FINANCING ENTREPRENEURSHIP IN INDIA: A CRITICAL ANALYSIS OF GOVERNMENT-LED FINANCIAL INTERVENTIONS

Abstract

Entrepreneurship plays a crucial role in driving economic development, innovation, and job creation, with emerging countries like India being no exception. Nevertheless, despite the relatively successful development of the start-up and MSME sector, finance still emerges as a crucial macro-structural factor that has been impeding entrepreneurs, especially in the early stages of starting up. Imperfections in the market, including information inefficiency, lack of collaterals, and risk aversion of financial institutions, have resulted in the limited availability of formal capital. To address this, the Indian government has developed several policies aimed at promoting entrepreneurship and ensuring that finance becomes more accessible for aspirational entrepreneurs. The purpose of this paper is to critically assess the major initiatives undertaken by the Indian government for the provision of entrepreneurial finance through initiatives like the Startup India initiative, Pradhan Mantri Mudra Yojana, Stand Up India Scheme, Credit Guarantee Scheme for Start-ups, and the Fund of Funds for Start-ups. The paper assesses, based on the imperative application of the initiative, whether this factor alleviates funding gaps, supports inclusive entrepreneurship, and enables the development of the start-up ecosystem. The paper will also highlight major challenges in the application process, along with major policy guidelines. The paper will also help in filling the literature with an integral, comprehensive policy approach in terms of the provision of entrepreneurial finance in India.