In order to develop rural India, Government of India has introduced several schemes. To begin with, IRDP was the only self-employment programme. Beginning with Training of Rural Youth for self employment (TRYSEM), a number of allied programmes have been added over the years such as Development of Women & Children in Rural Areas (DWCRA), Supply of Improved Toolkits to Rural Artisans (SITRA) and Ganga Kalyan (GKY). The multiplicity of programmes, being viewed as separate programmes in themselves, resulted in a lack of proper social intermediation, absence of desired linkages among these programmes inter se and the implementation being more concerned with achieving individual programme targets rather than focussing on the substantive issue of sustainable income generation. To rectify the situation, the Government has decided to restructure the self-employment programmes. A new programme known as “Swarnjayanthi Gram Swarozgar Yojana” (SGSY) has been launched from 1st April, 1999. This is a holistic programme covering all aspects of self employment such as organisation of the poor into self-help groups, training, credit, technology infrastructure and marketing. SGSY will be funded by the Centre and the States in the ratio of 75:25. Despite efforts made over the past few decades, rural poverty in India continues to cause grave concern. While the anti-poverty programmes have been strengthened in successive years and while, in percentage terms, poverty levels have reduced from 56.44% of India’s population in 1973-74 to 37.27% in 1993-94, the number of rural poor has more or less remained static and is estimated to be about 244 million people. The effect of such a large percentage of poor on the country’s development is not difficult to appreciate. Quite obviously, we need to redress the situation quickly. It is in this context that the self-employment programmes assume significance for, they alone can provide income to the rural poor on a sustainable basis.

The objective of SGSY will be to bring the assisted poor families (Swarozgaris) above the poverty line in three years, by providing them income-generating assets through a mix of bank credit and government subsidy. It would mean ensuring that the family has a monthly net income of atleast Rs.2000. Subject to availability of funds, the effort will be to cover 30% of the poor families in each block during the next five years.

Quality will be the hallmark of SGSY, which has to be imaginatively used to bring people above the poverty line.

Salient features of Swarnjayanti Gram Swarozgar Yojana

  • Swarnjayanthi Gram Swarozgar Yojana aims at establishing a large number of micro-enterprises in the rural areas, building upon the potential of the rural poor. It is rooted in the belief that the rural poor in India have competencies and, given the right support can be successful producers of valuable goods / services.
  • The assisted families (henceforth known as Swarozgaris) may be individuals or groups (Self-Help Groups). Emphasis will be on the group approach.
  • The objective under SGSY is to bring every assisted family above the poverty line in three years.
  • Towards this end, Swarnjayanthi Gram Swarozgar Yojana (SGSY) is conceived as a holistic programme of micro-enterprises covering all aspects of self-employment viz., organisation of the rural poor into self-help groups and their capacity building, planning of activity clusters, infrastructure build up, technology, credit and marketing.
  • In establishing the micro-enterprises, the emphasis under SGSY is on the cluster approach. For this, 4-5 key activities will be identified for each block based on the resources, occupational skills of the people and availability of markets. Selection of key activities will be with the approval of the Panchayat Samitis at the Block level and the DRDA/ZP at the District level. The major share of SGSY assistance will be in activity clusters.
  • SGSY will adopt a project approach for each key activity. Project reports will be prepared in respect of identified key activities. The banks and other financial institutions will be closely associated and involved in preparing these project reports, so as to avoid delays in the sanctioning of loans and to ensure adequacy of financing.
  • The existing infrastructure for the cluster of activities will be reviewed and gaps will be identified. Investments will be made under SGSY subject to a ceiling of 20% (25% in the case of North Eastern States) of the total programmes allocated for each district. This amount will be maintained by the DRDAs as ‘SGSY - Infrastructure Fund’ and which can also be utilised to generate additional funds from other sources.
  • The effort under SGSY is to cover 30% of the poor in each block in the next five years through an efficient programme. In planning of the key activities, care would be taken to ensure that the maximum number of Panchayats are covered without jeopardising the quality of the programme.
  • SGSY will also focus on the Group approach. This would involve organisation of the poor Help Groups (SHGs) and their capacity building. Efforts would be made to involve women members in each SHG. Besides, exclusive women groups will continue to be formed. At the Block level, at least half of the groups will be exclusively women groups. Group activity will be given preference and progressively, majority of the funding will be for Self Help Groups.
  • The Gram Sabha will authenticate the list of families below the poverty line identified in the BPL census. Identification of individual families suitable for each key activity will be made through a participatory process.
  • SGSY is a credit-cum subsidy programme. However, credit will be the critical component in SGSY, subsidy being only a minor and enabling element. Accordingly, SGSY envisages a greater involvement of the banks. They will be involved closely in the planning and preparation of projects, identification of activity clusters, infrastructure planning as well as capacity building and choice of activity of the SHGs, selection of individual Swarozagris, pre-credit activities and post-credit monitoring including loan recovery.
  • SGSY will seek to promote multiple credit rather than a one time credit ‘injection’. The credit requirement of the Swarozgaris will be carefully assessed. They will be allowed and, in fact, encouraged to increase their credit intake over the years.
  • SGSY will seek to lay emphasis on skill development through well-designed training courses. Those, who have been sanctioned loans will be assessed and given necessary training. The design, duration of training and the training curriculam would be tailored to meet the needs of the identified activities. DRDAs will be allowed to set apart up to 10% of the SGSY allocation on training. This would be maintained as “SGSY - Training Fund”.
  • SGSY will ensure upgradation of technology in the identified activity clusters. The technology intervention will seek to add value to the local resources, including processing of the locally available material from natural and other resources for local and non-local markets.
  • SGSY will provide for promotion of marketing of the goods produced by the SGSY Swarozgaris. This would involve providing market intelligence, development of markets, constancy services, as well as institutional arrangements for marketing of the goods including exports.
  • Subsidy under SGSY will be uniform at 30% of the project cost, subject to a maximum of Rs.7500 in respect of SC/STs, however, these will be 50% and Rs.10000 respectively. For Groups of Swarozgaris (SHGs), the subsidy would be 50% of the cost of the scheme. Subject to a ceiling of Rs.1.25 lakh. There will be no monetary limit on subsidy for irrigation project.
  • SGSY will particularly focus on the vulnerable groups among the rural poor. Accordingly, the SC/STs will account for at least 50% of the Swarozgaris, women for 40% and the disabled for 3%.
  • SGSY will be implemented by DRDAs through the Panchayat Samits. The process of planning, implementation and monitoring would integrate the banks and other financial institutions, the PRIs. NGOs as well as technical institutions in the district DRDAs will be suitably revamped and strengthened.
  • 15% of the funds under SGSY will be set apart at the national level for projects having a far reaching significance and which can also act as indicators of possible alternative strategies to be taken up in conjunction with other departments or semi-government or international organisations. This would include initiatives to be taken in the individual districts or across the districts.
  • Funds under the SGSY will be shared by Central and State Governments in the ratio of 75:25.
  • The central allocation earmarked for the States will be distributed in relation to the incidence of poverty in the States. However, additional parameters like absorption capacity and special requirement will also be taken into consideration during the course of the year

In order to assist rural entrepreneurs, who may be covered in the scheme, DRDA identified some key activities. To get details about the projects entrepreneurs can approach Project Officers of Rural Development Department situated in each district.


  1. Coconut leaves thatching
  2. Door Mat
  3. Dining Table Mat
  4. Handloom Weaving
  5. Milch Animals
  6. Sheep Rearing
  7. Mushroom Cultivation
  8. Jute Products - Bags etc.
  9. Readymade Garments
  10. Grinder Stone Cutting
  11. Sericulture
  12. Medicinal Plant Cultivation

The details of the implementation of this scheme in Erode District is given below.

SGSY 1999 - 2000

Sl.NoDetils of
No.of GroupsAmount sanctioned (Rs. in lakhs)
1Revolving Fund10210.2015.3025.50
3622.835 23.449 46.284

Marketing Assistance

DRDA constructed a marketing complex called ‘Poomalai’ at the estimate of Rs.28 lakhs at Erode. The purpose of the marketing complex is to market the goods produced by the self help groups

Further, separate village bazaars are also under construction in all the 20 blocks of the district. These will help the groups to market their products directly to the consumers, eliminating the middlemen and realising a better price for their products.




A High Power Committee on Khadi and Village Industries headed by the Prime Minister recommended in May, 1994, among other things accelerated growth of rural employment generation programmes. Accordingly, KVIC has formulated a Scheme for financing projects with investment limits upto Rs.25 lakhs for rural industrialisation and employment generation. Under the scheme, a portion of the project cost is being provided as Margin Money by way of back-end subsidy.

Though KVIC has introduced the Margin Money Scheme during 1996, with necessary modifications again scheme during October, 1997. Further for smooth implementation of the scheme, Commission has already placed lumpsum Margin Money in advance with Nodal branch of each Public Sector banks at Mumbai. The total amount deposited is Rs.132 Crores, covering 27 Public Sector Banks.

The Reserve Bank of India has already approved and circulated the contents of the Scheme vide Ref.RPCD No.PLNFS/BC.13/06.0612(d)/97-98 dated 28th July, 1997.

Consequently the Public Sector Banks have already issued Circulars for their branches for adoption of the Scheme of KVIC.

Further R.B.I. has vide their circular / letter addressed to all Regional Offices of R.B.L., the need for extending invitations to representative of KVIC to SLBC / DCC meetings and the Agenda for these meetings should include periodical review of financing of Khadi and Villagae Industries Sector. In this regard, R.B.I. has already advised the S.L.B.C. convenors.

The salient features of the scheme:

The Bankers are at liberty to finance in identification of beneficiaries and viable schemes as per the banking norms and KVIC’s criteria. In this endevour, KVIC / KVIB would render all cooperation to the banks in selection of beneficiaries and schemes.



    The Scheme envisages that;

    25% of the project cost for the projects upto Rs.10.00 lakhs will be provided as “Margin Money”.

    For projects above Rs.10.00 lakhs and upto Rs.25.00 lakhs, rate of Margin Money will be 25% of Rs.10.00 lakhs plus 10% of the remaining cost of the project.

    In the case of weaker section beneficiary viz. SC/ST/OBC/Women/ Physically Handicapped/Ex-servicemen and Minority Community beneficiary/Institution and for Hill, Border and Tribal Areas, North Eastern Region, Sikkim, Andaman & Nicobar Islands, Lakhsdweep, Margin Money grant will be at the rate of 30 per cent of the project cost upto Rs.10.00 lakhs and above this amount upto Rs.25 lakhs it will be 10% of the remaining cost of the project.

    Project cost will include one cycle of Working Capital.

    Margin Money Scheme is applicable for viable village Industry Projects (Khadi and Polyvastra are kept out of its purview).

    The Bank will initially sanction 90% of the Project cost in case of General category of beneficiary / institution and 95% of the project cost in case of Weaker Section beneficiary /institution and disburse full amount suitably for setting up of the project.


    Individual / Entrepreneurs for projects upto Rs.10.00 lakhs.

    Institutions / Co-operative Societies / Trusts for projects upto Rs.25.00 lakhs.


    1. KVIC has placed a lumpsum deposit of Margin Money in advance with the corporate office of each Bank or a Nodal Branch designated by the Banks in Savings Bank Account in the name of KVIC.
    2. Banks will ensure that each project fulfills the criteria of “Villagae Industries”, “Per Capita Fixed Investment”, “Own Contribution” and is located in “Rural Area”.

      1. Village Industry means: Any industry located in rural area which produces and goods or renders any services with or without the use of power and in which the fixed capital investment per head of an artisan or a worker does not exceed Rs.50,000/- A list of village industries under purview of KVIC is also furnished. (Annexure - III).
      2. Rural Area Means: An area which comprises any village or includes an area outside the Municipal limits, the population of which does not exceed 20,000.

    3. Banks will appraise projects technically as well as economically and take their own credit decision on the basis of viability of each project.
    4. Banks must ensure investment of “own contribution” of the entrepreneur / individual / institution / Co-operative Society etc. @ 10% of the total cost of the project for general category and 5% in the case of the Weaker Section beneficiary / institutions viz. SC / ST / OBC / Women/ Minorities/ Ex-servicemen and Physically Handicapped persons, North Eastern Region, Sikkim, Andaman & Nicobar Islands, Lakshdweep, Hill, Border and Tribal Areas are treated as Weaker Section areas.
    5. Once the Margin Money is released in favour of the loanee, it should be kept in Term Deposit Receipt for 2 years at branch level in the name of the beneficiary / institution. Interest accrued on such deposit will be utilised to service partial interest burden on the loan disbursed to the beneficiary / instituion.
    6. Since “Margin Money” is to be provided in the form of back-ended Subsidy (Grant), it will be credited to the borrower’s loan account after 2 years from the date of first disbursement to the borrower / institution.

      (In case, the Bank’s advance goes “bad” before 2 years period is over, Margin Money will be adjusted by the banks to liquidate loan liability of the borrower either in part or full).
    7. In case any recovery is effected subsequently by the Bank from any source whatsoever, such recovery will be utilised by the bank for liquidating their outstanding dues first. Any surplus will be remitted to KVIC.
    8. Margin Money will be one time assistance from KVIC. For any enhancement of Credit Limit, the KVIC’s margin Money assistance will not be available.

  1. KHADI: (Cotton, Silk and Wollen) and Dann carpet
    (Exclusively for sikkim and North East States)
  2. Village Industries

    Village industries / schemes under the purview of KVIC group in seven major groups are as under:

Group - I : Mineral Based Industry

(1)Cottage Pottery Industry (2) Lime Stone, Lime shell and other lime products industry (3) Stone cutting, crushing, carving and engraving for Temples and Buildings (4) Utility articles made out of stone (5) Slate and Slate pencil making (6) Manufacture of plaster of paris (7) Utensil washing powder (8) Fuel briqueting (9) Jewellery out of Gold, Silver, Stone, shell and synthetic materials (10) Manufacture of Gulal, Rangoli (11) Manufacture of Bangles (12) Manufacturer of paints, pigments, varnishes and distemper (13) Manufacturer of Glass toys (14) Glass Decoration - cutting, disigning and polishing (15) Gem cutting.

Group - II : Forest Based Industry

(16) Handmade paper (17) Manufacture of Kattha (18) Manufacture of Gums and resins (19) Manufacture of Shellac (20) Cottage match Industry, manufacture of fire works and Agarbattis (21) bamboo and cane work (22) Manufacture of paper cups, plates, bags, and other paper containers (23) Manufacture of exercise book binding, envelope making, register making, including all other stationery items made out of paper (24) Khus tattis and broom making (25) collection, processing and packing of forest products (26) Photo framing (27) Manufacture of jute products (under fibre Industry).

Group III : Agro Based and Food Industry

(28) Processing, packing and marketing of cereals, pulses, spices, condiments, masala etc. (29) Noodles making (30) Power atta chakki (31) Daliya making (32) Mini rice shelling unit (33) Palmgur making and other palm products industry (34) Manufacture of cane gur and khandasari (35) Indian sweets making (36) Raswanti - Sugarcane Juice catering unit (37) Bee-keeping (38) Fruits and Vegetable processing, preservation and canning including pickles (39) Ghani oil industry (40) Menthol oil (41) Fibre other than coir (42) Collection of forest plants and fruits for medicinal purpose (43) Processing of maize and ragi (44) Pith work, manufacture of pith mats, and garlands etc. (45) Cashew processing (46) Leaf cup making (47) milk products making unit (48) Cattle feed, poultry feed making.

Group - IV : Polymer and Chemical Based Industry

(49) Flaying curing and tanning of hides and skins and ancillary industries connected with the same and cottage leather industry (50) Cottage soap Industry (51) Manufacture of rubber goods (dipped latex products) (52) Products out of Rexin, PVC, etc. (53) Horn and Bone including Ivory products (54) Candle, Camphor and sealing wax making (55) Manufacture of packing items of plastics (56) Manufacture of Bindi (57) Manufacture of mehandi (58) Manufacture of Essential Oils (59) Manufacture of shampoos (60) Manufacture of Hair Oil (61) Detergent and washing powder making (non-toxic).

Group - V : Engineering and Non conventional Energy

(62) Carpentry (63) Blacksmithy (64) Manufacture of household aluminium (65) Manufacture and use of manure and methane (66) Vermiculture and waste disposal (67) Manufacture of paper pins, clips, safety pins, stove pins, etc (68) Manufacture of decorative bulbs, bottles, glass (69) Umberlla assembling (70) Solar and wind energy implements (71) Manufacture jandmade utensils out of brass (72) Manufacture of handmade utensils out of copper (73) manufacture of handmade utensils out of bell metal (74) Other articles made out of brass, copper and bell metal (75) Production of radios (76) production of cassettee player whether or not fitted with radio (77) Production of cassette recorder whether or not fitted with radio (78) Production of voltagae stablizer (79) Manufacture of electronic clocks and alarm time pieces (80) Carved wood and artistic furniture making (81) Tin smithy (82) Motor winding (83) Wire net making (84) Iron grill making (85) Manufacture of rural transport vehicles such as hand carts, bullock carts, small boats, assembly of bicycles, cycle rickshaw, motorised carts, etc. (86) Manufacture of musical instruments.

Group _ VI : Textile Industry (excluding khadi)

(87) Polyvastra which means any cloth woven on handloom in India from yarn handspun in India from a mixture of manmade fibre with either cotton, silk or wool or with any two or all them or from a mixture of manmade fibre yarn handspun in India with either cotton, silk or woolen yarn handspun in India or with any two or all of such yarn (88) Manufacture of lok vastra cloth (89) Hosiery (90) Tailoring and preparation of readymade garments 991) Batic works (92) toys and doll making (93) Thread balls and woolen balling, laachi making (94) Embroidery (95) Manufacture of surgical bandages (96) Stove wicks (97) Embroidery of fabrics.

Group _ VII : Service Industry

(98) Laundry (99) Barbar (100) Plumbing (101) Servicing of Electronics wiring and electronics domestic appliances and equipments (102) Repairs of diesel engines, pumpsets etc. (103) Tyre vulcanising unit (104) Agriculture servicing for sprayers, insecticides, pumpsets, etc. (105) Hiring of sound system like loud speaker, amplifier, mike, etc. (106) Battery charging (107) Art board painting (108) Cycle repair shops (109) Masonary (110) Band troupe (111) Motorised local boat (fibre glass) for goa only (112) Motor Cycle to fly as taxi 9for Goa only) (113) Musical instruments (for Goa only) (114) Dhabas (Not serving liquor) (115) Tea stall.

KVIC margin money scheme was very successfully implemented in the district and probably the district performance might be the best in the state with 349 loans sanctioned to the tune of 280 lakhs during 1999-2000. Bankers enthusiasm in the implementation of the scheme is appreciable. KVIB has allocated the target of 638 benificiaries and margin money of Rs. 32 lakhs for the year 2000 - 01.