Seed Capital Fund Scheme


EDISher-e-Kashmir Employment and Welfare Policy for Youth (SKEWPY) was announced as ruling coalition’s flagship plan to manage unemployment by encouraging youth to become entrepreneurs. Seed Capital Fund Scheme, under which the government offers free money ranging up to a million rupees to the intending entrepreneur to make him or her bankable, is the major part of the SKEWPY.

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Applicants are identified, trained, and motivated by the experts at J&K Entrepreneurship Institute (EDI) that also prepares their project DPR and submits to the bank for balance part of the funding. The policy already over 19 months old, however, is yet to produce the first entrepreneur. A Third Party audit of the scheme that chief minister Omar Abdullah was handed over recently offers the grim state of the crisis that the policy initiative encounters at the banking level.

Of the people enrolled under SDF scheme, 73% are unemployed, 78% of the applicants are sitting idle but 22% have started small businesses. Newspapers were the main source of information about the scheme to the applicants.

Individuals surveyed suggested that a majority of them were basically somewhat satisfied with the training, trainer, the duration of the training and its usefulness to them. However, they were not highly satisfied indicating the quality and the level of training can still be improved. Majority of them – 65.50% – completed their activities at the DECC and EDI within three months including document submission, training and DPR submission.

Sanction Letters
More than half – 52%, took more than three months for receiving their sanction letters and 16% have not received the sanction letter so far. Evaluating the time that the applicants spent between their first visit to getting the sanction letter was more than 90 days in 78% of the cases. Interestingly, the major difficulty the applicants faced was the time that steering committee took in processing their applications.

Banking Experience:
As many as 75% of the applicants whose cases were sent to the bank have told the surveyors that banks lack the knowledge of the SCF scheme. They want the officials at branch level be trained and briefed about the scheme. In 95% cases, the loan amount has not been sanctioned as processing of cases takes a lot of time. Asked about hurdles they are facing, 80% of the respondents said they are facing problems on processing front in the bank.

The bank is seeking guarantors (27%), mortgages (11%) and in many cases the bank branch is consistently maintaining that they are yet to get the file (14%). They have told the bank works as a de-motivator. Cumulatively 30% are satisfied, 35% are less satisfied and 25% are dis-satisfied with the bank that handles their cases.

Asked about the current status of their cases 85% are in processing and 15% are delayed.

Asked if bribes were demanded from them respondents said they were not either at EDI or at the bank. “There were instances where applicants were requested for bribes at the Pollution Control Board, PDD, PHED and J&K Bank,” the survey reports, adding “Worth mentioning is that not a single respondent was asked for a bribe at EDI.”

The EDI Report Card
(Up to July 15, 2011)
The EDI entrusted with the implementation of the SDFS has organized 74 Entrepreneur Development Programmes – 53 in Kashmir, 21 in Jammu that trained a total of 2280 candidates – 1807 from Kashmir, 473 from Jammu.

Post training, as many as 1093 detailed project reports (DPR) involving 1028 enterprises were submitted to the J&K Bank. These enterprises envisaged a cumulative investment of Rs 122.35 crores of which Rs 33.64 crores would be the seed capital and the balance Rs 88.71 crores as loan.

By now, J&K Bank has cleared a total of 625 enterprises involving 668 entrepreneurs. These cleared projects envisage a total investment of Rs 72.58 crores of which seed capital is Rs 21.81 crores, term loan would be Rs 127.68 crores, working capital would be Rs 19.46 crores and the entrepreneurs would have to chip in with Rs 3.62 crores.

The all powerful Steering Committee that eventually decides on the release of the free money has so far approved 523 enterprises involving 551 entrepreneurs. These projects involve cumulative investment of Rs 59.91 crores of which Rs 23.35 crores would be term loan, Rs 18.02 crores seed capital, Rs 15.59 crores working capital leaving the balance Rs 2.94 crores that the entrepreneurs would have to contribute from their own kitty.

So far the EDI after all mandatory approvals and sanctions has released Rs 13.57 crores of seed money in case of 389 enterprises involving a total of 408 entrepreneurs. As many as 78 new DPRs are ready to be placed before the new Steering Committee for approval.


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