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DAIRY PRODUCTS

CCEA nod for upward revision of interest subvention to upto 2.5% per annum
Friday, 21 February, 2020, 12 : 00 PM [IST]
Our Bureau, New Delhi
The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, has given its approval for upward revision of interest subvention from upto two per cent to upto 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 envisaged to have interest subvention component of Rs 1,167 crore to be contributed by DAHD during the period of 2018-19 to 2030-31 with spill over 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 2,001 crore shall be contributed by eligible end borrowers and Rs 12 crore would be jointly contributed by National Dairy Development Board (NDDB) and National Cooperative Development Corporation (NCDC).

Details

Under DIDF, the Government of India will provide interest subvention upto 2.5 per cent to NABARD from 2019-20 (with effect from July 30, 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 upto 2030-31 with spill over to the first quarter of FY 2031-32.

NABARD shall endeavour to keep the cost of borrowings to the minimum. It shall devise its own strategy for borrowing so that it takes advantage of lower interest rate in the markets to provide low cost of funds to the milk unions.

The Bank should immediately initiate 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 estimated cost of Rs 4,458 crore, of which the loan component would be Rs 3,207 crore for the scheme. Out of Rs 3,207 crore, as on date, Rs 1,110 crore has been disbursed in two installments of loan by NABARD to NDDB for the implementation of the scheme.

Achievement under DIDF as on January 31, 2020 is as under:

Target

Financial (Rs in crore)

Physical

Status

Number of projects

Project Outlay

Loan Sanctioned

Milk Processing Capacity (LLPD)

Value Added Products (MTPD)

Milk Drying Capacity (MTPD)

Sanctioned Projects

33

4,059

2,722

122

37

270

Project Proposal in pipeline

4

399

485

17

-

20

Grand Total

37

4,458

3,207

139

37

290


Impact
  • Ninety-five lakh milk producers will be benefited by covering 50,000 villages
  • Establishment of 28,000 bulk milk coolers with 140 lakh litres per day as additional milk chilling capacity
  • Creation of additional 210 metric tonne per day milk drying capacity
  • Modernisation, expansion and creation of milk processing capacity of 126 lakh litre per day
  • Creation of infrastructure of 59.78 lakh litre per day capacity for value-added dairy products to ensure remunerative prices to milk producers
  • Providing 28,000 milk testing equipment to check adulteration in milk
Implementation strategy and targets
NABARD raises funds from the market, which it lends to NDDB/NCDC at six per cent and NDDB/NCDC, in turn, lends it to the eligible end borrowers at an appropriate interest rate. DAHD provides interest subvention equal to the difference or upto 2.5 per cent between the cost of raising capital by NABARD and the interest rate at which NABARD lends to NDDB/NCDC. In case there is any further increase in the cost of funds, it shall be borne by the end borrowers themselves.

Targets

Physical parameter

Target

Bulk milk cooler (LLPD)

140

Drying capacity (MTPD)

210

Modernisation, expansion and creation of milk processing capacity (LLPD)

126

Creation of infrastructure capacity for value-added dairy products (LLPD)

59.78


The major activities covered under DIDF are:
  • Modernisations creation of new milk processing facilities and manufacturing
  • facilities for value-added products
  • Chilling infrastructure
  • Electronic adulteration testing kit
  • Project management and learning
Background
In pursuance to the Union Budget 2017-18 announcement by the ministry of finance, CCEA on September 12, 2017, DIDF scheme with an outlay of Rs 10,881 crore during the period from 2017-18 to 2028-29.

NABARD was to contribute Rs 8,004 crore as loan to NDDB and NCDC. Rs 2,001 crore was to be contributed by end borrowers, Rs 12 crore was to be jointly contributed by NDDB/NCDC and Rs 864 crore was to be contributed by DAHD towards interest subvention.

The scheme envisages that NDDB and NCDC shall directly implement through the end borrowers such as milk unions, state dairy federations, multi-state milk cooperatives, milk producer companies and NDDB subsidiaries those meeting the eligibility criteria under the scheme. The end borrowers will get the loan at 6.5 per cent per annum. The period of repayment will be 10 years with initial two years moratorium.

Expenditure involved
Financial   implications   for   implementation   of DIDF with outlay of Rs 11,184 crore during the period from 2018-19 to 2030-31 with spill over to first quarter of the FY 2031-32 is tabulated below.

Rs in crore

Serial Number

Component

NABARD

Loan

End Borrowers' contribution

NDDB's

Contribution

NCDC's

Contribution

Total

Outlay

A

Modernisation and creation of new milk processing facilities and manufacturing facilities for value-added products

5,577

1,395

0

0

6,972

B

Chilling infrastructure

2,063

515

0

0

2,578

C

Electronic milk adulteration testing kit

364

91

0

0

455

D

Project management and learning

0

0

6

6

12


Total

8,004

2,001

6

6

10,017


Interest subvention from DAHD (GoI share)





1,167


Grand total





11,184


With this investment, 95,00,000 farmers in about 50,000 villages would be benefited.
 
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