESPECT OF PMRY 

DURING 2003-04, 2004-05 and 2005-06 (UP TO NOVEMBER 2006) 

Cases Cases Cases Cases Cases Cases 

S.No. States Target sanctioned disbursed Target sanctioned disbursed Target sanctioned disbursed 

2003-04 2004-05 2005-06* (up to November 05) 

1 Assam 6600 7501 5844 7500 10300 4785 7387 3644 2899 



2 Manipur 1200 595 520 1500 440 270 1418 06 04 

3 Meghalaya 350 453 403 400 597 555 361 75 68 

4 Nagaland 300 68 53 400 897 109 363 130 128 

5 Tripura 800 2494 2043 1000 2126 1689 1193 1431 1200 

6 Arunachal 

Pradesh 200 685 668 200 443 133 173 23 04 

7 Mizoram 200 788 775 200 144 142 188 0 0 

8 Sikkim 100 31 30 100 37 32 66 08 07 

Total 9750 12615 10336 11300 14984 7715 11149 5317 4310 

Source: RBI 

*Provisional 

Note: Employment Generation is estimated at the rate of 1.5 person per case disbursed 

6.10.0 CONTINGENCY FUNDS 

The funds for contingency are released to the State/UTs @ 

Rs. 250/- per beneficiary sanctioned loan. So far from the period 

2003-04 to 2005-06, as on 31 January 2006, an amount of 

88


Rs. 3.98 crore has been released to North Eastern States 

including Sikkim for training and contingency etc. State-wise 

details of funds released to North Eastern States including 

Sikkim from 2003-04, 2004-05 and 2005-06 (as on 31 January 

2006), are given at Table II. 

TABLE-II 

Statement of funds released to North-Eastern States under PMRY for training and 

Contingency during 2003-04, 2004-05 and 2005-06 (up to January 2006) 

(Rs. in thousand) 

Sl. State/UT 2003-04 2004-05 2005-06 

No. (up to Jan.06) 

1 2 3 4 5 

1 Assam 5897.150 10071.050 7780.250 

2 Arunachal Pradesh 346.800 539.448 453.538 

3 Manipur 557.00 454.800 12.940 

4 Meghalaya 709.621 829.150 822.000 

5 Mizoram 360.500 324.300 822.000 

6 Nagaland 100.050 1712.250 1680.000 

7 Tripura 1822.950 2124.400 2269.700 

8 Sikkim 47.700 24.600 88.850 

Total 9841.771 16079.998 13929.278 



89

SUMMARY OF THE C&AG REPORT 

Avoidable excess payment of Interest Subsidy: 

Chapter 

7 



Khadi and Village Industries Commission paid an 

additional interest subsidy of Rs.1.03 crore for bank 

finance availed by directly aided institutions due to its 

failure to revise the provision of the Interest Subsidy 

Scheme. 

[Para 14.1 of Report No.4 of 2005] 

Autonomous Bodies 

7.1.0 OBSERVATION 

7.1.1 The Interest Subsidy Eligibility Certificate (ISEC) Scheme 

is the major source of funding for khadi programme. It was 

introduced in May 1977 to mobilise funds from banking 

institutions to fill the gap in the actual fund requirement and 

its availability from budgetary sources. Under the ISEC 

Scheme, credit at the concessional rate of interest of 4 per 

cent per annum for capital expenditure as well as working 

capital is given as per the requirement of the institutions. 

The difference between the actual lending rate and 4 per 

cent is paid by the Central Government through KVIC to the 

lending bank. The funds for this purpose are provided by 

the Government under budget sub-head khadi grant of 

KVIC. 

90


7.1.2 During audit it was observed that the KVIC had issued Interest 

Subsidy Eligibility Certificates to one of its directly aided 

institutions viz Shri Mahila Griha Udyog Lijjat Papad against 

which the institution availed bank finance of Rs. 5.90 crore 

during 1998-99 and 1999-2000 and Rs. 7.90 crore during the 

period 2000-01 to 2003-04 from three different banks at varying 

rates of interest. 

7.1.3 The rates charged by the three banks namely, Bank of Baroda, 

Bank of India and Dena Bank for the period April 2002 to 

March 2004 were 0.5 per cent to 2 per cent, 1.36 per cent to 

2.6 per cent, 3.06 per cent to 4 per cent higher than the prime 

lending rates fixed by the respective banks. Hence, the 

Commission had to bear excess interest liability of Rs. 38.70 

lakh for the period 2002-03 and 2003-04. Further, considering 

the average difference in rates of interest, the excess payment 

of interest subsidy for the period 1998-99 to 2001-02 worked 

out approximately Rs. 64.47 lakh. Thus failure of the 

Commission to harmonise the scheme with the deregulated 

interest rate regime resulted in excess payment of interest 

subsidy amounting to Rs. 1.03 crore for the period up to March 

2004 on account of bank finance provided to only one 

institution. 



7.2 REPLY 

7.2.1 The Mahila Griha Udyog Lijjat Papad had raised bank finance 

from 3 banks instead of one bank as maximum permissible 

bank finance limit of the local branch was not sufficient to meet 

the financial need of the institution to full extent. However, the 

banks provided loan to the institution at different interest rates 

resulting in excess payment of Rs. 1.03 crore. The bank-wise 

and year-wise excess payment made on account of difference 

in interest rate were as under: 

91


(Rs. lakh) 

Year Bank of India Dena Bank Bank of Baroda 

1998-1999 11.26 20.40 4.94 

1999-2000 

2000-2001 8.52 3.19 

2001-2002 7.32 8.84 

2002-2003 14.61 17.68 6.41 

2003-2004 

Total 41.71 46.92 14.54 



7.2.2 As regards the issue of charging excess rate of interest by 

Dena Bank it is to state that each bank has its own set of 

guidelines for charging rate of interest for different type of 

advances. KVIC had taken up the matter with the Reserve Bank 

of India, who in turn replied that due to liberalization and 

relaxation of lending norms by RBI for fixing the interest rates, 

banks are free to devise their own guidelines for fixing lending 

rates for credit limit over Rs. 2.00 lakh. While fixing the interest 

rate, the banks also take into account evaluation and credit 

rating of the entity to whom loan is to be given. Accordingly 

three different lending rates were arrived as under: 

YEAR 2002-03 

Name of the Bank Rating Rate of interest 

Bank of India AA 14.60% 

Bank of Baroda AAA 13.50% 

Dena Bank B 16.25% 

7.2.3 Further, it has also been observed that when Dena Bank joined 

the consortium in 1995, the rate of interest was 19.25 per cent 

per annum i.e. same rate as charged by the lead bank, State 

Bank of India. However, subsequently the rate of interest 

charged by Dena Bank was less in view of their own bank 

92


norms. Moreover the rate of interest of Dena Bank was lowest 

in 1998 i.e. 17.60 per cent as against 18 per cent and 19 per 

cent charged by Bank of Baroda and Bank of India respectively. 

7.2.4 Further, the point made by audit that KVIC being the 

organization bearing the financial burden of higher rates should 

have negotiated for lower rates is well taken, but to calculate 

such notional loss is not wholly correct as negotiations with 

banks may or may not have resulted in charging of lower interest 

rates. It cannot be said with certainty that the banks would 

have agreed to lend at the lower rates, as being the public 

sector banks, they also have to be satisfied that their lending 

rates are as per the lending norms of their banks and RBI 

guidelines. 

7.2.5 The KVIC on its part has again made efforts and advised all 

the three banks lending to this institution to charge single rate 

of interest based on the common credit evaluation and credit 

ratings. A meeting was also held between the representatives 

of KVIC, three banks and President of Shri Mahila Griha Udyog 

Lijjat Papad on 12 July 2005. In the meeting the bank officials 

explained the reason for variation in the interest rate on the 

loans being provided to the institutions and assured that they 

will consider suggestion made by KVIC while working out single 

uniform rate of interest. 



7.2.6 It is now hoped that the banks would agree to the request of 

KVIC and charge one single rate of interest considering that 

they are lending to a KVIC aided institution which is helping a 

large number of women workers under it to earn a decent 

livelihood, even though as per the liberalised lending regime 

banks are free to decide their own lending rates. 

93


USE OF OFFICIAL LANGUAGE 

Chapter 

8 



8.1.0 Hindi is the Official Language of the Union of India and the 

Government policy is aimed at progressive use of Hindi in 

official work. Effective steps were taken during the year in the 

Ministry Agro and Rural Industries to ensure the compliance 

of the Official Language Policy of the Government, implement 

the annual programme and comply with the orders of the 

President on recommendations of the Committee of 

Parliament on Official Language. Consequently, there has 

been a constant progress in the use of Official Language in 

official work in all these offices. 

8.2.0 COMPLIANCE TO SECTION 3 (3) OF THE 

OFFICIAL LANGUAGE ACT, 1963 

All documents such as Resolutions, general orders, rules, 

licences falling under Section 3(3) of the Official Language Act 

and all papers laid on the Table of the Houses of Parliament 

were issued bilingually i.e. in Hindi and English. Some papers 

like general orders meant for departmental use were issued in 

Hindi only. 

8.3.0 REPLIES TO HINDI LETTERS 

All letters received in Hindi were replied in Hindi only. 

8.4.0 CORRESPONDENCE IN HINDI 

Letters to State Governments, Union Territories and their offices 

and offices of the Central Government located in region ‘A’ and 

94


‘B’ were issued in Hindi to the maximum extent possible. 

Similarly, efforts were also made to send letters in Hindi to 

Central Government offices located in region ‘C’ as per targets 

laid down in the Annual Programme. About 90.87 per cent 

correspondence were made in Hindi in region ‘A’, 85.64 per 

cent in region ‘B’ and 81.65 per cent in region ‘C’ up to the 

quarter ending December 2005. 

8.5.0 SECTIONS SPECIFIED FOR WORKING IN HINDI 

Sections, notified for doing hundred per cent work in Hindi, are 

working satisfactorily. 

8.6.0 MONITORING AND INSPECTIONS 

In order to ensure compliance of the Official Language Policy, 

monitoring is done through reviewing the quarterly progress 

reports in the meetings of the Official Language Implementation 

Committee etc. During the year, two Sections and one Desk of 

the Ministry have been inspected by the Officers with a view to 

ensure use of Hindi and compliance of the Official Language 

Policy. 



8.7.0 HINDI TRAINING 

All officials of the Ministry have already been trained in Hindi 

typing and Hindi stenography. Ministry is already notified under 

the Official Language Rule 10(4). 

8.8.0 MECHANICAL AIDS 

As per provisions of Official Language Act bilingual mechanical 

facilities have been provided on mechanical equipments in the 

Ministry. Computers and terminals have also been installed as 

per requirement and facility to work in Hindi is also available 

on them. 

95

8.9.0 COMMITTEES 

To review the use of Hindi in the Ministry and to give advise to 

accelerate the use of Hindi, a Hindi Advisory Committee exists 

in the Ministry. 

Departmental Official Language Implementation Committee 

under the chairmanship of Joint Secretary (In-charge-Hindi) in 

the Ministry of Small Scale Industries and Agro and Rural 

Industries has already been constituted. Quarterly meetings of 

these committees were held and important decisions taken 

regarding the use of Hindi in official work to ensure compliance 

of these decisions and follow up action. 

8.10.0 HINDI MONTH 



Hindi month was celebrated from 14 September 2005 to 13 

October 2005 in the Ministry. To encourage and motivate the 

employees for doing maximum official work in Hindi, various 

competitions in Hindi were organized during this period. On 

the occasion of Hindi Month, the messages of the Hon’ble Home 

Minister and the Cabinet Secretary were circulated to the 

officers / employees in the Ministry and also to the officer-incharge 

in the Attached and Subordinate offices under the 

Ministry for information and compliance. During this period, 

competitions in Hindi typing, Hindi stenography, debate in Hindi, 

Hindi essay and noting and drafting in Hindi General 

Knowledge, etc., were held and a large number of officers and 

employees participated in it with great enthusiasm. 

96

VIGILANCE ACTIVITIES 

9.1.1 The vigilance unit of the Ministry is headed by a Chief 

Vigilance Officer(CVO) of the rank of Joint Secretary 

appointed on the advice of the Central Vigilance 

Commission(CVC), who functions as the nodal point in the 

vigilance set up of the Ministry. The secretariat assistance to 

the CVO in the Ministry of ARI is given by the Vigilance Desk 

of the Department of Industrial Policy & Promotion (DIPP) as 

the Ministry of ARI being a small Ministry does not have its 

own independent vigilance unit. The vigilance unit is, interalia, 

responsible for the following in respect of Ministry of Agro 

and Rural Industries (ARI) : 

• identification of sensitive areas prone to malpractices/ 

temptation and taking preventive measure to ensure 

integrity/efficiency in Government functioning; 

Chapter 

9 



• taking suitable action to achieve the targets fixed by the 

Department of Personnel & Training(DoPT) on anticorruption 

measures; 

• scrutiny of complaints and initiation of appropriate 

investigation measures; 

• inspections and follow-up action on the same; 

• furnishing the comments of the Ministry to the CVC on 

the investigation reports of the Central Bureau of 

Investigation(CBI); 

• taking appropriate action in respect of departmental 

proceedings on the advice of the CVC; 

97


• obtaining second stage advice of the CVC wherever 

necessary; and 

• obtaining the advice of the Union Public Service 

Commission(UPSC) in regard to the nature and quantum 

of penalty to be imposed wherever necessary. 


The Coir Board, Cochin is an autonomous body under Ministry 

of ARI. The Vigilance work in Coir Board, Cochin is looked 

after by a part-time Chief Vigilance Officer appointed with the 

concurrence of CVC. 

9.3.0 KHADI AND VILLAGE INDUSTRIES 

COMMISSION, MUMBAI 

The KVIC, Mumbai is a statutory organisation under the M/o 

ARI. The vigilance unit in KVIC is headed by a full-time CVO 

appointed on the advice and concurrence of CVC. 



Preventive vigilance continues to receive priority attention with 

emphasis on identification of areas sensitive/ prone to 

malpractices and temptation. The guidelines/instructions issued 

by the DoPT and CVC from time to time in this regard are 

followed. Action taken inter-alia includes the following:- 

i) Regular and surprise inspections are being carried out 

by the Departmental Security Officer of the Deptt. of IP&P 

as a whole 

ii) 

Strengthening of vigilance machinery by way of 

appointment of CVOs in the offices and organisation under 

the Ministry who look after the vigilance activities in the 

office/organization concerned. . 

98


iii) 

iv) 

A strict watch is being kept on liaison men and on other 

persons. The departmental security instructions are 

reiterated from time to time for streamlining entry into the 

building. 

As regards the identification of areas which are corruption 

prone in the Ministry of ARI, it may be stated that the 

Ministry does not issue licences /registrations. 

v) The cases of such of the officers who have attained the 

age of 50 years or have put in 30 years of service are 

reviewed under FR 56 (j) in order to assess their suitability 

to continue in service thereafter. The exercise is currently 

being done by the establishment division of the DIPP. 

vi) 

vii) 

Steps to put an end to the practice of professional liaison 

men operating in the Ministry have been initiated and a 

fresh list of such unwanted liaison –men has been 

prepared. The entry system has been tightened and the 

enquiry-slip-system has been revitalised. 

In order to make officers conscious of the provisions of 

Conduct Rules, concerned Rules/Instructions are 

reiterated from time to time to them. 



99


CITIZENS’ CHARTER 

10.1.1 This Charter is a declaration of the Ministry, incorporating 

policies, missions, commitments for the small scale 

entrepreneurs and for the people of India in general. 

10.2.0 MINISTRY OF AGRO AND RURAL INDUSTRIES 

Chapter 

10 



The Ministry of Agro and Rural Industries is responsible 

for designing and formulation of policy, for promoting the 

growth of village and cottage industries, tiny and micro 

enterprises in the country. The actual implementation of 

the policy is done by the Ministry through the Khadi and 

Village Industries Commission (KVIC) and the Coir Board. 

The Prime Minister’s Rozgar Yojana (PMRY) of this 

Ministry is implemented through the District Industries 

Centres (DICs) of the States/Union Territories (UTs) and 

banks, in the rural areas as well as urban areas. The 

organizations of the Ministry have their own Citizen’s 

Charter. 

10.3.0 OUR MISSION 

Our Mission is to support the Village & cottage Industries, tiny 

and micro enterprises in both urban and rural areas and 

implementation of Prime Minister’s Rozgar Yojana (PMRY) by 

way of an advocacy role with the various organization of 

Government, by way of being provider of services to support 

ARI growth and by the management of programmes through 

Government and non-Government organisations for the benefit 

100


of village and cottage industries. Our object is to promote, aid 

and foster growth of Village & cottage Industries, tiny and 

micro enterprises by providing them institutional support in the 

areas of marketing, export, technology upgradation, training 

and common facilities services. We aim at providing prompt 

service to citizens through our field agencies like KVIC/SIDO 

(Partly) so that the growth of these sectors is enhanced, quality 

of production is improved and more employment opportunities 

are generated. 

10.4.0 OUR VALUES 

We are committed to efficient and prompt service with 

transparency and courtesy in dealing with citizens. 

10.5.0 OUR COMMITMENT 

The Ministry will be dutiful, disciplined and will respect the right 

of entrepreneurs and associations. The Ministry will maintain 

and uphold the confidentiality of the personal and business 

information disclosed to it by citizens. To continuously review 

the provisions and enforcement of laws and regulations in 

consultation with associations and other groups which help the 

units. 



10.6.0 STANDARD FOR GENERAL PROCEDURE 

The correspondence, letters received by the Ministry will be 

acknowledged in 15 days. 

10.7.0 RESPONSIBILITIES OF OUR CITIZENS 

The Ministry expects continuous feed back from citizens on 

the quality of the services provided to them and on areas in 

which they expect improvements. 

101


10.8.0 ASSESSING OUR PERFORMANCE 

The Ministry will share out performance with citizens through 

the media. The Ministry will hold independent surveys on 

citizenís perceptions and assessment of our performance. 

10.9.0 GUIDANCE AND HELP 

The information and Facilitation Counter of the Ministry located 

on the Ground Floor, Gate No.4, Nirman Bhavan, New Delhi 

provides information on the services and activities of the Ministry 

and related organizations in the area of tiny, agro and rural 

industries and their growth. One can visit the counter or make 

phone calls to it on 011-23062219. 

10.10.0 COMPLAINTS 



In case of any complaint, one may telephone or send a letter 

or fax or visit our office. However, before lodging such complaint, 

one may, first of all, use the Information and Facilitation Counter 

of the Ministry. In case, one is not satisfied, they may take up 

the matter with the Grievance officer in this Ministry. The 

address and phone number of the Information and Facilitation 

Counter and the Grievance cell are: 

I) Information and Facilitation Counter 

Gate No.4, Ground Floor, 

Nirman Bhavan, New Delhi-110 011. 

Tel.No.23062219 

II) 

Grievance Cell 

Director, Ministry of ARI 

Room No. 275-D, Udyog Bhavan, 

New Delhi –110011 

Tel. No.: 23062745 

102


10.11.0 RIGHT TO INFORMATION ACT 

In order to promote transparency and accountability in the 

working of every public authority and to empower the citizens 

to secure access to information under the control of each public 

authority, the Government of India has brought out “The Right 

to Information Act, 2005”. In accordance with the provisions of 

section 4(1) (b) of this Act, the Ministry of Agro and Rural 

Industries, Government of India has brought out a handbook 

for information and guidance of the stakeholders and the 

general public and hosted the same on the website of the 

Ministry i.e. http.//ari.gov.in. In terms of section 5(2) of the Right 

to Information Act, 2005, Shri Ashutosh Mishra, Director in the 

Ministry has been designated as Central Public Information 

Officer (CPIO) for all matters concerning the Ministry. The 

address and phone number of the CPIO is as under: 

Shri Ashutosh Mishra 

Director, Ministry of ARI 

Room No. 275-D, Udyog Bhavan, 

New Delhi –110011 

Tel. No.: 23062745 



Two organisations, namely, the Khadi and Village Industries 

Commission and the Coir Board, which comes under the 

administrative control of this Ministry, have also designated their 

CPIOs in respect to their organizations and the field offices 

under them. The details of CPIOs designated by the KVIC and 

the Coir Board is available on their websites www.kvic.org.in 

and www.coir-india.com. The addresses and phone numbers 

of the CPIOs designated for the head offices of the KVIC and 

the Coir Board are as under: 

(i) 

Shri P.R. Brahmane, 

Director, 

103


KVIC, Central Office, 

3, Irla Road, Vile Parle (West), 

Mumbai - 400056. 

Tel.: 022-26235728 

(ii) 

Shri P. Ajid Kumar, 

Joint Director, 

Coir Board, 

Coir House, M.G. Road, 

Kochi - 682016. 

Tel: 0484-2362751 



104

Annual Report 2005-06 - Ministry of Micro, Small and Medium ...

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