On 31-7-2025, the Union Cabinet chaired by Prime Minister Narendra Modi approved a Central Sector Scheme titled ‘Grant-in-aid to National Cooperative Development Corporation (NCDC)’. This financial assistance scheme is aimed at invigorating India’s cooperative ecosystem and strengthening rural enterprises through targeted support over the next four years. It is a Central Sector Scheme with a total outlay of ₹2,000 crore. The duration of the scheme is four years, from 2025—26 to 2028—29.
Background:
India’s cooperative landscape is both expansive and essential, encompassing more than 8.25 lakh societies and over 29 crore members. Notably, 94% of the country’s farmers are linked to these cooperatives in some form. These organizations span a wide range of activities—including dairy, agriculture, fisheries, textiles, food processing, and women-led enterprises. Despite their reach and importance, many cooperatives face constraints in accessing timely and affordable financing, limiting their ability to scale, diversify, or modernize.
To bridge this gap, the government has initiated this scheme as a strategic move to boost liquidity, enhance productive capacity, and foster inclusive development, particularly in rural areas.
Key points:
- The scheme primarily aims to strengthen India’s cooperative sector by extending long-term financial support that enhances the operational capacity and resilience of grassroots institutions.
- Under this scheme, NCDC will raise up to ₹20,000 crore from the open market by leveraging the ₹2,000 crore government grant, with ₹500 crore allocated each year from 2025—26 to 2028—29.
- These funds will be disbursed as loans to eligible cooperative societies across diverse sectors such as:
- Dairy
- Fisheries
- Livestock
- Food processing
- Textiles
- Women-led cooperatives
- Cooperatives can utilize this credit to launch new initiatives, modernize technology, expand infrastructure, and address working capital requirements, all of which contribute to improved efficiency and profitability.
- NCDC will serve as the implementing body for the scheme. Its responsibilities include:
- Disbursement
- Project monitoring
- Follow-up
- Loan recovery from beneficiaries.
- NCDC will extend loans to cooperatives either through state governments or directly, depending on eligibility. Those meeting NCDC’s direct funding guidelines will receive financial assistance against admissible securities or state government guarantees.
- The financial support includes long-term loans for setting up, modernizing, upgrading technology, and expanding project facilities. Cooperatives will also be provided with working capital to help them operate more efficiently and profitably.
- These funds will enable cooperatives to build income-generating capital assets and access crucial liquidity to maintain smooth operations.
- Cooperative principles like democracy, equality, and community focus make them powerful drivers of social equity, including enhancing women’s participation in economic activities.
- The availability of loans will support capacity expansion, modernization, diversification, and profitability enhancement, ultimately boost productivity and improve the livelihoods of farmer members.
- Infrastructure-related term loans will spark employment opportunities across various skill levels, contributing to broader economic development.
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Funds will be used for launching new projects, upgrading infrastructure, and meeting working capital needs, ultimately boosting employment, productivity, and rural livelihoods. This financial support is intended to stimulate employment, enhance productivity, and support income generation at the grassroots level.
Overall, the scheme is designed to fortify the operational capacity and financial resilience of cooperative institutions nationwide and to improve the financial health and operational capacity of grassroots cooperative institutions.