Interest subvention on Working Capital Loans for Dairy sector

To offset the economic impact of Covid-19 on Dairy Sector, Ministry of Fisheries, Animal Husbandry and Dairying has introduced a new scheme “Interest subvention on Working Capital Loans for Dairy sector” for Supporting Dairy Cooperatives and Farmer Producer Organizations engaged in dairy activities (SDC&FPO) for implementation during 2020-21.

• In order to meet the working Capital needs of the Cooperatives and Farmer owned milk producer companies, Interest subvention will be given on working capital loan taken from scheduled Commercial Banks/R.R.Bs/Cooperative Banks/Financial Institutions between 1^st April 2020 and 31st March 2021 by Cooperatives/FPOs for conversion of milk into conserved commodities and other milk products.
• The scheme has made provisions for providing interest subvention of 2% per annum, with an additional incentive of 2% per annum interest subvention to be given in case of prompt and timely repayment/interest servicing.
• This will help to ease out the working capital crisis for handling surplus milk and enable timely payment to the farmers. The scheme will be implemented by this Department through National Dairy Development Board (NDDB), Anand.
• The modified scheme envisages a budgetary provision of Rs 100 Crore earmarked for the component “Interest Subvention on Working Capital Loans for Dairy sector” during 2020-21.

The scheme envisages to have the following benefits:

1. It will help in providing stable market access to milk producers.
2. Enable the Producer Owned Institutions to make timely payment of milk bill to milk producers.
3. It will help Producer Owned Institutions in supplying quality milk and milk products to consumers at a reasonable price and will also help in stabilizing the domestic market price of conserved dairy commodities and other milk products.
4. Consistent increase in farmers’ income from dairying even during flush season making the dairy operations viable for milk producers. This in turn will lead to reduced dependency on imported commodities during the period of shortage, thereby helping in stabilising the domestic prices of milk and milk products.

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