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Khadi Gramodyog Vikas Yojana: Empowering Rural India through Khadi


The Khadi Gramodyog Vikas Yojana is an amalgamation of two distinct programs, namely the Khadi Vikas Yojana, which has played a key role in fostering the Khadi Industry in India, and the Gramodyog Vikas Yojana, which is dedicated to promoting and assisting small-scale rural enterprises.

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Khadi Gramodyog Vikas Yojana: Objectives

  1. Enhancing employment and job opportunities in rural India
  2. Strengthening the condition of Khadi industries
  3. Fostering a sense of self-esteem among rural communities through improved opportunities
  4. Promoting Khadi clothing as a global fashion statement

Khadi Gramodyog Vikas Yojana: Salient Features

  • In Feb 2019, the Khadi Gramodyog Vikas Yojana received approval from the Cabinet Committee on Economic Affairs.
  • The Khadi and Village Industries Commission (KVIC) has managed both schemes over the years.
  • Khadi Vikas Yojana historically consisted of Market Promotion and Development Assistance (MPDA), Interest Subsidy Eligibility Certificate (ISEC), Aam Admi Bima Yojana, and Khadi Grant, which aimed to strengthen the weak infrastructure of the Khadi Industry. In contrast, Gramodyog Vikas Yojana focused on funding village industries through KVIC.
  • The Khadi Gramodyog Vikas Yojana includes a new component called Rozgar Yukt Gaon, which operates alongside the existing mix.
  • The objective of Khadi Gramodyog Vikas Yojana is to promote entrepreneurship in the Khadi Industry, introduce new employment opportunities at the rural level, and ultimately empower rural communities.

Khadi Gramodyog Vikas Yojana: Major Schemes

Rozgar Yukt Gaon

  1. The Khadi Gramodyog Vikas Yojana is an initiative aimed at empowering Khadi artisans by providing them with the necessary resources to produce and sell their products.
  2. To achieve this objective, the Cabinet Committee for Economic Affairs has proposed a shift in the existing business model of Khadi enterprises, moving away from the subsidy-based model to an enterprise-based model.
  3. As a part of the scheme, 50 villages will be provided with the tools and equipment required for the production of Khadi, including Charkha, loom, and warping units.

Market Promotion and Development Assistance (MPDA)

  1. The Ministry of MSME (Micro Small and Medium Enterprises) is responsible for overseeing the Market Promotion and Development Assistance (MPDA) scheme.
  2. The primary objective of this scheme is to create new opportunities for promoting the Khadi Industry across India.
  3. To support the production, selling, and marketing of Khadi and small enterprises in rural areas, a grant of 977 crores was sanctioned under this scheme.

Interest Subsidy Eligibility Certificate (ISEC)

  1. The scheme was launched in May 1977 to assist Khadi and Polyvastra production enterprises to obtain capital from banks.
  2. Under the scheme, rural enterprises can receive bank loans with an interest rate of only 4 percent, with the remaining interest being subsidized by the KVIC (Khadi and Village Industries Commission).

Boosting Agarbatti Udyog (2020)

  1. A new programme was sanctioned by the Ministry of MSME in 2020 to boost Agarbatti manufacturing in rural areas under the Gramodyog Vikas Yojana.
  2. KVIC (Khadi and Village Industries Commission) will train Agarbatti artisans to help build the enterprise-led business model in the rural sector.
  3. Raw material, tools and equipment required to produce Agarbatti will also be provided by KVIC.
  4. The objective of this move by the ministry is to revive the Agarbatti Udyog and provide employment opportunities in rural enterprises.

Khadi Gramodyog Vikas Yojana: Beneficiaries

  • Individuals living in rural areas with limited or no skills.
  • Artisans involved in the production of Khadi.
  • Entrepreneurs who wish to invest in the Khadi industry.
  • Various industries under the MSME sector that will benefit from the scheme.

Khadi Gramodyog Vikas Yojana: Implementation

  1. The scheme comprises of two components, Khadi Vikas Yojana and Gramodyog Vikas Yojana.
  2. The two schemes have been merged to form the Khadi Gramodyog Vikas Yojana.
  3. The scheme aims to transform the existing business model used by rural industries.
  4. The goal is to promote self-sufficiency among village industries and reduce their reliance on subsidies.
  5. Assistance will be provided to small scale and cottage industries such as food, leather, pottery and hand-woven textiles to enhance their production and marketing capabilities. The government plans to establish Design Houses across the country to increase accessibility of Khadi products to the general public.
  6. The government intends to increase financial aid to 50-60% to encourage the establishment of structured business verticals and better resource management.

Khadi Gramodyog Vikas Yojana: Significance

  • The global market of Khadi will see improvement.
  • The employment opportunities in rural areas of India will be enhanced.
  • The living conditions of people living in poverty in rural areas of India will be improved.

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