StartUp India receives just 24% of promised Rs 2,500 cr

New Delhi: The initiative of the government to promote entrepreneurship among youth by giving a push to start-ups under the StartUp India campaign is proving to be a failure as the Centre has released just Rs 600 crore out of the total allocated amount of Rs 2,500 crore.

The StartUp India campaign would complete 2 years of its launch on January 16, 2018. According to the latest report, till date, some 5,350 startups have been recognised in the country with over 40,000 employees working in these start-ups. Surprisingly, the worst is that the agency that was designated by the Centre to disburse funds to start-ups has released only Rs 337 crore out of Rs 600 crore to only 75 start-ups in 2 years.

Under the initiative, which was launched on January 16, 2016, by Prime Minister Narendra Modi and Finance Minister Arun Jaitley, the Small Industries Development Bank of India (SIDBI) was tasked to manage the disbursement of funding to the alternative investment fund (AIF) registered under the market regulator SEBI.

Under 'funds of fund' provision, the AIFs were authorised to identify start-ups for fund disbursement. "Till date, a total amount of Rs 600 crore has been released to SIDBI for the FFS (fund of funds for Startups), while Rs. 605.7 crore has been committed by SIDBI and Rs 90.62 crore disbursed to 17 alternative investment funds, who in turn have invested Rs 337.02 crore in 75 startups," said CR Chaudhary, Minister of State for Commerce and Industry, in reply to a question in the Parliament. According to the information given by the government in the Parliament, SIDBI issued Rs 500 crore in 2015-16 and only Rs 100 crore in 2016-17. The total amount issued by the Centre is just 6 per cent of the total 'committed' funding. In 2015, the government had set up a Rs 10,000 crore fund of funds under the Startup India Action Plan that was be distributed among startups in four years, which means an allocation of Rs 2,500 crore every year.

According to experts, the poor funding pattern would derail the ambitious project of the Prime Minister. "The StartUp India campaign was started to provide financial support of budding entrepreneurs to create employment opportunities and when the start-ups would not get the funds, it wouldn't be possible for them to sustain leading to failure of the whole programme."

"Our Prime Minister always talks about becoming an employer instead of employees, but the government is delaying fund disbursement meant for start-ups," the experts said, adding that India has a huge potential to become the hub of startups ecosystem as the country is the third-largest start-ups in the world.

There are some start-ups that have been started to resolve issues in agriculture aimed at helping farmers sustain themselves against the pervasive shortage of water and use existing sources efficiently. A Bangalore-based startup – Avanijal – has developed an automated system termed 'Nikash' that leverages IoT and wireless technology to control irrigation motors and valves in the field.