1

 CHAPTER II

THEORETICAL PERSPECTIVES

THE CONCEPT OF ENTERPRENEUR AND ENTERPRENEUSHIP

INTRODUCTION

 The concept of entrepreneur emerged some centuries ago. The word

”entrepreneur” has an interesting history. It was first coined in the
French language, and dates back to the emergence of the concept of an
entrepreneurial function. In the early 16th century it was first applied to
those who were engaged in military expeditions. After about 1700 AD,
the term came into wider usage and applied to architects and
contractors of public works like roads, bridges, harbors and
fortification.

 The Oxford English Dictionary :( in 1897) defined Entrepreneur as the

Director or Manager of Public Musical institution, one who ‘gets up’
entertainment, especially musical performance.

H. Cole defines entrepreneurship as the purposeful activity of an

individual or
A group of associated individuals, undertaken to initiate, maintain
or aggrandize profit by production or distribution of economic
goods and services”

 Entrepreneurship is the attempt to create value through

recognition of business opportunity, the management of risk-
taking appropriate to the opportunity, and through the
communicative and management skills to mobilize human,
financial and material resources necessary to bring a project into
fruition.

The Concise Oxford Dictionary defines entrepreneurship as “readiness,

initiative and daring for an undertaking”
 2

 The concept of Entrepreneurship un the analysis of economic

development first appeared in the 18th century. Since then the
concept ha been analyses and defined by economists,
Psychologists, Sociologists, Social Psychologists,
Anthropologists and historians, from their respective points of
view, but no consensus has so far emerged and it still remains
controversial elusive and vague.

ENTREPRENEURIAL THEORIES;

Entrepreneurial theories have been advanced by different social

scientists. They naturally differ from one another in their print of view. They
may be broadly classified into
i) Economic
ii) Sociological and
iii) Psychological.

FUNCTIONS OF AN ENTREPRENEUR

 From the foregoing account of entrepreneurial theories, it is obvious

that the different theorists have defined entrepreneurship in terms of
entrepreneurial functions. And hence a detailed analysis of
entrepreneurial functions would provide a better insight into the nature
of entrepreneurship. Some writers have thought of the entrepreneur as
owner of the business and ‘co-ordinate’ economists like Canutillo, J.B
say and others stress risk-taking as has specific function.

 Prof. Knight regards entrepreneurship as a dual function of risk-

taking and control.

 J.S Mill lists superintendence control and direction as entrepreneurial

functions.

 Schumpeter said innovation is the sole function of an entrepreneur.

 To Alfred Marshal, organization and superintendence are the main

functions of an entrepreneur and organization building capacity is the
 3

most essential skill expected of him. He also assigns to the

entrepreneur the functions of risk-bearing innovation and management.

REDDISH MAKES A THREE TOLD DIVISION OF

FUNCTIONS

1. Capitalist – employing factors and buying raw material, setting up

the organization:

2. Managerial – innovation, supervision and organization of

productive activity: and
3. Entrepreneurial decision- making.

 B.C Tandon lists the functions of an entrepreneur in a

developing economy in the context of its economic, legal,
political and cultural environment. According to him the
entrepreneur must posses.

1. Capacity to take risks and self-confidence,

2. Technological knowledge, alertness to discern opportunities,
willingness to accept change, and ability to initiate,
3. Ability to Marshal resources, and
4. Ability for organization and administration.

Tandom views the entrepreneur as an ‘Ideal – Type’ rather

than a ‘social type’

Modern economics recognize that the entrepreneur today has to

perform multiple functions to operate successfully an enterprise. They
include provision of capital, taking-risks, strategic administration and day to
day technical management.

Peter Killby has drawn up the following long list of the several
functions.

1. Perception of market opportunities (novel or imitative)

2. Gaining command over scarce resources:
3. Purchasing inputs
 4

4. Marketing of the product and responding to competition;

5. Dealing with the public and bureaucracy concessions, licenses,
taxes;
6. Management of human relations within the firm;
7. Management of customer and supplier relations.
8. Financial management.;
9. Production management (Control by written records, supervision,
co-coordinating input flows with order, maintenance);
10. Acquiring and overseeing assembly of the factory;
11. Industrial engineering. (Minimizing input with a given production
process)
12. Upgrading process and production quality; and
13. Introduction lf new production Techniques and product.

Modern writers on entrepreneurship outline broadly these functions of

the entrepreneur
1. Innovation
2. Risk taking and
3. Organization and management of business so as to have
leadership and control over it.

TYPES OF ENTREPRENEURS

Clarence Danhof, on the basis of his study of the American

Agriculture, classified entrepreneurs in the manner that at the initial stage of
economic development, entrepreneurs have less initiative and drive and as
economic development proceeds, they become more innovating and
enthusiastic. Basing on this, he classified entrepreneurs into four types. These
are discussed in seriatim.

1. INNOVATING ENTREPRENEURS: An innovating

entrepreneur is one who introduces new goods, inaugurates new
method of production, discovers new markets and reorganizes the
enterprise. It is important to note that such entrepreneurs can work
only when a certain level of development is already achieved, and
people look forward to change and improvement.

2. IMITATIVE ENTREPRENEURS: These are characterized

by readiness to adopt successful innovations inaugurated by innovating
entrepreneurs. Imitative entrepreneurs do not innovate the change
 5

themselves, they only imitate techniques and technology innovated by

others. Such types of entrepreneurs are particularly suitable for the
under-developed regions for bringing a mushroom drive of imitation of
new combinations of factors of production already available in
developed regions.

3. FABIAN ENTREPRENEURS; Fabian entrepreneurs are

characterized by very great caution and skepticism in experimenting
any change in their enterprises. They imitate only when it becomes
perfectly clear that failure to do so would result in a loss of the relative
position in the enterprise.

4. DRONE ENTREPRENEURS: These are characterized by a

refusal to adopt opportunities to make changes in production formulae
even at the cost of severely reduced returns relative to other like
producers. Such entrepreneurs may suffer from losses but they do not
make changes in their existing productions methods.

Following are some more types of entrepreneurs listed by some

other behavioral scientists:

1. SOLO OPERATORS: These are the entrepreneurs who essentially

work alone and, if needed at all, employ the beginning, most of the
entrepreneurs start their enterprises like them.

2. ACTIVE PARTNERS: Active partners are those entrepreneurs who

start carry on an enterprise as a joint venture. It is important that all of them
actively participate in the operations of the business, Entrepreneurs who only
contribute funds to the enterprise but do not actively participate in business
activity are called simply ‘partners’

3. INVENTORS: Such entrepreneurs with their competence

and inventiveness invent new products. Their basic interest lies in research
and innovative activities

4. CHALLENGERS: These are the entrepreneurs who

plunge into industry because of the challenges it presents. When one
challenge seems to be met, they begin to look for new challenges.
 6

5. BUYERS: These are those entrepreneurs who do not

like to bear much risk. Hence in order to reduce risk involved in setting up a
new enterprise, they like to buy the on going one.

6. LIFE TIMER: These entrepreneurs take business as an

integral part of their life. Usually the family enterprise and business, which
mainly depend on exercise of personal skill, fall in this type/category of
entrepreneurs.

PROBLEMS IN ENTREPRENEURSHIP:

The many complexities involved in the starting on an entrepreneurial

career and the problems faced by the existing entrepreneurs demotivate and
discourage the unemployed from taking up an entrepreneurial career. They
would rather prefer waged salary employment to entrepreneurship

There is a common belief that all business risky and there is much truth
in it. Because the entrepreneur has to take countless decisions from among
several possible alternatives in performing his task successfully. If his
planning or estimation about the future were to go wrong he will surely land
in trouble.

In developing entrepreneurship, we are faced with several problems,

which are of individuals, groups, and institutional nature. However,
ultimately it rests on the individuals because it is he who has to take the
initiative to take a decision to start and manage his enterprise. Both he also
needs the approval and support of his kin, group or community. Some of the
problems he is likely to encounter are lack of motivation. Slyness and
institution on his past, lack of finance for initial investment, lack of support
from his family and community, lack of confidence in one’s own abilities,
ignorance of opportunities that he can avail himself of lack of requisite
managerial and technical skills to start and manage his enterprise. Similarly,
he may have to face some problems from the group to which he belongs such
as preferences for traditional occupations an professions, lack of awareness
 7

or ignorance of alternatives avocations; lack of freedom to choose an

account of the influence of the local elite of the dominant caste.

The problems listed above are varied and many and belong to related
fields. And therefore, a multi-pronged and interdisciplinary approach is
required to find solutions to them.

There is abundant scope for entrepreneurial development in India

today. The four important factors, which matter in entrepreneurial
development, are:

1. Resources material and human

2. Organization concerned with entrepreneurial
development.
3. Infrastructure; and
4. Entrepreneurs

In entrepreneurial development mass should be the focus. There are

around him several opportunities and alternatives for his enterprises.
We should try to build up the necessary machinery to promote and
accelerate the growth of entrepreneurship among people today.

CHARACTERISTICS OF AN ENTREPRENEUR

If we go through the business history of India, we come across the

names of persons who have emerged as successful entrepreneurs in the
country who started their business enterprises with small size and made good
fortunes. Success or otherwise of a small enterprise is, to a great extent,
attributed to the success or otherwise of the entrepreneur himself / herself.
Then the question is : What makes the entrepreneurs successful? Whether
they had anything common in their personal characteristic? The scanning of
their personal characteristics shows that there are certain characteristics of
entrepreneurs, which are fond usually prominent in them.

1. Hard work
2. Desire for high achievement
3. Highly optimistic
4. Independence
 8

5. Foresight
6. Good organizer
7. Innovative

GENESIS OF PMRY;

Unemployment is considered as a bane of India’s developments.

The educated unemployed youth who become unproductive and
frustrated are to be paid special attention. The small-scale sector
includes villages and cottage sectors are found out to be the best means
to solve the growing un-employment problem.
Self-employment is the only solution to the un-employment problem.
Policy makers and economists studied the problem and arrived at new
conclusion that setting up a small-scale unit with a moderate
investment has got the potential to provide employment to about
4to5people directly and indirectly. The satisfaction of self-employment
and the contentment of contributing to the National income and
proving livelihood to few unemployed can have positive multiplier
effect. Adding to it the SSI sector has got the inherent advantage if
utilizing the local resources, technologies for productive purposes and
at the same time could satisfy the needs of the local people and exploit
the local market at micro level.

Taking all the these into consideration the central government

initially launched self-employment scheme for educated unemployed
Youth (SEEUY)
Popularly known as Gramodaya Scheme introduced by Government of
India in
1985 where in financial assistance of not more than Rs.35000 was
provided for industries, Rs.25000 for service units and RS.15000 for
business ventures by way of composite loans to eligible educated
unemployed Youth to start their small enterprises.

District Industries Centre (DIC) operated this central scheme at

this district level, where 25% of the sanctioned loans amount was
granted as subsidy by Central Government to be deposited as fixed
deposit in the name of the candidate. This scheme could not be
continued successfully. It was estimated that more than 70% of the
units became sick and subsequently closed down.
 9

Honorable Prime Minister of India, announced a new scheme

the Prime Minister’s Rozgar Yojana (PMRY) on 15th August 1993.

The scheme was launched on the auspicious day of 2nd October

1993 the birth anniversary of “Mahatma Gandhi” all over the country
the main objective of the PMRY scheme was to provide easy
subsidized financial assistance to educated unemployed Youth for
starting their own enterprises in manufacturing, business service and
trade sectors.

Initially the scheme was aimed at providing self-employment to

one million educated unemployed Youth in the country by setting up 7
lakhs micro enterprises through inducting services and business
ventures over a period of 2 years. The scheme was a stupendous
success and caught the imagination of the youth. Overwhelmed with
the response and ever-increasing need, the Government has decided to
make it a permanent scheme and framed modalities & guidelines for its
successful and to fulfill the purpose for which it is designed.

SALIENT FEATURES OF PMRY SCHEME:

 This is a centrally sponsored scheme

 The Development Commissioner (small-scale industries) under
ministry of small scale, Rural and Agro, industries Government
of India is the apex body for this scheme.
 The respective Commissioner/Director of industries implements
the scheme at the state level except the four metropolitan cities
with an overall monitoring by the concerned secretaries of
industries.
 The implementation agencies at the grass root level are District
industries Centre (DIC) who would be instrumental for the
grounding of the units.
 Small industries services institute (SISI) located in the four
Metropolitan citied of Delhi, Kolkata, Mumbai and Chennai are
the implementing agencies of this scheme.
 The DCSSI has set up a special PMRY division in the
headquarters under the able guidance of an IAS officer. DCSSI
formulates the rules, regulations and guideline instructions and
 10

provide clarification an all the matters pertaining to PMRY

scheme. It has also devised complete feedback information by
the means of getting monthly, quarterly and annual progress
reports from all the states to closely monitor the implementation
and progress of the scheme.
 Similarly at the state level, A state level PMRY committee
meeting monitors the progress of the scheme every quarter.
 The yearly targets for number of beneficiaries for each state is
fixed by DCSSI.

PARAMETERS OF PMRY:

AGE:
For all educated unemployed between the age group of 18-40 years, in
general with a 10 years relaxation for SC/ST s, ex-servicemen, physically
handicapped and woman.

EDUCATIONAL QALIFICATION:
8th passed. Preference will be given to those who have been trained for
any trade in Government recognized/approved institutions for duration of at
least six months.

FAMILY INCOME:
Neither the income of the beneficiary along with the spouse nor the
income of parents for the beneficiaries shall exceed RS.40000pa.

RESIDENCE:
Permanents resident of the area for at least 3 years.

DEFAULTER:
Should not be a defaulter to any nationalized bank/financial institution
/cooperative bank. Further a person already assisted under other subsidy
linked government schemes would not be eligible under this scheme.

ACTIVITIES COVERED:
All economically viable activities including agriculture and allied
activities but excluding direct agricultural operation like raising crop,

PROJECT COST:
 11

RS.1.00 lakh for business sector. Rs.2.00 lakhs for other activities.
Loan to be of composite nature. If two or more eligible persons join together
in a partnership, project upto Rs10.00lakhs are covered. Assistance shall be
limited to individual admissibility.

SUBSIDY AND MARGIN MONEY:

Subsidy will be limited to 15%of the project cost subject of ceiling of
Rs755 per entrepreneur. Bank will be allowed to take margin money from the
entrepreneur varying for 5% to 16.25% of the project costs as to make the
total of the subsidy and the margin money equal to 20% of the project cost.

COLLATERAL:

No collateral for project up to Rs1 lakh. Exemption from collateral in

case of partnership project will also be limited to an amount of Rs.1 lakh per
person participating in the project.

RATE OF INTEREST AND REPAYMENT SCHEDULE:

Normal bank rate of interest shall be charged. Repayment schedule

may range between 3to7 years after an initial moratorium as may be
prescribed.

TRAINING AND OTHER ASSISTANCE:

The training expenses and operational expenditure to be covered

within the ceiling of Rs. 2000 per case the existing system of revising the
scale of expenditure in consultation with the finance for various activities and
flexibility would be available to the implementing agencies of the state and
central levels subjects to condition that over all training and operating
expenses remain within the ceiling of Rs.2000 per case sanctioned.

IMPLEMENTING AGENCY:
The district industries centers and the directorate of industries shall
mainly be responsible for scheme implementation along with banks.

LINKAGES OF TARGETS WITH RECOVERY:

Basic minimum targets based on the population and the number of

educated unemployed, Additional targets would be linked to the recovery of
 12

loans sanctioned, past performance of sanctions special circumstances

prevailing in the state/ UT/.

RESERVATION:

Preference should be given to weaker sections including women. The

scheme envisages 22.5% reservation for SC/ST and 27% for other backward
class (OBCS).In case SC/ST/OBC candidates are not available, States/ UTs
Government will be competent to consider other categories of candidates
under PMRY.

HOW THE SCHEME IS IMPLEMENTED:

FIXING OF TARGETS:

Basically these targets are given for a year staring form April to
March. These largest are fixed by DCSSI after carefully taking into
consideration the important factors like population, unemployment and
backwardness of the areas. The targets fixed for a year would be regularly
monitored and may also be revised taking into consideration the recovery of
loans and performance for the year. The state of Andhra Pradesh was allotted
the basic target of achieving of 16900 additional targets of 16900 nos.
Totaling to 33800 beneficiaries to AP state for the year 2000-2001.
Commissioner/Director of Industries , AP state Govt is the implementing
agency of the PMRY scheme in Andhra Pradesh.

ALLOCATION OF TARGETS BY STATES:

The state Government reallocates the states targets to all District

Industries Centers (DIC) of the district where the scheme is in vogue. Andhra
Pradesh is implementing the PMRY scheme in its entire 23 district including
the twin cities if Hyderabad and Secunderabad.

ALLOCATION OF FINANCIAL TARGETS TO BANK:

Along with DICs the banks also form apart of the implementing
agencies for sanction of loans. The chief General Manager RPCE of reserve
bank of India is intimated about the targets allocated to the states, they intern
 13

issue the necessary guidelines and funds to the lead banks of the states. Lead
banks of the states issues the necessary instructions to their respective bank
branches of each district for the disbursement to bed made in accordance with
the fixed targets.

CALLING FOR PMRY APPLICATIONS:

The District industries centre (DIC) along with banks being the
implementing agency at the grass root. Level of each district calls for people
to apply for PMRY loans. The required applications forms are available at
DICs with the local industry promotion officers of the concerned areas as
well as local banks. The application form is a simple format seeing the basic
details of the candidate (Application form enclosed).

CONSTITUTING THE TASK FORCE COMMITTEE:

The GM, DIC constitutes the task force committee and convenes
meeting to conduct interview of the candidates. The members of the task
force committee are Gm DIC, all the financing bankers, officials of all other
developmental agencies like SISI The objective of the task force committee
is to take interview of the applicants to assess their knowledge about the
proposed project, aptitude, interest, and entrepreneur qualities so as to make
the proposed project a success and to sincerely replay the proposed loan
amount given under the PMRY scheme. The committee selects the candidates
by the process of grading marks. Task force committee selects the candidate
and allocate to the bank. The selected candidates, are duly intimated and
directed to approach the selected bank branch for sanctions of the loan, with
this the selection process is completed.

PROVIDING TRAINING TO THE SELECTED CANDIDATES:

As per the DCSSI guidelines all the selected candidates under PMRY
have to undergo training. The GM, DIC’s have to provide the training to the
candidates by making the necessary arrangements. They are provided with
training materials, training schedule and good faculty and convenient training
centers. The candidates get familiarized with the finer points of starting and
successfully running their selective enterprises. The period of training is 15 to
20 working days for candidates setting up industry sector and 7 to 1 working
days for business/service sectors.
 14

MONITORING AND REVIEWING OF PMRY:

The DCSSI has devised a procedure to review and monitor the

progress of PMRY Under this every district has to furnish the information on
sanction, disbursements, training, grounding and recovery of loan sanctioned,
and furnishes the same in a prescribed format giving monthly, quarterly and
annual progress reports to the commissioner of industries for preparing the
same reports for the state. These reports are submitted to the DCSSI and
RPCD of RBI for review. The state level PMRY committee settings are
convened under the chairmanship of chief secretary to state Government
with secretaries of industries. Finance , commissioner of industries General
Manager SLBC of banks lead bank managers general manager RPCD of RBI,
Director , SISI as members and all the related organization as invitees to
discuss the progress of PMRY category of unites benefited and suggestions
for improvement. The District industries promotion committee (DIPC)
meetings at the District level under the chairmanship of the District collector
are convened every month by the DIC s to review the progress of the PMRY
at the district level. All these measures are aimed to make the objectives of
the scheme i.e. to provide employment to educated unemployed youth of the
society for whom the scheme is formed.

DIFFICULTIES EXPERIENCED BY DIC:

1) TRAINING:

The important and nation wide scheme (viz) PMRY is being

implemented by the District industries Center, with the active support of bank
officials

The application are received, in this are scrutinized and candidates are
selected by Task Force Committee. The selected candidates are sent to banks
for issue to sanction tickets for having sanctioned of loan amount. on receipt
of sanction orders from banks PMRY training is imparting to the candidates
through approved training institutions for imparting said PMRY Training m/s
Trecstep, Trichy and thanthal hans roever college have been approved by the
industries commissioner and director of industries and commerce , Chennai-
5. But one approved training institution M/s Trecstrep have expressed their
 15

inability to continue to conduct the training programmers entrusted to them

due to certain administrative reasons. he another institution M/s Thanthai
classes are nowadays not upto the entire arrangements for training classes are
nowadays not upto the entire satisfaction, as they are not willing to conduct
training at Ariyalur and hesitate to take up training programme. Moreover
this is an educational institute involved in academic courses only. In view of
the above one approved and interested training institute to take up training
programmes entrusted to them is very essential for perambalur district for
providing effective training to the PMRY beneficiaries.

2) SANCTION ORDERS:

Bank officials are not issuing sanction orders to PMRY beneficiaries

on prorate basis . They are issuing sanction orders in bulk only at the end of
the financial year. Due to which it is find very difficult by this Department to
organize training programme to PMRY beneficiaries and so also
disbursement of sanctioned loan amount is affected, Reserve bank of India
and our Department insists for achieving 100% target in sanction before 31st
December if sponsored applications are sent by

HOW TO APPLY FOR LOAN

1. Project ideas and preparation of a project Report:

Candidate desiring to get loan should have complete knowledge

about the project proposed to be set up. The entrepreneur is free to seek the
advice of developmental agencies like SISI and DIC, which has specially
prepared variable project profiles for PMRY beneficiaries. Guidance and
clarifications regarding the selection of project are also provided by these
organizations.

The project idea is the most important step for availing PMRY loan.
Based on the project idea the entrepreneur has to prepare a project report. A
project report is a statement which contains the details of the proposed
project like fixed assets, raw materials required, other contingencies like rent,
wages/salaries, other expenditure etc., total cost of production, sales, profit,
break-even analysis, profitability ratios, repayments schedules etc. This
 16

project report would reflect at a glance the details of capital required, cost of
production, profit and various parameters of viability of the capital required,
cost of production, profit and variu8s parameters of viability of the proposed
project. SISIs and DICs have prepared project profiles for PMRY
beneficiaries on various viable schemes, which can be adopted. Assistance,
guidance can also be provided for new/updating of the project profile.

As the PMRY facilitates to provide loans under manufacturing, service

and business ventures, a prospective entrepreneur has to first prepare a
project proposal. While deciding the ventures the following factors should be
carefully considered.

a. the marketability of the product by market survey

b. the demand and supply position of raw materials required if any

c. The availability of infrastructure facilities like power, water and

other Government Clearances.

d. Technology and know how of manufacturing/business/service

procedures to be adopted and where to set up the unit.

2. Applying for PMRY Loan

Applying finalizing the project idea, along with the

project profile the applicant has to fill the form and duly submit it
enclosing the necessary documents and photographs at the DIC
and/or at the local bank.

All the applications received at DICs and banks are thoroughly

scrutinized and selected applicants are called for interview. In order
to facilitate the applicants, the interviews are planned at places that
are near to their place of residence.
 17

It has been observed that most of the prospective entrepreneurs

desiring to avail the benefits of this scheme fail to utilize it, due to
lack of proper guidance and awareness about the modalities and
formalities to be followed to avail the scheme. With an aim to fill
this void a step-by-step guidelines are explained about the
eligibility relation to age, minimum educational qualifications,
family income, resident proof and cast certificate for SC/ST/BC
either by DIC/SISI/local banks. A person willing to apply for
PMRY should checkout all these aspects and should produce proof
for all these parameters while applying for the scheme.

One can apply any time during the year. But the best time
would be between April to June of the year. The normal practice is
to hold PMRY interviews in three phases in a year in all the
districts.

The task force committee conducts the interview and selects

the candidates for the bank loan.

3. Bank clearance for the project.

After receiving the intimation letter of selection and

allotment of bank, the applicant is advised to discuss the viability of the
proposed project with the allotted banker regarding the aspect of the
proposed project like alterations, changes and other financial aspects.
After complying with all the required formalities with the banker the
applicant can start the implementation of the project.

4. Training:

Selected applicants are called for training. After the

successful completion of the training the candidates are awarded
 18

certificates that they; have to produce to the bank to get the sanctioned
loan. The DIC and bankers helps in the grounding of the project and
supports for success of the project.

5. Grounding of the unit:

Now the applicant is financially prepared for grounding the

proposed project. Before grounding the unit certain statutory and
mandatory formalities are to be complied with which are as follows.

 Arranging for the margin money as per the PMRY guidelines that
could be 5% to 16.25% of the project cost.

 Arranging for collateral security if required by the bankers and for

projects costing more then Rs one lakh per person.

 Taking permission form the local body like Panchayat or

Municipality as the base may be for starting the unit.

 Getting the Pollution Control Board clearance if required.

 Getting the Sales tax registration

 Registering with DIC as a tiny sector unit to avail the State

Government incentives.

 Getting other statutory clearances like Factories Act, Labour Act,

Boilers Act and Central excise if the unit is covered under these
legislation.

In order to facilitate the Small entrepreneurs to gets all

the required clearances the District Industries Centre (DIC) has
started the single window system where DIC would get all theses
clearances on behalf of the entrepreneur. The entrepreneur can would
 19

get all these clearances on behalf of the entrepreneur. The

entrepreneur can avail these facilities.

6. Repayment of Loan:

After the unit is grounded and the unit starts its commercial
production the repayment schedule is worked out by the banker and
intimated to the applicant that depends on the PMRY guidelines for
repayment that are between 3 to 7 years with initial moratorium worked out
as the case may be.

THE ENTREPRENEUR HAS TO FURTHER REMEMVER THAT

HE HAS BEEN PROVIDED WITH A LOAN THAT HAS TO BE REPAID
WITH INTEREST PROMPTLY IN TIME. IN CASE OF DEFAULT, THE
BANK ALONG WITH THE DIC HAS BEEN PROVIDED POWERS TO
RECOVER THE OUTSTANDING LOAN ALONG WITH INTEREST
DUE BY SEEKING THE ASSISTANCE OF REVENUE DEPARTMENT
AND POLICE DEPARTMENT.

Efforts are ton tie cover this loan under Revenue Recovery Act, as
was the case with CMEY programme. Hence sincere efforts are to be made
by the entrepreneur to ground the unit and make all out efforts for repayment
of the loan with interest in time.

SOME OBSERVATIONS ABOUT PMRY

 In the year 1993 - 94 for 6 months the target was fixed for 3355
number of beneficiary. The year of 1994 - 95 the target was
increased to 18,200. The target for the year 2000 – 01 is fixed at
33,800, no. of beneficiary an increase of 85.7% over 5 years.

 The Number of applications recommended to the banks were

108% of the target of 1994 – 95, whereas it is 17.5% less than
target of 1999 – 2000 (as on 30-09-2000). The excess of
 20

applications over the target is done to give adequate provision for

rejections.

 The percentages of Number of sanctions of loan to the target for

the year 1999 – 2000 (as on 30-09-2000) is 77.9% and 91.6% of
the total applications recommended to the banks were sanctioned.

 The amount of sanction has considerably increased from Rs.

1,152.83 lakhs in 1994 – 95 to Rs. 17,768 lakh in 1999 – 2000 (as
on 30.09.2000), which can be viable projects for availing this
benefit.

 The important aspect of PMRY is the disbursement, which is only

44.24% for the target for the year 1999 – 2000 (as on 30.09.2000).

 The percentage of disbursement to sanction is 74.3% in 19994 –

95 and 56.7% in 1999- 2000 (as on 30-09-2000).

 The per capital disbursement has increased to Rs. 67,000 for the
year 1999 – 2000 which was only Rs. 50,000 in 1994 – 95.

Application should be submitted complete in all respects in duplicate along

with attested copies of the following documents

1. Proof of Date of Birth (SSC Certificate or T.C from school where

studied)

2. Certificate of qualification academic and technical

3. Ration card or any other proof of residency for 3 years,. i.e. residential
certificate issued by MRO.

4. Experiences certificate if applicable

5. Income certificate issued by MRO of concerned mandal.

6. Caste certificate issued by MRO if applicable.

7. Driving License in case of the candidate applying for motor vehicles.

 21

8. A copy of the proposed project profile.

Guidelines to be adopted for means of finance:

In this compendium, Promoter’s contribution has considered as 5% for

easy in calculations. However, as the project cost increased beyond Rs.
50,000/- subsidy + Promoter’s contribution has to be calculated basing on
individual project cost.

For example:

Project cost

Project cost Rs. 1,00,000

Bank cost Rs. 80,000 (80%)
Subsidy Rs. 7,500 (7.5%)
Promoter’s Contribution Rs. 12,500 (12.5%)

Bank loans in all the cases are 80% of the Project Cost.

In the vibrant Indian economy small scale sector plays a

significant role that accounts for 40% of the industrial production and
35% of total Exports. The small-scale sector with more than 32 Lakh
Units creating employment to about 167 Lakh persons has strongly
emerged as a means to address the problem, of unemployment and self-
sustenance. Adding to it the process of liberalization, economic reforms
precipitated into competition and tremendous opportunities for the
growth of small- scale sector with an objective to provide the basic
imports, support to this vital sector and to address the requirements like
credit, the Govt. of India haves launched the ambitions project of Prime
Minister’s Rozar Yojana (PMRY) on 15th August 1993 to provide self-
employment to educated unemployment youth.
 22

This Novel scheme is being implemented and monitored by the

office of the Development Commissioner (Small Scale Industries) Govt.
of India, through its network of Small Industries Service Institute and
District Industries Centre’s at state level. SISI, Hyderabad had embarked
on the onerous task of preparing the compendium of project profiles for
PMRY beneficiaries. These projects are carefully selected keeping in
view all the relevant aspects of viability by the officers of this institute.
These project profiles are aimed to help the prospective PMRY
beneficiaries to select and launch for projects. The schemes inters – alias
provides the information regarding machinery, raw materials,
manufacturing process, investment etc.,

Conclusion

The PMRY scheme is launched with an aim on self-reliance and

utilizing the youth work force for productive purposes. This essence of
the scheme is to be inculcated by all the implementing agencies and
should strive to achieve it in its true sense. As the gap between targets
and grounding are wide, strenuous efforts are to be made to reduce the
gap and the true success of the PMRY would be only when number of
targets of grounding of projects could be same.