What is the primary purpose of the ₹1,000 crore venture capital fund announced in the Union Budget for 2024-25?

Solution

The Union Budget for 2024-25 included several significant allocations and initiatives, particularly for the Department of Space. Here are the key points related to the venture capital fund: Department of Space Budget: The budget allocation for the Department of Space saw a marginal rise of 0.02% points, with a focus on the development of space technologies. Space Applications and Sciences: While space applications received a slight increase in funding, the budget for space sciences decreased, and the allocation for the INSAT satellite systems was nearly halved compared to the previous year. Venture Capital Fund: A ₹1,000 crore venture capital fund was announced to specifically support space technology start-ups. This fund aims to expand the space economy by five times over the next decade. Expert Reactions: The announcement received mixed reactions. Some experts felt the fund was insufficient, highlighting the need for more substantial government investment similar to global standards. Government Procurement: Optimism was expressed regarding the government acting as an anchor customer for start-ups, which would help validate high-risk products and create a competitive market. Angel Tax and FDI: The proposal to remove the angel tax is expected to reduce investment friction. Additionally, 100% automatic foreign direct investment (FDI) in satellite component manufacturing was allowed, with varying limits for other space-related activities. Given this context, the primary purpose of the ₹1,000 crore venture capital fund is to support space technology start-ups, making option (c) the correct answer.