Exactly a year has passed on January 16, when the government of India had started Rs 10,000 crore Start Up India fund, with full page advertisement in leading newspapers.
But we are yet to understand who has actually benefitted from the exercise? Who has got the funds, which government planned to invest in the new ventures?
Due to lack of communication and understanding on government's plan, the entire project has toppled down with seemingly negligible achievement in the process.
"The 10,ooo crore fund started off on a bang with its announcement but one does not really know what the initiative did for the sector," Ankur Bisen, Senior Vice President, Teknopak Advisors told media.
However, Indian inc has appreciated the intention of the government sand said that the fund was laudable. When it was announced, the government said that the fund is "expected to generate employment for 18 lakh persons on full deployment... A corpus of Rs 10,000 crore could potentially be the nucleus for catalysing Rs 60,000 crore of equity investment and twice as much debt investment." However, there was a catch, the government did not specify, how the funds were to be disbursed.
"Who are the beneficiaries," Manish Taneja, Co-Founder, Purplle.com questions government's intentions. "Nothing much has changed for startups," he told.
However, there is an advertisement in newspapers, which is snobbishly quoting achievements saying, that the fund has recognised over 500 startups, 118 incubators, 257 tinkering labs were sanctioned under the Atal Innovation Mission, over 170 startups were mentored for incubation and funding support. The advertisement has further mentioned that it was easier now to access funds through relaxed rules for angel funds and foreign venture capitalists, etc.
Surprisingly, it did not mention any name of the startups or any other beneficiaries. Even the coaching institutes publish names of the students who secure good marks in the examinations. This is one of its kind of advertisement which gives numbers but did not mention anything about its successful ventures.
"A year later, no one knows which agency/body is disbursing the funds, so one does not know how the programme can be termed a success," an anonymous entrepreneur said.
The government must focus on creating opportunities for generation of funds for the start-ups. The role of the government should be to create an environment where investors can fund the companies. The government should not disburse money to foster entrepreneurship, Harish HV, Partner, Grant Thornton India LLP, said adding that a tax break should be given to VCs and HNIs who invest in these start-ups, which comes under the government fund.
"The government could have been proactive and met with VCs and incubators and liaised with them," says Paula Mariwala, Partner, Seedfund and Co-Founder, Stanford Angels.
In 2016, the startup sector was plagued by fund crunch (42.7% fall), shut downs (over 200 startups shut shop). In these circumstances, could the policy makers have done anything to better the situation? The government can do more for investors to help the situation.
The government should reduce the tax burden of entities involved in supporting and managing a startup. A longer period for tax concessions and lower corporate taxes would help. The government must also increase expenditure on infrastructure to support startups.