FinMin Claims Major ‘Stand Up India’ Gains, But Where Are The Women-Run SMBs?

Even as there are questions being raised about the efficacy of fund disbursal under the Startup India scheme and the success of the Digital India mission, the finance ministry on Sunday (April 4) said that banks have sanctioned INR 25,586 Cr to about 1,14,322 beneficiaries under the Stand Up India Scheme.

The scheme, which was introduced in April 05, 2016 and completed five years, intends to promote entrepreneurship and job creation amongst women and other marginalised segments — scheduled castes (SC) and scheduled tribes (ST) categories. Under the scheme, banks loans worth INR 10 Lakh to INR 1 Cr are offered to at least one SC/ST borrower and at least one woman borrower per bank branch of the scheduled commercial banks.

The initiative was launched to help women and socially-backward groups start greenfield micro, small and medium enterprises in trading, manufacturing and service sectors. It claims to have aided 93,094 women entrepreneurs so far, with outstanding loans worth INR 21,200 Cr as of March 23 this year. About 16,258 entrepreneurs belonging to the SC category have received loans worth INR 3,335.87 Cr and 4,970 entrepreneurs from ST category have received loans worth INR 1,049 Cr, according to the data shared by the finance ministry.

The scheme, which has been extended up to 2025, covers local entrepreneurs above the age of 18 belonging to the above mentioned groups. Stand Up India also offers loans to non-individual enterprises, where 51% of the shareholding and controlling stake is held by this class of entrepreneurs. Additionally, the borrowers should not be in default to any bank or financial institution.

Women Run Fewer Than 13% Small Businesses

According to a report by gender research and advocacy organisation, Initiative for What Works to Advance Women and Girls in the Economy (IWWAGE), report, India stood 70 on a ranking of 77 countries in the Female Entrepreneurship Index, as only seven of 100 entrepreneurs in India are women. Further, nearly half of these women get into business out of necessity rather than aspiration.

Meanwhile, International Finance Corporation (IFC) report on ‘Financial Inclusion for Woman-Owned Micro, Small & Medium Enterprises (MSMEs) in India’ adds that only 33% of the early-stage entrepreneurs in India are women, emphasising that India ranks third among countries reporting gender gap in business.

According to an IndiaSpend report based on a survey, women entrepreneurs in India have a harder time in accessing institutional finance and have little clarity on the special schemes and initiatives introduced by the government to encourage female entrepreneurs.

The report notes that there are three government loan schemes available for small businesses under the government-run Micro Units Development and Refinance Agency (Mudra) —  Shishu, Kishor and Tarun. These offer loans ranging between INR 50K to INR 10 Lakh. The report notes that women are the biggest recipients (70%) of the Mudra scheme as it does not require any collateral.

Has The Modi Government Done Enough To Boost Entrepreneurship?

Besides Stand Up India, the Indian government has also rolled out several other initiatives to boost entrepreneurship and job creation. The two major initiatives in these departments are Startup India and Digital India intitivaties, which are widely regarded as progressive policies. However, these missions have not been able to make the same impact as the government had initially anticipated, especially due to executional issues.

According to an Inc42 Plus special report, the government of India has announced a fund of funds (FoF) with a corpus of INR 10,000 Cr to be disbursed by March 31, 2025, under the Start Up India initiative. However, the government committed to invest INR 3,798 Cr and disbursed only 10% or INR 1,050 Cr of the FoF, as of March 31, 2020.

Similarly, the Digital India initiative lacked the commitment towards personal data protection of individuals, our report noted. Initially, the Digital India campaign had not mentioned anything regarding digital privacy and only after the Supreme Court stated privacy to be “our fundamental right granted under Article 21 of the Constitution,” the government formed a committee under Justice BN Srikrishna for drafting a Bill to ensure one’s digital privacy.

Read more about Indian government’s policy failure in Inc42 Plus’ report: 6.5 Years On, The Promises Modi Govt Could Not Keep Haunt Startups, Sectoral Growth