Budget 2018: Larger institutional financing possible for animal husbandry

To boost agricultural incomes and push for modernised processing, the Union Budget 2018-19 could expand the institutional financing mechanism for the animal husbandry sector.

A key official said this could be done through creating dedicated funds in rural-centric banks such as the National Bank for Agriculture and Rural Development (Nabard), and the money could then be channelled for expanding and modernising processing units and creating storage. 

The dedicated funds are likely to focus on fisheries, poultry, and other animal products. This will also be for dairy and supplement what was announced in the previous Budget.

In the 2017-18 Budget, the government had announced a dedicated fund of Rs 80.04 billion in Nabard for the dairy sector called the Dairy Processing and Infrastructure Development Fund (DIDF). According to guidelines approved by the Union Cabinet, Nabard will give this amount as loan to the National Dairy Development Board (NDDB) and National Dairy Development Cooperation (NCDC) at around 6 per cent interest per annum for further lending to eligible borrowers at 6.5 per cent interest per annum.

Sources: NDDB and government sources

The fund’s kitty as approved by the Union cabinet is over Rs 108.80 billion after adding Rs 20.01 billion as end borrowers’ contribution, Rs 120 million as the NDDB or NCDC’s share, and Rs 8.64 billion as the Department of Animal Husbandry’s contribution as interest subvention.

According to the plan, Nabard will disburse Rs 20.04 billion, Rs 30.06 billion, and Rs 29.94 billion during 2017-18, 2018-19, and 2019-20, respectively, to dairy cooperatives and eligible applicants. The fund will be used for setting up an efficient milk procurement system by creating chilling infrastructure, installing electronic milk adulteration testing equipment, and creating, modernising, or expanding the milk processing infrastructure, and manufacturing facilities for value-added products like ghee and butter in milk unions and milk producer firms.

Of this, the first tranche of funds amounting to more than Rs 5 billion is expected to be released this month for expanding processing capacities.

Through this route, the government hopes around 9.5 million farmers in about 50,000 villages will benefit over the next 10 years while an additional milk processing capacity of 12.6 million litres per day will be created.

The government aims to create 40,000 direct jobs and more than 200,000 indirect jobs through this. India is the world’s largest milk producer with almost a 20 per cent share of world output but its share in global trade is less than 1 per cent.