Start-ups complain about lack of promised supportMost start-ups are operating just to survive in the current situation, entrepreneurs say.
Published at : September 13, 2021
Updated at : September 14, 2021 07:23
Start-up wine producer Binita Pokhrel was stunned to find out about the latest government directive requiring wineries to paste excise duty stickers with the QR code on the bottles.
The new regulation was included in the budget statement for the current fiscal year presented by the erstwhile KP Sharma Oli administration.
“We do everything according to a plan. But sometimes our plan gets thrown into confusion due to new policies that the government brings, adding an immediate burden” she said.
The Oli administration had also created a policy to provide seed capital of Rs2.5 million at 1 percent interest to encourage start-ups. But the policy seems to have become lost when the new Sher Bahadur Deuba-led coalition government issued a revised budget last week brought by the Oli administration through the ordinance route.
“There was no government support during this pandemic. Not a single support for start-ups,” said Pokhrel, founder of Pure Joy that produces wine using different fruits.
And the frequent changes in government makes things harder for start-ups and other businesses looking to scale up.
“The frequent changes in government impacts growth. It impacts the company’s whole planning,” said Pokhrel. “The government brings plans and programmes for entrepreneurs, but they rarely benefit us,” said Pokhrel who has been in business for around five years.
The revised budget for this fiscal year brought by the Deuba administration has not mentioned the start-up provision, putting entrepreneurs in a big predicament.
The revised budget presented in the House of Representative last Friday has introduced collateral-free subsidised loans for micro, small and medium scale industries, commercial farming, youth entrepreneurship, women entrepreneurship, foreign migrant returnees and the Dalit community.
“I have made a provision for self-employment by providing loans to at least 500 unemployed youths from commercial banks through their branches in every municipality by prioritising skill and entrepreneurship,” said Finance Minister Janardan Sharma while presenting the budget.
There was no mention of start-ups in the revised budget. The Oli government had been planning to implement provisions made in the budget by creating the Business Credit Flow Work Procedure 2021.
The work procedure was planned to be implemented from the first day of the new fiscal year 2021-22. But two months have passed and the work procedure draft has got nowhere.
Mahesh Acharya, spokesperson for the Ministry of Finance, said the work procedure was being discussed and was yet to be approved by the minister. He added that the government had not cancelled the programme introduced for start-ups.
“Entrepreneurs have lost hope and they have given up as there is no clear communication from the government on such a serious issue,” said Kavi Raj Joshi, founder and managing director of Next Venture Corp.
"Start-up founders have stopped expecting support from the government," he said. "In fact, entrepreneurs have started looking for funding on their own."
Entrepreneurs are sceptical about the implementation of provisions because when a new administration takes over, it tends to forget the policies and programmes made by its predecessor, he said.
"There is a mindset that the new government should not implement the provisions made by the previous government or that it should go against it and bring new provisions of its own," he said.
Though not implemented then, the provisions for start-ups were created when the late Nabindra Raj Joshi was industry minister.
As per entrepreneurs, most start-ups are operating just to survive in the current situation.
Due to prolonged lockdowns and political instability, the business environment has not been positive for start-up entrepreneurs who are facing challenges. Besides, there has been zero support from the government for start-up entrepreneurs in the country, insiders said.
The draft Business Credit Flow Work Procedure 2021 states that banks should provide subsidised loans in two instalments. The project will be kept as collateral for the loan, and the government will secure the loan as per prevalent laws. The selected start-up needs to repay the loan and interest in seven years, as per the work procedure.
The government’s lack of ability to implement policy will also decrease trust in the government system, entrepreneurs said. The government has to show commitment to implementing policies, or else entrepreneurs will start leaving the country, they said.
The government announces different programmes and subsidies for youth entrepreneurs in the budget statement annually, but youths have been complaining that they have not been able to benefit from the provision because people with connections receive the benefits instead of the needy ones.
“The government proudly says that it is committed to minimising the trade gap by encouraging domestic industry and prioritising domestic production in every year’s budget statement; but since the time I have been in business, I have not been able to see that as implementation never happens,” Pokhrel said.