A Decade on, Govt’s Plan to Provide Subsidized Loans to Startups Remains Unimplemented

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A Decade on, Govt’s Plan to Provide Subsidized Loans to Startups Remains Unimplemented

October 10: The government has been announcing concessional loans to start-up businesses for almost a decade but is still struggling with the procedure.

Inspired by neighboring India, the government had announced to provide concessional loans under the innovative work by selecting entrepreneurs to create high-quality inventions and to  develop systems using less time, cost, and resources through new technology. However, those seeking to do so have not yet been able to obtain loan.

The program has not been implemented due to a lack of clear definition of start-up business, lack of timely formulation of work procedure, lack of coordination among government agencies for the formulation of work procedure and program operation, as well as confusion over grant and subsidized loans for start-ups in the government’s budget programme.

It has been two years since the government received around 700 applications for the grant announced to encourage startups. The government then changed the programme of providing grant to subsidized loans instead. However, those trying to start a business have not been able to get cash incentives from the government.

Meghraj Magar, a resident of Koteshwor in Kathmandu, originally from Rukum West, says that he has not yet received the grant even though he has applied for it based on an advertisement that says the government will provide grant to innovative start-ups.

He returned to Nepal after working in South Korea for five years and intends to modernize the agriculture of Nepal using Korean technology and knowledge he acquired during his overseas stay  He, however says, he could not acquire loan from the and is not able to initiate the start-up alone as he does not have money to start the project. 

Hundreds of young people like Magar have not been able to move their startup plans forward as the government is often confused about whether to give concessional loans or grant to startups.

The government had introduced the programme to provide grants to startup business in Nepal from FY 2076/77.

Accordingly, the National Planning Commission had also collected applications by formulating work procedures related to grants. According to the Commission, 699 people had applied for grants under the programme.

Similarly, the previous government had introduced a programme to provide startup loans at a 2 percent interest rate in the fiscal year 2077/78, but it could not be implemented. In the current Fiscal Year, the present government has allocated Rs 1 billion for startups through the Replacement Bill.

Government officials, who have been confused regarding the work procedure for nearly a decade, held a discussion on Friday to resolve the problem. During the discussion held at the Ministry of Finance on Friday (October 8) regarding the formulation of startup loan procedures, stakeholders reached a conclusion that ambiguous work procedure itself was a hurdle to promote start-ups.

Participants of the meeting realized the need to formulate a simple and quick procedure to facilitate start-up businesses.

During the discussion, Finance Minister Janardan Sharma directed the concerned bodies to formulate work procedure so that even the youths of remote areas could easily get start-up business loans.

"Let's not create a cumbersome procedure where young people who want to start a new business get frustrated just by looking at the paper. Let's implement the program by making a concise and simple procedure," Minister Sharma urged during the meeting.

Member of National Planning Commission Dr Ram Kumar Phuyal said that since start-up business is a new program for Nepal, simple procedures should be made by paying attention to its principles and international practices. Member Secretary of the National Planning Commission, Kewal Prasad Bhandari, stressed the need to formulate a simple procedure to make start-up loans easily available to enthusiastic youths with new concepts. Finance Secretary Madhu Kumar Marasini and Revenue Secretary Krishna Hari Pushkar said that procedures should be formulated targeting new entrepreneurs.



 

 






 

 

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