The Indian government has introduced the “Supporting State Dairy Cooperatives and Farmer Producer Organizations (SDC& FPO) engaged in dairy activities” scheme to provide much-needed financial support to dairy cooperatives and FPOs. This initiative is designed to help these organizations navigate challenging market conditions, natural calamities, and other unforeseen circumstances. This article explores the scheme’s objectives, components, and implementation.
Objectives: Providing Stability and Support
The primary objectives of the scheme are:
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To offer soft working capital loans to dairy cooperatives and FPOs to mitigate crises arising from adverse market conditions or natural disasters.
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To provide stable market access for dairy farmers, ensuring they have a reliable channel for selling their milk.
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To enable timely payments to farmers by cooperatives and producer organizations, thus ensuring their livelihood.
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To help cooperatives and FPOs procure milk from farmers at a remunerative price, even during peak production seasons.
Key Components: Working Capital Loan and Interest Subvention
The scheme comprises two main components:
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Component A: Working Capital Loan – This component provides funds in the form of soft working capital loans. However, it is currently kept under suspension for 2022-23.
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Component B: Interest Subvention on Working Capital Loan – This provides a 2% per annum interest subvention on secured/unsecured working capital loans. An additional 2% subvention is provided for timely repayment.
Eligibility Criteria: Identifying the Beneficiaries
To be eligible for the benefits of the scheme, dairy cooperatives and FPOs must meet several conditions:
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They must not be defaulters on previous loans from NDDB or NCDC
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Submit past financial records with their loan applications
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Demonstrate a Debt Service Coverage Ratio (DSCR) of at least 1.25 times, and post operating profits for the last 3 consecutive financial years.
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Ensure compliance with all scheme guidelines.
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They must not be availing any other state subsidy for milk procurement.
Implementation and Management:
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High Powered Committee (HPC): This committee, chaired by the Secretary (DADF), oversees the scheme, makes disbursement decisions, and guides implementation.
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National Dairy Development Board (NDDB): The NDDB is the implementing agency, responsible for disbursing funds, managing claims, and monitoring compliance.
Financial Provisions: Aiding Cash Flow
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The scheme has an allocation of Rs. 100 crore for interest subvention in 2022-23.
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A 2% per annum interest subvention is provided to eligible organizations, with an additional 2% for prompt repayments.
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Subvention is provided on a back-ended basis every month, after verification of claims.
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Borrowers are expected to make payments within a 9-month cycle.
Application Process: Ensuring a Streamlined Approach
Eligible borrowers must follow a prescribed process, which includes:
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Submitting an application in a prescribed format to NDDB.
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Providing month-wise details of milk procurement, sales, and cash flows.
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Demonstrating a history of regular repayments.
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Providing audited annual accounts for the last three financial years.
Monitoring and Evaluation: Ensuring Compliance
The scheme’s progress is monitored through:
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Quarterly progress reports from implementing agencies.
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Annual reports and audit reports by participating agencies
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Utilization certificates by the implementing agency in the prescribed format.
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Regular review by the High Powered Committee
Conclusion
The “Supporting State Dairy Cooperatives and Farmer Producer Organizations” scheme plays a crucial role in stabilizing India’s dairy sector. Through providing working capital loans and interest subventions, the scheme empowers cooperatives and FPOs, ensuring fair prices for farmers, and fostering sustainable growth.