What the 50% Budget Cut Means for the PM Internship Scheme

In a move that has surprised policy analysts, the Union Budget 2026-27 has significantly reduced the allocation for the PM Internship Scheme.

The outlay for the ambitious youth employment program has been slashed by over 50% compared to the Budget Estimates (BE) of the previous fiscal year, raising questions about the pace of the scheme’s nationwide implementation.

PM Internship Scheme: The Fiscal Contraction

The PM Internship Scheme, originally launched to bridge the skill gap by placing youth in India’s top 500 companies, saw its funding reduced from the ₹2,000 crore projected in the previous year to just under ₹950 crore for FY26.

This sharp decline in financial backing suggests a recalibration of the government’s approach toward the corporate-led skilling model.

While the government maintains that the scheme remains a priority, the reduced budget indicates a shift from aggressive expansion to a more measured, demand-driven rollout.

Implementation Challenges and Industry Response

The reduction in outlay follows a year of mixed results in the scheme’s initial phase.

While thousands of companies registered on the portal, the actual conversion of “intent” into active internships lagged behind initial projections.

Industry experts point to several bottlenecks, including complex compliance requirements for participating firms and a mismatch between the geographical location of candidates and available corporate roles.

The lower budget allocation may reflect a strategy to utilize unspent funds from the previous cycle before infusing new capital.

PM Internship Scheme Budget Cut: Focus on Quality Over Quantity

Government sources suggest that the revised outlay is part of a plan to focus on “quality internships” rather than meeting high numerical targets.

By tightening the budget, the Ministry of Corporate Affairs aims to ensure that the internships provided are in high-demand sectors like semiconductor manufacturing, AI, and green energy.

The government continues to offer a monthly stipend of ₹5,000 to interns, with ₹4,500 contributed by the state and ₹500 by the corporate partner through CSR funds.

Impact on Employment Targets

The scheme originally aimed to provide internship opportunities to one crore youth over five years.

With the current funding cut, critics argue that the five-year target may become increasingly difficult to achieve.

However, proponents of the budget move suggest that the government is encouraging the private sector to take a larger share of the financial burden, moving toward a self-sustaining apprenticeship ecosystem.

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