New Scheme for Diary Sector: GoI subsidizes interest rates on working capital

On May 14, 2020, the Government of India launched a new scheme for the diary sector. The scheme has introduced Interest Subvention on Working Capital to support Diary Cooperatives and FPO (Farmer Producer Organization).

Key Features

• The scheme intends to modernize existing milk processing units. 
• It will also enhance the milk processing capacity of the country to 126 lakh litres per day.
• The scheme will provide interest subsidies to the loans that were availed by the banks to the cooperatives and farmer owned milk organizations and companies. 
• The scheme will include those loans that were sanctioned between April 1, 2020 and March 31, 2021.
• The scheme has also provided interest subvention of 2% per annum. 
• An additional incentive of 2% of interest subvention will be provided if the farmers repay the loans on time.
• The modified scheme is expected to make 100 crores of rupees available in farmers’ hands. 
• The scheme is to be implemented by National Dairy Development Board (NDDB).

NDDB

• The National Dairy Development Board was established through an act of Parliament of India. 
• It was founded in 1965. The main aim of the board was to spread similar successes as that of the AMUL Cooperative. 
• The World Bank assisted the mission. 
• It was named “Operation Flood” and lasted for 26 years.