Landscape of India's spending on SC/ST’s development and entrepreneurship

This article is authored by Lakshmi Venkataraman Venkatesan, founding and managing trustee, Bharatiya Yuva Shakti Trust.

As a nation that aspires to become a $5 trillion economy, we need to ensure that growth is inclusive, taking along all sections of society, particularly those who were historically left behind. While the past three decades have seen a promising upswing in Scheduled Castes and Scheduled Tribes (SC/ST) is welfare expenditure from 0.06% of the Union Budget of 1995 to 6% in 2024-25, money alone is not enough to bring in equity. The allocation of ₹2.9 lakh crore this year shows intent, but inclusion means that we need to tackle systemic exclusions, enhance access to credit, and build supportive networks for SC/ST entrepreneurs.

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Initiatives like Stand-Up India, the Venture Capital Fund (VCF) for SCs, and the Ambedkar Social Innovation and Incubation Mission (ASIIM) are major policy programmes. Stand-Up India, which was started in 2016, has sanctioned loans of ₹40,700 crore to more than 1.8 lakh entrepreneurs. However, only 18% of these loans have been sanctioned to SC/ST applicants, which is a significant deficit of access.

Similarly, even as the VCF-SC scheme provides concessional finance and ASIIM assists young Dalit entrepreneurs with equity finance of up to ₹30 lakh and more if they do well, these schemes need to maximise their reach and coverage. Lack of awareness, administrative/compliance and regulatory hurdles, and a risk-averse banking system often make these schemes inaccessible to first-generation SC/ST entrepreneurs.

The private sector too needs to be a serious collaborator in this. Corporate investment in SC/ST entrepreneurship is unrecorded and largely untapped. An exception is the Dalit Indian Chamber of Commerce and Industry (DICCI), which has established linkages between emerging Dalit entrepreneurs and large business houses, providing mentorship and access to markets and credit.

Many non-profits, through its collaboration with SC/ST and other underserved communities' grassroots entrepreneurs, has witnessed firsthand the huge difference that mentoring, handholding and capacity building can make. The mentoring-based approach can inspire thousands of youth to become job creators in sustainable enterprises, making it possible for them to transition out of circumstances where entrepreneurship had otherwise seemed impossible.

We need a few more such models, though. There is an imperative need that CSR initiatives move beyond tokenistic representation and make SC/ST entrepreneurship a core agenda. SC/ST-led start-ups need to be incubated, mentored, and funded with the same passion as we commit to mainstream innovation hubs.

Although making up a sizeable proportion of India's population, SC/ST entrepreneurs are owners of merely about 16.5% of India's 6.34 crore MSMEs. Many of them are forced to work under challenging conditions with limited market and digital infrastructure opportunities, and no mentoring or handholding.

These statistics are so much more than a number; they are lost chances. Take, for example, Kalpana Saroj, who turned Kamani Tubes into a profitable firm and was conferred the Padma Shri award. Or take Milind Kamble, who started DICCI, and built essential platforms for Dalit businesses. Their life stories are exemplary not just due to their own success, but due to how they achieved this success despite working against the system. Their stories showcase the unprecedented potential that happens when opportunity encounters talent.

Nonetheless, not every would-be entrepreneur is equally well-supported. Surveys indicate that nearly 80% of Indian small enterprises fail within three years of inception because of limited credit, mentoring/guidance, and access to market. For building an economically inclusive society, there has to be a joint effort by all sections of society. Above all, upskilling, entrepreneurial training/hand-holding, and mentoring must be specially tailored to address the special requirements of SC/ST entrepreneurs, especially from rural and semi-urban areas. Partnership with local NGOs can greatly enhance outreach and impact, making interventions effective and relevant.

Access to collateral-free credit is the primary constraint. Banks and NBFCs (Non-Banking Financial Company) will need to streamline their loan processes, moving away from the traditional collateral-based model. There is a pressing need to call for equity funds, micro-venture capital, and hybrid credit models, especially for first-generation SC/ST entrepreneurs.

The private sector also needs to come forward. Corporates need to utilize their CSR funds for inclusive entrepreneurship development. Programs such as supplier diversity programmes, incubation grants, and technology partnerships can help SC/ST entrepreneurs develop their businesses and grow their ventures in a successful manner.

A strong policy support is the foundation. This involves putting in place specialised schemes geared to develop market linkages, promoting digital adoption, and promoting businesses run by SC/STs to international market. Creating an SC/ST entrepreneurship index would be a good move for tracking progress and celebrating success, holding stakeholders accountable and assessing the effect across sectors.

Let us honour the vision of social justice by ensuring that economic justice catches up. A country that wants to dominate the global economy cannot afford to leave behind those who have been denied fair beginnings for far too long. We must shift from symbolism to substance, from short-term initiatives to long-term support.

Entrepreneurship is a great social catalyst. It creates dignity, independence, and opportunities. In investing in SC/ST entrepreneurs, we are not just starting businesses; we are building a more just and equitable India.

This article is authored by Lakshmi Venkataraman Venkatesan, founding and managing trustee, Bharatiya Yuva Shakti Trust.