The Cabinet in February 2020 had approved the Rs 6,865-crore scheme to be spent for setting up of 10,000 new FPOs and ensuring their growth by FY28.
While budgetary support of Rs 4,496 crore will be spent by FY24, an additional Rs 2,369 crore has been estimated for hand-holding of these FPOs until FY28.
The government has launched a drive to ensure the farmers producer organisations (FPOs) scheme becomes successful to unite mainly the small and marginal farmers, estimated at 12 crore, amid the stand-off over the three farm laws that allowed freedom of choice to farmers and traders in buying-selling of agri produce. Agriculture minister Narendra Singh Tomar on Thursday asked the implementing agencies like Nabard and government agencies to focus on the scheme – National Cooperative Development Corporation (NCDC) – so that collectivisation of farmers help improve their bargaining power.
Addressing a seminar on development support to promote agri-business cluster and credit enhancement instruments, jointly organised by Asia Pacific Rural and Agricultural Credit Association (APRACA) and Nabard, Tomar said several initiatives have brought the unbanked into the net of basic banking and social and economic security to the underprivileged sections of the society that further accelerated financial inclusion in the country.
Debashish Panda, financial services secretary, said that collectivisation of farmers was the only way to break the vicious cycle of low investments and low productivity and poor bargaining powers in the market and low profits in the agricultural sector. The FPOs are going to help improve returns of the farmers and also increase the investment, Panda said.
The Cabinet in February 2020 had approved the Rs 6,865-crore scheme to be spent for setting up of 10,000 new FPOs and ensuring their growth by FY28. While budgetary support of Rs 4,496 crore will be spent by FY24, an additional Rs 2,369 crore has been estimated for hand-holding of these FPOs until FY28. The finance minister has allocated Rs 700 crore for FY22, up by 40% from FY21 for the FPO scheme. So far, Rs 102 crore has been disbursed under the scheme. Under the scheme, FPOs will be provided direct financial assistance up to Rs 18 lakh each over 3 years. The Centre also will contribute a matching equity grant up to Rs 2,000/farmer member of each FPO with a limit of Rs 15 lakh per organisation and a credit guarantee facility up to Rs 2 crore per FPO to help them access credit from banks and other agencies.
Speaking at the event, Nabard chairman GR Chintala said that the apex rural sector lending institution has been taking a lead role in collectivisation of farmers and making finance accessible for agriculture and various start-ups and FPOs to achieve economies of scale.