Scheme to help start-ups by SC entrepreneurs cost Maha govt Rs200 crore

The social justice department of the state launched the scheme to financially assist cooperative industrial units run by scheduled caste entrepreneurs in 2004

The state’s scheme to assist entrepreneurs from backward class by offering soft loans to their industrial units and start-ups seems to have crashed, with 372 of such start-ups cheating the government.

The state approved loans worth Rs1,097 crore to 372 units between 2004 and 2012. Only 60 of these start-ups have opened, while the remaining 97 are on paper. There is no trace of the remaining units , making recovery of loans difficult.According to a conservative estimate of the social justice department, the scheme has cost the government around Rs200 crore so far.

The social justice department of the state launched the scheme to financially assist cooperative industrial units run by scheduled caste entrepreneurs in 2004. Under the scheme, the entrepreneurs get 35% of the project cost as loan and an equal amount as share capital. The units invest 5% of the project cost, while the remaining 30% is raised from financial institutions. Cooperative societies have to be mandatorily run by at least 70% of office-bearers from the SC community.

The government recently registered a first information report against 29 societies, even as 51 units have been sealed for alleged irregularities.

“Of the approved amount of Rs1,097 crore, Rs 776 crore were distributed to the units as loan and share capital,” said an official from the department. “Although the huge loan amount was to be recovered eventually, only three units have paid Rs6 lakh against the loan.”

While the loan is distributed by the social justice department, the right to recover it is with the cooperation department. In a recent report submitted by the co-operative commissioner, the government has been appraised of the action initiated to recover funds usurped by people. Many units are controlled by political leaders and floated with the help of frontmen from the SC community, said sources.

“We have initiated action against defaulters and recovery will be done soon. Some of the units are in the process of setting up industries and need more time. The actual loss to the exchequer will be ascertained only after the inquiry was completed,” said Surendrakumar Bagade, secretary, social justice department.

The units that were set up were into dry fruit packaging, agriculture produce processing and trading of lime products, among others. The project costs submitted by the units ranged between Rs3 crore and Rs7 crore.