The Centre on Thursday announced a new employment generation scheme to create over 37 lakh jobs by merging the existing Prime Minister's Rozgar Yojana and the Rural Employment Generation Programme.

The new credit-linked subsidy programme, called Prime Minister's Employment Generation Programme, was approved at a meeting of the Cabinet Committee on Economic Affairs chaired by Prime Minister Manmohan Singh.

The financial implication of the new scheme, to be implemented over a four-year period, is estimated at Rs 4,485 crore (Rs 44.85 billion), Finance Minister P Chidambaram told reporters.

"The expected employment generation under the new scheme would be 37,37,500," he said.

Under the PMEGP, which will be implemented through the ministry of micro, small and medium enterprises, the maximum cost of a project admissable under the manufacturing sector will be Rs 25 lakhs (Rs 2.5 million).

For the services sector, the cost ceiling will be Rs 10 lakhs (Rs 1 million), Chidambaram said.

Subsidy levels for the scheme in urban areas will be 15 per cent in the general category and 25 per cent in the special category, which includes SC, ST, OBC, minorities and ex-servicemen.

In rural areas, the subsidy levels will be 25 per cent in the general category and 35 per cent in the special category.

"The PMEGP improves upon the subsidy levels and the cost limits of projects compared to those available so far under the PMRY," Chidambaram said adding that it also ensures that salient features of the REGP are not diluted in any way.

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