Modi Government's big relief for these farmers! Interest subvention raised up to 2.5 pct to NABARD

In a bid to provide relief to the Indian dairy farmers, the Narendra Modi government has decided to increase interest subvention from 'up to 2 per cent' to 'up to 2.5 per cent' per annum under the Dairy Processing and Infrastructure Development Fund (DIDF) scheme. The decision in this regard was taken by the Cabinet Committee on Economic Affairs (CCEA) yesterday. The CCEA also revised the fund allocation for the Scheme of Rs 11,184 crore out of which Rs 8,004 crore will be contributed by NABARD (National Bank for Agriculture & Rural Development).  

The CCEA informed about the decision in a written press statement citing, "The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Narendra Modi, has given its approval for upward revision of interest subvention from "up to 2 per cent" to "up to 2.5 per cent per annum" under the scheme Dairy Processing and Infrastructure Development Fund (DIDF) with the revised outlay of Rs 11,184 Crore. The scheme envisages having interest subvention component of Rs 1167 crore to be contributed by DAHD during the period of 2018-19 to 2030-31 with spillover to first quarter of the FY 2031-32. The scheme also has a loan component of Rs 8,004 crore to be contributed by NABARD. Rs 2001 cr shall be contributed by the eligible end borrowers and Rs 12 crore would be jointly contributed by National Dairy Development Board (NDDB) and National Cooperative Development Corporation (NCDC)."

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The CCEA statement went on to add that Under Dairy Processing and Infrastructure Development Fund (DIDF) Government of India has to provide Interest subvention up to 2.5 per cent to NABARD from 2019-20 (with effect from 30.07.2019) to 2030-31 and in case there is any further increase in the cost of funds, it shall be borne by the end borrowers themselves. The funding period (2017-18 to 2019-20) of the scheme is revised to 2018-19 to 2022-23 and the repayment period to be extended up to 2030-31 with spillover to the first quarter of the FY 2031-32.

NABARD shall endeavor to keep the cost of borrowings to the minimum. NABARD is expected to devise its own strategy for borrowing so that it takes advantage of lower interest rates in the markets to provide a low cost of funds to the Milk Unions. NABARD should immediately initiate an action plan for prompt disbursement of funds as and when the market is conducive to raising funds at affordable rates.

Altogether 37 sub-projects have been submitted with an estimated cost of Rs.4458 crore, of which loan component would be Rs.3207 crore for the scheme. Out of Rs 3207 crore, as on date, Rs 1110 crore has been disbursed in two installments of loan by NABARD to NDDB for implementation of the scheme.