NCDC’s Role in Financing and Promoting Cooperatives

India has over 8.44 lakh cooperatives with a combined membership of more than 30 crore people, making the cooperative sector one of the largest networks of rural economic activity in the world. At the center of financing and developing this network stands the National Cooperative Development Corporation (NCDC) – the apex institution that has been channeling funds, building capacity, and expanding the reach of cooperatives across India for over six decades. Understanding how NCDC works, what it finances, and how it has evolved is essential to grasping how cooperative development actually happens on the ground.

What is the NCDC? 🔗

The NCDC is a statutory corporation established by an Act of the Indian Parliament on 14 March 1963, under the National Cooperative Development Corporation Act, 1962. It functions as the apex financing and developmental institution dedicated to strengthening cooperatives across India, with a primary emphasis on agricultural and rural sectors. Headquartered in New Delhi, NCDC operates through 18 state and regional directorates and is headed by a Managing Director.

Originally set up as a successor to the National Cooperative Development and Warehousing Board (established in 1956), the NCDC was created to do one thing: mobilize financial resources and direct them toward cooperatives so they could grow into self-sustaining economic units. Its core objectives include planning, promoting, and financing programmes for the production, processing, marketing, storage, export, and import of agricultural produce, foodstuffs, and notified commodities on cooperative principles.

How the NCDC is structured and governed 🔗

The management of the NCDC is vested in a 51-member General Council, which shapes its policies and programmes, and a 12-member Board of Management that oversees day-to-day activities. Both bodies are nominated by the central government. The General Council sets the broad policy direction, while the Board handles operational management. This two-tier governance structure allows the corporation to maintain policy consistency while remaining administratively agile.

The corporation’s in-house technical expertise spans a wide range of domains – from cooperation and financial management to sugar technology, oilseeds, textiles, dairy, fishery, poultry, and healthcare infrastructure. This internal capability is what allows NCDC to assess and support projects across such a diverse range of cooperative sectors.

How does NCDC finance cooperatives? 🔗

NCDC provides financial assistance in the form of both loans and grants. Loans and grants are advanced to state governments for financing primary and secondary level cooperative societies, and directly to national-level and other societies whose operations extend beyond one state. This two-channel approach – through state governments and directly to qualifying cooperatives – gives NCDC the flexibility to reach cooperatives at every tier of the system.

For primary and secondary societies, the state government acts as the intermediary, receiving funds from NCDC and then on-lending to cooperatives within its jurisdiction. For larger, multi-state cooperatives, NCDC can engage directly. The corporation can also go in for direct funding of projects under its various schemes of assistance on fulfillment of stipulated conditions – a provision that has progressively given NCDC more reach and flexibility in recent years.

The scale of NCDC’s financial outreach 🔗

The growth in NCDC’s disbursements over the past decade tells a clear story. In 2014-15, NCDC’s total disbursement stood at Rs 5,735.51 crore. By 2024-25, this figure jumped to an impressive Rs 95,182.88 crore – a nearly 17-fold increase in a single decade. In the ongoing financial year 2025-26, disbursements had already crossed Rs 49,799 crore by October 2025 alone.

To further scale up this impact, the Union Cabinet approved a Central Sector Scheme “Grant-in-Aid to NCDC for Cooperative Sector Development” with a total outlay of Rs 2,000 crore for 2025-26 to 2028-29. This will enable NCDC to leverage nearly Rs 20,000 crore from the open market to provide credit to 13,288 cooperatives across sectors such as dairy, fisheries, sugar, textiles, and food processing, benefiting nearly 2.9 crore cooperative members.

Sectors NCDC supports 🔗

NCDC’s mandate has expanded considerably since its founding. The original focus was on agricultural produce – production, processing, marketing, and storage. Over time, the scope has broadened to include a wide range of farm and non-farm activities.

Agriculture and allied sectors 🔗

NCDC’s major activities in agriculture and allied sectors cover crop production, dairy, fisheries, livestock, horticulture, and sericulture. In the agricultural marketing space, the corporation funds infrastructure for storage, cold chain facilities, marketing yards, and processing units. NCDC also implements Central Sector schemes like the Agricultural Marketing Infrastructure (AMI) sub-scheme for storage and horticulture development under the Mission for Integrated Development of Horticulture (MIDH).

Cooperatives procure a significant share of India’s staple grains. According to data cited by policy analysts, cooperatives handle more than 13% of wheat and 20% of paddy produced in the country – helping ensure fair prices for farmers by reducing dependence on intermediaries.

Rural industries and non-farm activities 🔗

In the non-farm sector, NCDC’s focus is on equipping cooperatives with facilities to promote income-generating activities, with special attention to weaker sections – including dairy, livestock, handloom, sericulture, poultry, fishery, scheduled caste and scheduled tribe cooperatives, and women cooperatives.

This is a critical element of NCDC’s social mandate. By financing non-farm cooperatives, NCDC helps rural communities diversify income sources beyond agriculture, which is especially important for households that face seasonal income gaps or are dependent on rain-fed farming.

Expansion into new sectors through legislative amendments 🔗

The NCDC Act has been amended twice to keep pace with India’s evolving development priorities. The Act underwent change in 1974 to include more business activities like fishery, poultry, dairy, handloom, and sericulture, and to broaden NCDC’s resource base by enabling it to raise funds from the market.

The Act was again amended in 2002 to cover additional areas such as livestock, industrial goods, cottage and village industries, handicrafts, rural crafts, and certain notified services – including water conservation, irrigation, animal healthcare, disease prevention, agriculture insurance, agriculture credit, and rural sanitation. This 2002 amendment was particularly significant because it moved NCDC beyond just commodity-based financing into service-based rural development – areas like rural sanitation and animal health that directly affect quality of life in villages.

Key schemes launched by NCDC 🔗

NCDC operates its own portfolio of targeted financial assistance schemes, each designed for a specific sector or demographic. These schemes have been a major driver of the corporation’s recent expansion.

Yuva Sahakar 🔗

The Yuva Sahakar – Cooperative Enterprise Support and Innovation Scheme aims to encourage newly formed cooperative societies with new and innovative ideas. It targets young entrepreneur cooperative societies that have been in operation for a minimum of three months, and is linked to a Cooperative Start-up and Innovation Fund created by NCDC. The scheme offers a 2% interest subvention on the applicable rate, making credit more accessible for first-generation cooperative entrepreneurs. Preferential support is extended to cooperatives in the North Eastern Region, NITI Aayog aspirational districts, and those comprising exclusively women, SC, ST, or PwD members.

Ayushman Sahakar 🔗

Ayushman Sahakar adopts a holistic approach to strengthening the healthcare ecosystem through cooperative institutions. It covers hospitals, medical and nursing education, paramedical education, health insurance, and AYUSH systems. This scheme reflects NCDC’s ambition to move cooperatives beyond traditional farming and into the delivery of public services – a significant shift in the cooperative development agenda. As an incentive, cooperatives where women members are in the majority receive a 1% reduction in applicable interest rates.

Dairy Sahakar 🔗

Dairy Sahakar aims to strengthen dairy cooperatives by offering financial assistance for both new projects and the modernization or expansion of existing infrastructure. It supports end-to-end dairy sector activities, including bovine development, milk procurement and processing, quality assurance, value addition, branding, packaging, marketing, transportation, storage, and export of dairy products. As of March 2025, NCDC’s cumulative financial assistance to cooperative sugar mills stood at Rs 33,311.79 crore, illustrating the scale of support flowing into agro-processing cooperatives more broadly.

Nandini Sahakar and Swayam Shakti Sahakar 🔗

NCDC has introduced two dedicated schemes to empower women through cooperatives. Nandini Sahakar aims to improve the socio-economic status of women and supports entrepreneurial dynamism through women’s cooperatives, while Swayam Shakti Sahakar Yojana provides NCDC’s financial assistance to agricultural credit cooperatives for extending loans and advances to women self-help groups. Over three financial years (FY 2021-22 to 2024-25), NCDC disbursed Rs 4,823.68 crore to women-led cooperatives.

Deerghavadhi Krishak Punji Sahakar Yojana 🔗

This scheme offers long-term financial assistance to agricultural credit cooperatives to enable them to extend credit for a wide range of agricultural activities, commodities, and services under NCDC’s mandate. Its goals include ensuring uninterrupted credit flow to cooperatives and their members, boosting capital formation in agriculture and allied sectors, and supporting non-farm employment in rural and semi-urban areas.

Area-based development: the ICDP approach 🔗

Beyond sector-specific and scheme-based financing, NCDC also promotes area-based development through the Integrated Cooperative Development Project (ICDP). ICDP is a project that works for the overall development of the people of a district by unleashing the potential of the district through the development of various cooperative activities. Rather than funding a single cooperative in isolation, ICDP takes a district-wide view – identifying viable sectors across both farm and non-farm activities and supporting multiple cooperatives within that geography in a coordinated way.

This approach is aligned with NCDC’s broader SAHAKAR-22 mission, which was launched to achieve the goal of doubling farmers’ income by targeting district-level cooperative development across India.

NCDC’s role in inclusive development 🔗

A consistent thread running through NCDC’s work is its attention to marginalized groups. NCDC has extended loans worth Rs 57.78 crore over the past three years to Scheduled Caste and Scheduled Tribe cooperatives, and has disbursed Rs 4,823.68 crore to women-led cooperatives during the same period.

NCDC is also one of the implementing agencies for the government’s scheme for the Formation and Promotion of 10,000 Farmer Producer Organisations (FPOs), and it implements the Formation and Promotion of Fish Farmers Producer Organisations (FFPOs) under the Pradhan Mantri Matsya Sampada Yojana. These roles position NCDC not just as a financier, but as an active institution building new cooperative structures at the grassroots level.

Challenges and the road ahead 🔗

Despite its impressive growth, NCDC faces some structural challenges. NCDC’s portfolio remains heavily tilted toward traditional sectors like sugar and dairy, while emerging non-farm and innovation cooperatives receive limited support – creating concentration and systemic risk. There are also concerns about the sustainability of large disbursements to cooperatives with weak financials, where borrowing sometimes covers operational losses rather than creating new productive assets.

On the policy side, the National Cooperation Policy 2025 sets a transformative vision for the cooperative movement in alignment with India’s goal of becoming Viksit Bharat by 2047. Implemented in collaboration with institutions such as IFFCO, NAFED, Amul, KRIBHCO, NDDB, and NABARD, the policy seeks to promote transparency, professionalism, and technology adoption across the sector. NCDC is expected to be a central vehicle for delivering this vision at scale.

What do you think? Given that NCDC has expanded its mandate from agriculture into healthcare, rural sanitation, and digital empowerment – should cooperative financing institutions focus more on deepening their impact in traditional sectors like agriculture, or is diversification into new service areas the right path for rural development? And with disbursements growing nearly 17-fold in a decade, how should NCDC balance rapid scale-up with ensuring the long-term financial health of the cooperatives it funds?

References

1. https://www.indiancooperative.com/from-states/phenomenal-growth-ncdcs-disbursal-soars-nearly-17-fold-in-a-decade/
2. https://en.wikipedia.org/wiki/National_Cooperative_Development_Corporation_(India)
3. https://byjus.com/free-ias-prep/national-cooperative-development-corporation-ncdc/
4. https://www.cooperation.gov.in/en/ncdc-0
5. https://pwonlyias.com/current-affairs/national-cooperative-development-corporation/
6. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2155612&reg=3&lang=2
7. https://www.manoramayearbook.in/current-affairs/india/2024/11/28/national-cooperative-development-corporation-ncdc.html
8. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2082789
9. https://www.shankariasparliament.com/current-affairs/national-cooperative-development-corporation-ncdc