Cabinet Approves ₹2,000 Crore Grant to NCDC to Boost Cooperative Sector and MSME Growth

In a significant push to promote cooperative-based economic development, the Union Cabinet chaired by Prime Minister Narendra Modi has approved a Central Sector Scheme to provide ₹2,000 crore in grant-in-aid to the National Cooperative Development Corporation (NCDC) over a four-year period from FY 2025–26 to FY 2028–29.

The scheme, aimed at strengthening India’s cooperative ecosystem, will see an annual allocation of ₹500 crore. Backed by budgetary support from the Government of India, this initiative will empower the NCDC to raise ₹20,000 crore from the open market during this period. These funds will be channelled into loans for cooperatives across a variety of sectors including dairy, fisheries, textiles, sugar, food processing, cold storage, livestock, and women-led cooperatives.

According to an official government release, approximately 2.9 crore members of 13,288 cooperative societies are expected to benefit from this move. The funds will be utilised by cooperatives for setting up new projects, expanding or modernizing existing facilities, and meeting their working capital requirements. The goal is to help cooperatives become more self-reliant, competitive, and aligned with the vision of inclusive, sustainable development.

The NCDC will serve as the executing agency responsible for disbursement, monitoring, follow-up, and recovery of the loans provided under this scheme. Loans will be extended either directly to cooperatives or through state governments, depending on eligibility under NCDC’s direct funding guidelines. Cooperatives that qualify will be able to access financial support against admissible securities or with state government guarantees.

This strategic infusion of capital is also aimed at facilitating the creation of income-generating assets and improving the liquidity of cooperatives, thereby strengthening their financial stability and long-term sustainability. More importantly, it supports grassroots economic empowerment by enhancing participation of marginalised groups, including women, in cooperative enterprises.

Beyond the economic impact, the government highlighted the social role of cooperatives in promoting values of democracy, equality, and community well-being. This initiative aligns with the broader national agenda of reducing socio-economic disparities and fostering inclusive growth, especially in rural and semi-urban areas.

This policy decision comes at a time when cooperatives are increasingly being seen as vital vehicles for rural industrialisation and micro-entrepreneurship, particularly for MSMEs and agrarian communities. With greater access to credit, improved infrastructure, and stronger institutional backing, the cooperative sector is expected to play a central role in India’s journey toward becoming a $5 trillion economy.