Several MSMEs are ineligible under the new Eligibility Condition of PMKVY

On April 9, the Ministry of Skill Development & Entrepreneurship, Government of India, floated a request for proposal (RFP) on special projects under Pradhan Mantri Kaushal Vikas Yojana (PMKVY) 3.0, that has a new eligibility condition which is asking the applicant organization to have a positive net worth successively in the last two financial years (clause 2.2.1.2 of the RFP).

Under this eligibility condition, several existing MSMEs would be ineligible; like those who have been associated with special projects under PMKVY 2.0 and had invested heavily in training centers.

According to a source, “The parameter introduced violates the essence of promise and commitment repeatedly expressed by the PMO regarding complete support to the MSME sector during these difficult Covid times. On one hand, where most government departments are in line with the commitment of the PMO going an extra mile to ensure support to the sector, the new guidelines by the Skill Ministry contradict the government’s continued commitment to handhold and stand by small companies especially those in the MSME sector.”

It is obvious that due to Covid lockdown, during last fiscal the skill ecosystem, also, faced the most severe onslaught with complete closure of all vocational training across India for almost nine months. With no work, zero revenues, and a huge burden of training center rentals and employee salaries, many skill- development firms in the MSME space had to shut down their operations or have become financially crippled.

“Moreover, the long gap of three months between Special Projects scheme under PMKVY 2.0 ending in January 2021 and the subsequent launch of the scheme under PMKVY 3.0 has put additional financial burden with no work for most of the companies engaged in the skill ecosystem under PMKVY special projects. Even the year before the Covid outbreak, economy was down, and many companies’ financials were hit, and 2021-22 will again see the severe impact,” noted a source on the condition of anonymity.

After the delay in the rollout of the third edition of the scheme, skill training companies in the MSME sector now face the new eligibility criteria of positive net worth as a necessary condition for application, which is making them ineligible to apply.

Even the Ministry of MSME, GoI has appealed to all the government departments for providing adequate support in line with the commitment of the Prime Minister’s appeal and assurance for this critical sector. Moreover, PMKVY as a scheme is designed with a payment structure with payments made only after completion of milestones laid as per skill execution parameters.

Skill companies invest in training costs and infrastructure in advance before they apply and can avail payment only when successfully meeting the milestones. PMKVY is one of the flagship schemes of the Modi government. And such debarring of MSMEs during Covid times through a new clause by Skill Ministry is surely an adverse action, the source added.

Industry experts believe, like many departments or ministries, the Skill Ministry should also have offered special waivers of conditions for MSME companies to facilitate their survival in these difficult Covid times rather than introducing such a draconian exclusion clause debarring them based on financial net worth.