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Centre discontinues start-up funding schemes for SCs and OBCs, new plan awaited

The social justice and empowerment ministry had informed the standing committee on demand for grants for 2025-26 about the discontinuation of both schemes from March 31 this year, according to the panel’s report tabled in Parliament last month

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Basant Kumar Mohanty
Published 13.04.25, 04:49 AM

The government is learned to have discontinued the Venture Capital Fund (VCF) schemes for Scheduled Castes and Other Backward Classes without announcing a time frame for the launch of a new scheme, prompting the Congress to allege that the Centre was “systematically clipping the wings” of the marginalised communities.

The social justice and empowerment ministry had informed the standing committee on demand for grants for 2025-26 about the discontinuation of both schemes from March 31 this year, according to the panel’s report tabled in Parliament last month.

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The parliamentary panel, headed by BJP Lok Sabha member P.C. Mohan, had asked the ministry to specify a timeline for the launch of the new scheme. The ministry told the committee that the scheme would be announced after being approved by the expenditure finance committee and the cabinet.

The VCF for Scheduled Castes was launched in 2015 to provide concessional finance to SC entrepreneurs to help them create wealth and value for society. Industrial Finance Corporation of India (IFCI) Venture Capital Ltd was the fund manager for the scheme, which had a coupon rate of 4 per cent per annum.

Though the fund had sanctioned 558.09 crore to 143 companies till December last year, it disbursed 393.87 crore to 115 firms. The VCF for Backward Classes, initiated in 2019, sanctioned 94.08 crore to 18 companies but disbursed 51.5 crore to 16 firms as of December.

According to the data, the budgetary allocation for VCF-SC had declined from 10 crore in 2024-25 to 1 lakh in 2025-26, while the allocation for VCF-BC had dropped from 40 crore in 2024-25 to 1 lakh in 2025-26.

Questioned by the panel about the decline in funds, the ministry said: “It is also important to note that both VCF-SC and VCF-BC are set to continue until 31.03.2025. A new Venture Capital Fund for deprived and marginalised groups is being plannedfor the future, which is why the allocation for 2025-26 is kept minimal.”

An evaluation study conducted by the Indian Institute of Public Administration (IIPA) said that the VCF-SC scheme should have been continued. Quoting the IIPA study, the panel said: “The committee feels that the suggestions made in the evaluation study such as delays in security clearances, better post-loan support, dissemination about the scheme, grievance redress mechanism etc should have been addressed instead of discontinuing the scheme.”

Congress leader Pawan Khera on Saturday posted on X that the budget allocation for the Venture Capital Fund for SCs and OBCs had seen a staggering 99.96 per cent cut in 2025-26 over the previous year. “In the last five years, only 54 companies have benefited from this scheme, with not a single beneficiary in Assam, Bihar, Delhi, Puducherry,Uttarakhand and Odisha,”he posted.

Khera said that the ministry had avoided setting any physical targets for the scheme, making it impossible to measure its effectiveness. “At a time when India should be propelling its most marginalised communities toward economic independence, this government is systematically clipping their wings,” he posted.

Scheduled Caste (SC) Other Backward Classes (OBCs)
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