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Bad news for startups: Govt makes no allocation for India Aspiration Fund in Budget 2017

The government also reduced the allocation from Rs 600 crore to Rs 100 crore made earlier for this current fiscal.

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The government has made no provision for its ambitious India Aspiration Fund, part of StartUp India initiative, for the next financial year and has reduced the allocation to Rs 100 crore from Rs 600 crore made earlier for the current fiscal.

In order to provide support to startups through Fund of Fund operations, IAF, with a corpus of Rs 2,000 crore, was launched by Finance Minister Arun Jaitley in August 2015 to enhance the equity availability to MSMEs.

LIC was also made partner and co-investor in the India Aspiration Fund (IAF) managed by SIDBI.

As per the Budget 2017-18 document, the government had made allocation of Rs 500 crore for 2015-16 when the fund was launched.

In the following year, a provision of Rs 600 crore was made but reduced significantly to Rs 100 crore as per the revised estimate announced in the Budget 2017-18.

The Budget, announced earlier this month, has not made any allocation under this head for the next fiscal.

At the time of the launch of the Fund, Jaitley had said it is expected to catalyse tens of thousands of crores of equity investment in start-ups and MSMEs.

IAF is a good initiative of the government to support MSMEs and startups in India, Anshuman Verma, Founder and Managing Director at M1L said.

"Instead of or in addition to disbursing part of the allocated money to venture capital funds operating in India, government should think about cutting inefficiencies and bringing more clarity by way of forming an expert panel that disburses funds directly to startups," he said.

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