In a major step to boost India’s cooperative movement and strengthen rural infrastructure, the Union Cabinet, chaired by Prime Minister Shri Narendra Modi, has approved a Central Sector Scheme titled “Grant-in-Aid to the National Cooperative Development Corporation (NCDC)” with a financial outlay of ₹2,000 crore. This funding will be allocated over four years from FY 2025-26 to FY 2028-29, with ₹500 crore earmarked annually.
This grant-in-aid will empower NCDC to raise ₹20,000 crore from the open market, multiplying the impact of the government’s support tenfold. The funds will be utilised to provide long-term and working capital loans to cooperative societies across various sectors, enabling them to undertake new projects, upgrade infrastructure, and meet operational requirements.
Scope and Financial Implications
The ₹2,000 crore grant will be provided through budgetary support from the Government of India. Leveraging this support, NCDC will be able to generate ₹20,000 crore from market borrowings, enhancing the availability of affordable finance for cooperatives. This infusion of capital is expected to provide a significant boost to the 13,288 cooperative societies covering sectors such as dairy, livestock, fisheries, sugar, textile, food processing, storage, cold storage, labour, and women-led cooperatives, benefiting around 2.9 crore members nationwide.
Implementation Strategy
As the executing agency, NCDC will be responsible for disbursing funds, monitoring project implementation, following up on loan recovery, and ensuring effective utilisation. Loans may be routed through state governments or disbursed directly to eligible cooperatives as per the NCDC’s established guidelines.
Funding will be extended to cooperatives that meet the criteria for direct financial assistance, supported by admissible security or state government guarantees. The financing will be targeted towards:
- Setting up or expanding processing units
- Modernisation and technological upgrades
- Infrastructure development
- Working capital requirements
Expected Impact and Employment Generation
The scheme is expected to lead to the creation of income-generating capital assets, significantly improving the financial health and operational capacity of cooperative societies. The availability of long-term and working capital loans will aid in:
- Increasing the productivity and profitability of cooperatives
- Promoting women’s participation in the workforce
- Supporting inclusive and sustainable rural development
- Bridging socio-economic disparities through democratic cooperative principles
Furthermore, term loans for infrastructure projects will spur job creation across multiple skill levels, contributing to rural employment and livelihood enhancement.
India’s cooperative sector, comprising over 8.25 lakh cooperatives with 29 crore members, plays a crucial role in national development. Approximately 94% of Indian farmers are associated with cooperatives, underlining their importance in agricultural and rural economies.
From banking and fertiliser distribution to dairy, textiles, handloom, housing, and fisheries, cooperatives support a diverse range of economic activities. Recognising their contribution to the socio-economic upliftment of rural India, this new scheme seeks to fortify cooperatives as key engines of inclusive growth.
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