Sunita's Makhana Unit: Reading a Scheme Correctly
Sunita Devi, 34, has traded raw makhana (fox nuts) in Darbhanga for three years, buying from pond growers and selling to Patna wholesalers. She now wants a processing unit that grades, roasts, flavours and pouch-packs makhana. The project cost is ₹16 lakh - ₹11 lakh for machinery and ₹5 lakh of working capital. She is a general-category woman entrepreneur, has no collateral to mortgage, and has repaid a ₹3 lakh Mudra Kishore loan on time. She has never taken a government subsidy, and no one else in her family has. Her household income is ₹4.2 lakh a year and her husband is a government schoolteacher. The district industries officer says she can get 'up to 35% margin money'. Her bank manager says a subsidy scheme 'will not cover a person already in the makhana trade' and asks her to bring her own contribution of at least 25%. She has ₹90,000 of her own.
1. Assuming she qualifies as a rural special-category beneficiary, set out the PMEGP funding plan with each component calculated.
Read the worked answer
PMEGP has three components: margin money (the subsidy), the beneficiary's own contribution, and a bank loan for the balance. For a rural project by a special-category beneficiary - and a woman is in the special category - the margin money rate is 35% of project cost and own contribution is 5%.
Project cost: ₹16,00,000. Margin money 35% = ₹5,60,000 (kept as a term deposit for three years and then adjusted against the loan). Own contribution 5% = ₹80,000 - she has ₹90,000, so this is covered. Bank loan = ₹16,00,000 − ₹5,60,000 − ₹80,000 = ₹9,60,000.
The size of the loan matters as much as the subsidy. ₹9.6 lakh is below ₹10 lakh, which is the band in which PMEGP loans are sanctioned without collateral, with guarantee cover available. So the 'no collateral' problem is solvable on paper - but only if she is accepted as a new unit, which is the real question.
2. Answer the bank manager's two objections and list what she should carry to the branch.
Read the worked answer
Objection 1 - 'the scheme will not cover a person already in the trade.' Her existing activity is trading; the project is a new manufacturing activity, with new machinery, a new premises and a new product form. She has taken no subsidy. That is an argument, not a guarantee, so she should ask the district office for the eligibility decision in writing before she buys machinery or commits to orders.
Objection 2 - 'bring 25% of your own.' That is not the PMEGP norm for a rural special-category project, where the required contribution is 5%. The 25% figure looks like the margin-money rate being confused with own contribution. She should quote the scheme's own-contribution slabs politely and ask the branch to verify against the current guidelines rather than argue from memory.
Documents: Udyam registration; project report with machinery quotations; proof of rural location and of the new premises; category proof; the Mudra repayment record (a clean repayment is evidence in her favour, not against her); and a declaration that no family member has availed PMEGP.
The judgement being tested: an applicant who arrives with the guidelines, a written eligibility query and a clean repayment record turns a verbal refusal into a file that a branch manager must answer.
3. If PMEGP is refused, what is Plan B and what does it cost her each month? Advise her.
Read the worked answer
Plan B is an ordinary term loan plus working capital, with no subsidy. She would borrow ₹16,00,000 − ₹90,000 = ₹15,10,000.
EMI per ₹1 lakh at 12% for 60 months is about ₹2,224. With PMEGP: ₹9.6 lakh × 22.24 ≈ ₹21,350 a month. Plan B: ₹15.1 lakh × 22.24 ≈ ₹33,580 a month.
The subsidy is worth about ₹12,200 a month in cash flow - roughly ₹1.46 lakh a year for five years. That is the real price of ineligibility, and it is nearly a third of her household's annual income.
Advice: apply for PMEGP first and obtain the decision in writing; do not order machinery on a verbal promise. If refused, do not take a ₹15 lakh loan against a ₹4.2 lakh household income. Instead shrink the project - one grading-and-packing line instead of a full roasting line, outsourced roasting, rented premises - so that the EMI stays near what the unit can actually service. A smaller unit that survives is worth more than a fully equipped one that defaults in year two.