Skill financing scheme, Pradhan Mantri Kaushal Mudra Yojana, likely to be unveiled in Budget

New Delhi: India is firming up a new scheme-Pradhan Mantri Kaushal Mudra Yojana (PMKMY)- to fund skilling of the country’s growing workforce, marking a major push to make financing a key part of the skills ecosystem.

The scheme is likely to be announced in the upcoming Budget 2026-27 in February and could be spread over a five-year period.

The scheme is the key component of a comprehensive financing model being firmed up by ministry of skills development and entrepreneurship, aimed at meeting the growing demand for workforce development in India while ensuring that resources reach all segments, including women, rural youth and persons with disabilities, ET has learnt. While details of the scheme size, target beneficiaries and mode of implementation are being finalized for consideration at the highest level, a senior government official aware of the deliberations told ET that the government funding is aimed at providing beneficiaries with broader access to both high-end government and private training providers where the cost of skills training is much higher.

“Besides, funding will be prioritized for emerging sectors like renewable energy, semiconductors, electric vehicles, defence and other high-tech and sunrise sectors to prepare a pool of trained manpower as India works towards becoming self-reliant and Viksit Bharat,” the official added. Other proposals in the pipeline to develop a robust funding mechanism include targeted interest subvention to marginalised groups and special regions to improve accessibility and affordability of skilling and expanding blended finance model through philanthropic and CSR funding sources. The government is of the view that India’s skill finance market needs to be expanded through credit guarantees and better data for loan underwriting, thus reducing risks for lenders and enhancing skills finance.