Why The Government Is Pumping ₹2,000 Cr Into Cooperatives: How 2.9 Crore Indians Could Benefit?

The Union Cabinet chaired by the Prime Minister Narendra Modi on Thursday approved the Central Sector Scheme “Grant in aid to National Cooperative Development Corporation (NCDC)” with an outlay of Rs 2000 crore for a period of four years from 2025-26 to 2028- 29 (Rs 500 crore each year from FY 2025-26).

Based on a grant in aid of Rs 2000 crore to NCDC from FY 2025-26 to FY 2028-29, NCDC will be able to raise Rs 20,000 crore from the open market over a span of four years.

Loans to boost cooperative sector growth

These funds will be utilised by NCDC for granting loans to Cooperatives for setting up new projects/expansion of plants, and loans for meeting the working capital requirements.

Approximately 2.9 crore members of 13,288 Cooperative societies of various sectors like Dairy, Livestock, Fisheries, Sugar, Textile, Food Processing, Storage and Cold Storage, Labour and Women-led cooperatives. across the country are likely to benefit.

The implementation strategy and targets are as follows: NCDC will be the executing agency for this scheme, responsible for disbursement, follow-up, monitoring of the project’s implementation, and recovery of the loan disbursed from the fund.

NCDC will provide loans to cooperatives either through the state government or directly, as per NCDC guidelines. Cooperatives, which meet the criteria of the direct funding guidelines of NCDC, would be considered for financial assistance directly against admissible security or state government guarantee.

NCDC will provide loans to cooperatives, offering long-term credit for setting up/modernisation/ technology upgradation/ expansion of project facilities across various sectors, as well as working capital to enable efficient and profitable business operations.

Empowering cooperatives to boost rural economy

Funds provided to these cooperatives will lead to the creation of income-generating capital assets and provide cooperatives with much-needed liquidity in the form of working capital.

In addition to economic benefits, cooperatives, through their principles of democracy, equality and community concerns, are an essential tool to bridge the socio-economic gap and increase participation of women in the workforce.

The availability of loans will help cooperatives in their capacity augmentation, modernisation, diversification of activities, increasing their profitability and enabling them to increase their productivity and generate more employment, improving the economic conditions of the farmer members.

Additionally, term loans for infrastructure development also create widespread employment opportunities across different skill levels.

The cooperative sector is contributing immensely to the Indian economy. Cooperatives play a vital role in socio-economic upliftment, infrastructure development, and job creation in the rural sector.

Supporting vital sectors through cooperative funding

The Cooperative Sector makes substantial contributions across all sectors of its respective production in the country. The cooperatives in India cover a wide array of activities, including credit and banking, fertiliser, sugar, dairy, marketing, consumer goods, handloom, handicraft, fisheries, housing, etc. India has more than 8.25 lakh cooperatives with more than 29 crore members, and 94 per cent of farmers are associated with cooperatives in some form or the other.

Due to their significant socio-economic contribution to the rural economy, it is essential to support the weaker sectors, such as dairy, poultry & livestock, fisheries, sugar, textile, processing, storage and cold storage, labour cooperatives, and women cooperatives, by granting them long-term and working capital loans.

(Inputs from ANI)

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