NCDC: Financing Co-operatives for Comprehensive Rural Development

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India’s cooperative movement is one of the largest in the world, with over 8.25 lakh cooperative societies and more than 29 crore members, where 94% of farmers are connected to cooperatives in some form. Yet, for this vast network to actually work – to process crops, store grain, access markets, and earn a decent livelihood – it needs structured financial backing and institutional support. That is precisely where the National Cooperative Development Corporation (NCDC) steps in. Established in 1963 and operating under the Ministry of Cooperation, NCDC functions as India’s apex institution dedicated to financing, planning, and promoting cooperative societies, with a particular focus on agriculture and rural development.

Table of Contents

Origins and statutory foundation of NCDC

NCDC was established as a statutory corporation under the NCDC Act of 1962, succeeding the National Cooperative Development and Warehousing Board that had been set up in 1956. Parliament recognised the need for a dedicated institution that could channel financial resources systematically into the cooperative sector – something the earlier body was not fully equipped to do. The Corporation began operations on 14 March 1963, and from its very inception, it was designed as a non-equity based promotional organisation, meaning it does not take ownership stakes in cooperatives but instead provides loans, grants, and developmental support.

Over time, the NCDC Act has been amended to keep pace with evolving rural needs. The 1974 amendment broadened the scope to include fishery, poultry, dairy, handloom, and sericulture, while also expanding NCDC’s ability to raise funds from the market. The 2002 amendment went further, covering livestock, cottage and village industries, handicrafts, rural crafts, and critical services such as water conservation, irrigation, agri-insurance, rural sanitation, and animal healthcare. Crucially, this amendment also enabled NCDC to fund cooperative societies directly – not just through state governments – upon fulfilment of stipulated conditions.

Core functions of NCDC

NCDC’s mandate is broad but purposeful. Its primary role is planning, promoting, and financing programmes for production, processing, marketing, storage, export, and import of agricultural produce and foodstuffs through cooperative societies. Beyond agriculture, NCDC covers notified commodities such as fertilisers, insecticides, agricultural machinery, textiles, and rubber, as well as income-generating activities like poultry, dairy, fishery, sericulture, and handloom.

Financially, NCDC operates through two broad channels. It advances loans and grants to state governments for financing primary and secondary level cooperative societies, and it provides assistance directly to national-level cooperative societies or those whose operations span more than one state. This dual channel – through state governments and directly – ensures that support reaches cooperatives at every level of the hierarchy.

Financial instruments: how NCDC funds cooperatives

NCDC employs several financial tools tailored to different needs of cooperative societies.

Term loans

Term loans finance long-term infrastructure and processing projects – such as establishing sugar mills or dairy processing units – typically covering 50 to 70% of project costs. These are designed for capital-intensive ventures that require significant upfront investment but generate returns over a longer period. For example, a cooperative setting up a cold storage facility or a rice milling unit would typically access NCDC funding through this route.

Working capital loans

Short-term operational needs are addressed through working capital loans, which have a repayment period of one to two years with no moratorium. These help cooperatives manage day-to-day functions like procurement, stocking, and distribution of agricultural inputs or consumer goods – activities that are essential for sustaining business continuity.

Share capital and margin money assistance

One of the significant but less-discussed instruments is share capital assistance. NCDC advances loans and grants to state governments specifically to enable them to subscribe to the share capital of cooperative societies. This strengthens the equity base of cooperatives and enhances their borrowing capacity from other financial institutions. Margin money assistance works similarly – it helps cooperatives meet the minimum equity requirements needed to avail loans from banks and other lending bodies, effectively making them creditworthy and financially viable for larger ventures.

Subsidies and grants

For cooperatives serving weaker sections – tribal cooperatives, women’s cooperatives, and those in economically backward districts – NCDC provides subsidised financial assistance. NCDC’s schemes are specifically designed to enhance income and improve livelihood for farmers, artisans, weavers, poor rural populations including tribals, and cooperatives organised exclusively by women.

Sectors supported by NCDC

NCDC’s financial assistance spans both farm and non-farm sectors. On the farm side, it supports marketing cooperatives, processing cooperatives (handling oilseeds, fruits, vegetables, sugar), storage infrastructure, agricultural inputs distribution, and cooperative cold chains. On the non-farm side, the focus shifts to income-generating activities for weaker sections – dairy, livestock, handlooms, sericulture, poultry, fishery, and healthcare cooperatives.

NCDC also implements several Central Government schemes as an executing agency. These include the Pradhan Mantri Matsya Sampada Yojana for fisheries, the PM Formalisation of Micro Food Processing Enterprises (PMFME) scheme, and the scheme for Formation and Promotion of 10,000 Farmer Producer Organisations (FPOs). This positions NCDC not just as a lender but as a key implementation arm of national cooperative policy.

The Integrated Cooperative Development Project (ICDP)

Perhaps the most comprehensive initiative in NCDC’s portfolio is the Integrated Cooperative Development Project (ICDP). Introduced in 1985-86, ICDP adopts an area-based approach, selecting an entire district for holistic cooperative development rather than focusing on individual cooperatives in isolation. The idea is straightforward: identify the resources, needs, and potential of a district, and build up all cooperative activities in that district simultaneously and in an interconnected manner.

What ICDP covers

The scheme promotes economic activities in agriculture, agro-based industries, cottage and household industries, and agro-allied sectors such as fishery, dairy, handloom, horticulture, and rural industries within the selected district. Assistance is provided in a package form that covers infrastructure needs, business development funds, and human resource development. A Macro Plan for the entire district is prepared keeping local resources and community needs at the centre.

How ICDP is implemented

Once sanctioned, the project is implemented through a Project Implementation Agency (PIA) – typically the District Central Cooperative Bank – and a Project Implementation Team (PIT). The PIT prepares business development plans, assesses the individual requirements of cooperative societies, and monitors implementation. NCDC sanctions funds as a combination of loan (approximately 70%) and subsidy (approximately 30%), which are routed through state governments to the implementing agencies and then to beneficiary cooperative societies.

ICDP in practice: state-level outcomes

The outcomes of ICDP are visible across states. In Kerala, for instance, ICDP funded the creation of crumb rubber factories, milk pasteurisation plants, spice powder units, tea factories, cattle feed plants, coconut oil processing units, and food processing units under different district projects. In Tripura, ICDP led to the construction of new godowns, repair of existing storage infrastructure, and creation of deposit counters for cooperative societies. These are not abstract benefits – they represent the physical infrastructure that allows rural cooperatives to actually process, store, and market what their members produce.

NCDC’s newer schemes: expanding the cooperative ecosystem

In recent years, NCDC has launched several new schemes that reflect the changing landscape of rural India and the cooperative movement.

Yuva Sahakar provides financial assistance to newly formed cooperative societies with innovative ideas, particularly targeting start-ups in the cooperative sector. Ayushman Sahakar is a comprehensive scheme covering cooperative hospitals, healthcare infrastructure, and medical education – aligning with national health goals. Nandini Sahakar focuses on improving the socio-economic status of women through women-led cooperatives. Dairy Sahakar provides a framework for financial assistance to cooperative dairy businesses with an emphasis on ESG (environmental, social, governance) outcomes. Together, these schemes reflect NCDC’s evolution beyond traditional agriculture into health, women’s empowerment, and sustainable development.

On a larger policy canvas, the Union Cabinet recently approved a grant-in-aid of Rs. 2,000 crore to NCDC over four years (FY 2025-26 to FY 2028-29), enabling the Corporation to raise up to Rs. 20,000 crore from the open market over this period. These funds are earmarked for setting up new cooperative projects, plant expansion, and working capital for approximately 13,288 cooperative societies spanning dairy, livestock, fisheries, sugar, textile, food processing, and cold storage sectors – with a combined membership of 2.9 crore people.

Governance and operational structure of NCDC

NCDC’s governance is structured around a General Council of 51 members, which lays down policy guidelines, and a Board of Management of 12 members that handles day-to-day administration – both nominated by the Central Government. Apart from its Head Office in New Delhi, NCDC functions through 18 Regional and State Directorates, whose field offices play a critical role in project identification, formulation, and implementation oversight. The Corporation maintains strong in-house technical capabilities across domains including sugar, oilseeds, textiles, dairy, fishery, handlooms, and financial management – allowing it to evaluate project viability with sector-specific expertise rather than relying purely on financial metrics.

Project proposals are appraised at the regional level for technical and financial feasibility before being sanctioned at headquarters, with repayment schedules and performance monitoring built into every loan agreement. NCDC has maintained a loan recovery rate above 99%, keeping net NPA at zero – a record that reflects both the quality of its project appraisal and the institutional discipline of the cooperatives it works with.

NCDC’s contribution to rural development: the bigger picture

NCDC’s role goes beyond being a lender. By financing the infrastructure that cooperatives need – storage godowns, processing plants, cold chains, business development inputs – it addresses a fundamental gap in rural India: the gap between what farmers produce and what they can actually earn. Cooperatives, by their nature, are community-owned institutions. When NCDC strengthens them financially, it is effectively strengthening the collective capacity of rural communities to negotiate better prices, reduce post-harvest losses, access national markets, and build self-reliant economic units at the grassroots level.

The ICDP model is especially significant in this regard. By taking a district-wide view and addressing all cooperative activities simultaneously – agriculture, dairy, handicrafts, fishery, rural industries – it avoids the fragmentation that often limits the impact of single-sector interventions. The result is a more integrated rural economy where different cooperatives are functionally linked to each other, creating a local economic ecosystem rather than isolated pockets of development.

What do you think? Given that ICDP was discontinued as a Central Sector Scheme from April 2021, should the government consider relaunching a revised version of area-based cooperative development programmes to address post-pandemic rural economic challenges? And with NCDC now channelling support through newer schemes like Yuva Sahakar and Dairy Sahakar, do these targeted initiatives adequately replace the integrated, district-level approach that ICDP once offered?

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References
  1. https://www.pmindia.gov.in/en/news_updates/cabinet-approves-central-sector-scheme-grant-in-aid-to-national-cooperative-development-corporation-ncdc-with-an-outlay-of-rs-2000-crore/
  2. https://www.cooperation.gov.in/en/ncdc-0
  3. https://www.manoramayearbook.in/current-affairs/india/2024/11/28/national-cooperative-development-corporation-ncdc.html
  4. https://en.wikipedia.org/wiki/National_Cooperative_Development_Corporation_(India)
  5. https://grokipedia.com/page/National_Cooperative_Development_Corporation_(India)
  6. https://byjus.com/free-ias-prep/national-cooperative-development-corporation-ncdc/
  7. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2155612&reg=3&lang=2
  8. https://cooperation.tripura.gov.in/integrated-cooperative-development-project
  9. https://coophp.nic.in/Home/HomePageFeaturesHpcd/ICDP
  10. https://cooperation.kerala.gov.in/integrated-co-operative-development-project-icdp/
  11. https://www.ensureias.com/blog/current-affairs/national-cooperative-development-corporation–ncdc-
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Co-operation – Genesis, Principles, Values, Growth and Development

1 Genesis of Co-operative Movement in India and Few Selected Countries

  1. Characteristics of Co-operative Enterprise
  2. Objectives of Co-operation
  3. Origin and Development of Co-operative Movement in India
  4. History of the Co-operative Movement in India up to 1947
  5. England (Consumer Co-operative Movement)
  6. Germany (Raiffeisen and Schulze)
  7. Dairy Co-operatives in Denmark
  8. Co-operatives in Israel (Collective Farming)
  9. New Age Co-operatives

2 Development of Co-operative Principles and Values including ICA Restated Principles, 1995

  1. International Co-operative Alliance (ICA)
  2. Rochdale Principles
  3. ICA Statement on Co-operative Identity – 1995
  4. Principles of 1995 Co-operative Statement
  5. Co-operative Values

3 Co-operative Autonomy, Distinctive Features of Democratice Management in Co-operatives vis-a-vis Companies

  1. Nature of Co-operatives
  2. Principles of Co-operatives
  3. Democratic Member Control as a Restated Principle (1995)
  4. Features of a Co-operative
  5. Comparison between a Co-operative and Company

4 Co-operative Policy and Support at Centre and States (After 1990)

  1. Model Co-operative Law
  2. Andhra Pradesh Mutually Aided Co-operative Societies Act 1995
  3. Enactment of Multi-State Co-operative Societies Act 2002
  4. National Co-operative Policy 2002
  5. Vaidyanathan Committee Recommendations

5 Phase-I 1st to 3rd Five Year Plan

  1. First Five Year Plan (1951-1956)
  2. Second Five Year Plan (1956-1961)
  3. Third Five Year Plan (1961-1966)

6 Phase-II 4th to 8th Five Year Plan

  1. Introduction
  2. Fourth Five Year Plan (1969-1974)
  3. Fifth Five Year Plan (1974-1979)
  4. Sixth Five Year Plan (1980-1985)
  5. Seventh Five Year Plan (1985-1990)
  6. Eighth Five Year Plan (1992-1997)

7 Phase-III 9th to 11th Five Year Plan

  1. Ninth Five Year Plan (1997-2002)
  2. Tenth Five Year Plan (2002-2007)
  3. Eleventh Five Year Plan (2007-2012)

8 Present Status of Co-Operative Movement

  1. Spread of Co-operatives
  2. Share of Co-operatives in National Economy
  3. Significance of Co-operative Movement
  4. Important Sectors of Co-operative Movement
  5. Problems of Co-operative Movement
  6. Issues/Challenges before Co-operative Movement

9 Types of Co-Operatives

  1. Co-operative Marketing
  2. Co-operative Processing
  3. Co-operative Farming
  4. Consumer Co-operative
  5. Industrial Co-operatives
  6. Housing Co-operatives
  7. Dairy Co-operative
  8. Fishery Co-operatives
  9. Transport Co-operatives
  10. Education Societies
  11. Labour Co-operatives
  12. Hospital Co-operatives
  13. Agri-tourism Co-operatives

10 Study of Co-Operative Credit Institutions

  1. Origin
  2. Co-operative Rural Credit Institutions in India
  3. Credit Co-operative Movement after Independence
  4. Long Term Credit
  5. Co-operative Rural Credit Institutions – Issues
  6. Non-Agricultural Co-operative Credit Institutions

11 Study of Marketing, Consumer, Processing Co-Operatives

  1. Marketing Co-operative
  2. Consumer Co-operative
  3. Sugar Co-operative
  4. Dairy Co-operative

12 Study of Co-Operatives for Weaker Section– Labour, Tribal, Fishery, Weavers, Women

  1. Importance of Weaker Section Co-operatives
  2. Different Weaker Section Co-operatives
  3. Fishery Co-operatives
  4. Tribal Co-operatives
  5. Labour Co-operatives
  6. Weavers’ Co-operatives
  7. Women Co-operatives

13 Study of Other Types of Co-Operatives- Housing, Fertilizer

  1. Housing Co-operatives
  2. Fertilizer Co-operatives
  3. Health Co-operatives
  4. Tourism Co-operatives
  5. Tree Growers’ Co-operative Societies

14 Findings and Recommendations of Important Committees (1954- 1989)

  1. All India Rural Credit Survey Committee Report – 1954
  2. Committee on Co-operation – 1965
  3. All India Rural Credit Review Committee (AIRCRC) – 1969
  4. Madhava Das Committee – 1978
  5. Report of the Committee on Co-operative Law for Democratisation and Professionalisation of Management in Co-operatives – 1987
  6. Report of the Agricultural Credit Review Committee – 1989

15 Findings and Recommendations of Important Committees (1991- 2010)

  1. Report of the Committee on Model Co-operative Act – 1991
  2. Report of the Committee on Licensing of New Urban Co-operative Banks
  3. Report of the Task Force on Revival of Rural Co-operative Credit Institutions (2005)
  4. Report of the High Powered Committee on Co-operatives (2009)

16 Role of Regulatory and Development Institutions for Co-operative Movement

  1. Role Functions of Reserve Bank of India
  2. Role Functions of NABARD
  3. Role Functions of NCDC
  4. Role Functions of NDDB
  5. Promotional Role of Registrar of Co-operative Societies in Co-operative Development

17 Co-Operative Training and Education

  1. Evolution of Co-operative Training and Education
  2. Structure of Co-operative Training and Education under NCUI
  3. Co-operative Training and Education Facilities in Junior Training Centres in States
  4. Co-operative Training and Education provided by other Co-operative Organizations