Lok Sabha Question No. 4026 (UNSTARRED), answered on 2025-03-25
Subject: State's Cooperative Institutions
Ministry: COOPERATION
Asked by: Shri Charanjit Singh Channi

## GOVERNMENT OF INDIA MINISTRY OF COOPERATION

## LOK SABHA UNSTARRED QUESTION NO.  4026 TO BE ANSWERED ON  25 th  MARCH, 2025

## State's Cooperative Institutions

## 4026. Shri Charanjit Singh Channi:

Will the Minister of Cooperation ( सहकारिता मंत्री ) be pleased to state:

- (a) whether  the Government  has  neglected  the  State's  cooperative  institutions, such  as cooperative banks, sugar mills and dairy plants, leading them to a state of crisis;
- (b) whether the Government has formulated any special plan for the revival and strengthening of these cooperative institutions, if so, the details thereof;
- (c) whether the market share of Punjab State Cooperative Milk Producers' Federation Limited (Verka) has declined while other brands like Amul have expanded their presence in the State; and
- (d) whether the Government has taken any concrete steps to enhance Verka's competitiveness and regain its market share, if so the details thereof?

## ANSWER

## THE MINISTER OF COOPERATION सहकारिता मंत्री (SHRI AMIT SHAH)

(a) to (b): Ministry of Cooperation, since its inception on 6th July, 2021 has undertaken several initiatives to realize the vision of 'Sahkar Se Samriddhi' and strengthen and deepen the cooperative movement from Primary to Apex level Cooperatives in the country. The steps taken for benefit of cooperative banks, cooperative sugar mills and cooperative dairy sector are at Annexure - I.

(c): As per the data provided by NDDB, milk procurement and sale of Dairy Cooperatives in India and Punjab are increasing over the years as per the details given below:

|                         | All India           | All India   | Punjab              | Punjab      |
|-------------------------|---------------------|-------------|---------------------|-------------|
| Year                    | Procurement (LKgPD) | Sale (LLPD) | Procurement (LKgPD) | Sale (LLPD) |
| 2020-21                 | 519                 | 361         | 19                  | 10          |
| 2021-22                 | 548                 | 386         | 19                  | 11          |
| 2022-23                 | 547                 | 422         | 19                  | 12          |
| 2023-24                 | 607                 | 434         | 20                  | 13          |
| 2024-25 (YTD Feb 2025)* | 616                 | 439         | 21                  | 13          |

Source: Milk Unions and Federations

* Provisional Data

- (d):  Government  is  implementing  following major  schemes  for strengthening the dairy cooperatives in Punjab:
1. White Revolution 2.0: Target to set up 2,378 new DCSs and strengthening of 2,440 existing DCSs in  Punjab  has  been  fixed  under  White  Revolution  2.0.  So  far,  87  DCSs  have  been registered.
2. Supporting Dairy Cooperatives and Farmer Producer Organisations engaged in dairy activities - Interest subvention for working capital loans

Interest subvention of Rs. 31.61 Crore has been released to the participating agencies in the state of Punjab for the period from 2020-21 to 2023-24, as on 15 March 2025.

Details of union-wise Interest Subvention released in the state of Punjab under SDC&FPO scheme during the above period (as on 15 March, 2025) are given in Annexure-II.

3. Dairying through Cooperatives (DTC) - Component B of National Programme for Dairy Development (NPDD)

In the state of Punjab, total 2 projects have been sanctioned with aggregate outlay of Rs. 371.18 Crore  (Loan-  Rs.  286.36  Crore,  Grant  -  Rs.  54.52  Crore,  Participating  Institution's  (PI) contribution - Rs. 30.30 Crore). The details of components sanctioned are given below:

| Sr.   |                           | Financial Outlay (Rs. Lakh)   | Financial Outlay (Rs. Lakh)   | Financial Outlay (Rs. Lakh)   | Financial Outlay (Rs. Lakh)   |                                                                                                                                                                                                                                  |
|-------|---------------------------|-------------------------------|-------------------------------|-------------------------------|-------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| No.   | Participating Institution | Loan                          | Grant                         | PI contri                     | Total                         | Project Components                                                                                                                                                                                                               |
| 1     | Ropar Milk Union          | 273.18                        | 23.15                         | 28.51                         | 324.84                        | • Strengthening Milk Procurement Infrastructure • Strengthening Milk Processing Infrastructure (5 LLPD milk processing plant) • Support for Marketing Infrastructure • Productivity Enhancement • Training &Capacity Development |

|         |                             | Financial Outlay (Rs. Lakh)   | Financial Outlay (Rs. Lakh)   | Financial Outlay (Rs. Lakh)   | Financial Outlay (Rs. Lakh)   | Project Components                                                                                          |
|---------|-----------------------------|-------------------------------|-------------------------------|-------------------------------|-------------------------------|-------------------------------------------------------------------------------------------------------------|
| Sr. No. | Participating Institution   | Loan                          | Grant                         | PI contri                     | Total                         |                                                                                                             |
| 2       | Baani Milk Producer Company | 13.18                         | 31.37                         | 1.79                          | 46.34                         | • Strengthening Milk Procurement Infrastructure • Productivity Enhancement • Training &Capacity Development |
|         | Total                       | 286.36                        | 54.52                         | 30.30                         | 371.18                        |                                                                                                             |

4. The NDDB has implemented following schemes to increase Verka's competitiveness:
- i. Support  to  Strengthen  Marketing  Operations  of  Producers'  Owned  Institutions scheme of NDDB:With an objective 'To support the smaller Producer Owned Institutes to strengthen their marketing operations so as to increase their market share for milk & milk products and provide quality & safe milk to the consumers at a reasonable price', NDDB  has  introduced  a  scheme  'Support  to  Strengthen  Marketing  Operations  of Producers'  Owned  Institutions'.  Under  this  scheme,  four  projects  for  the  Amritsar, Patiala, Gurdaspur and Hoshiarpur Milk Unions have been approved with total grant of Rs 330.32 lakhs.
- ii. Revitalising Promising Producers' Owned Institutions' Scheme of NDDB:National Diary Development Board (NDDB) sanctioned an interest free loan of Rs. 246.21 lakh and grant of Rs. 228.20 lakh to Ferozepur District Co-operative Milk Producers' Union Limited  under  the  NDDB's  'Revitalising  Promising  Producers'  Owned  Institutions' Scheme. Total project outlay under the scheme is Rs. 607.15 Lakh. In this scheme, out of  total  outlay  Rs.  168.53  Lakh  is  for  component  of  'Strengthening  Marketing Operation'.

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## A. Strengthening the Urban and Rural Cooperative Banks:-

- i. Urban Cooperative Banks (UCBs) have been allowed to open new branches to expand their business: UCBs can now open new branches up to 10% (maximum 5 branches) of the existing number of branches in the previous financial year without prior approval of RBI.
- ii. UCBs have been allowed by RBI to offer doorstep services to their customers: Door step banking facility can now be provided by UCBs. Account holders of these banks can now avail various banking facilities at home such as cash withdrawal, cash deposit, KYC, demand draft and life certificate for pensioners, etc.
- iii. Cooperative banks have been allowed to make one-time settlement of outstanding loans, like Commercial Banks: Co-operative banks, through board-approved policies, can now provide the process for settlement with borrowers, along with technical write-off.
- iv. Time limit increased to achieve Priority Sector Lending (PSL) targets given to UCBs : RBI has extended the timeline for UCBs to achieve Priority Sector Lending (PSL) targets by two years i.e., up to March 31, 2026.
- v. A Nodal Officer designated in RBI for regular interaction with UCBs : In order to meet the long pending demand of the cooperative sector for closer coordination and focused interaction, RBI has notified a nodal officer.
- vi. Individual  housing  loan  limit  more  than  doubled  by  RBI  for  Rural  and  Urban Cooperative Banks:
- a. Housing loan limit of Urban Cooperative Banks has now been doubled from Rs. 30 lakhs to Rs.60 lakhs.
- b. Housing loan limit of Rural Cooperative Banks has been increased to two and a half times to Rs.75 lakhs.
- vii. Rural  Cooperative  Banks  will  now  be  able  to  lend  to  commercial  real  estate/ residential housing sector, thereby diversifying their business : This will not only help Rural Cooperative Banks to diversify their business, but will benefit Housing cooperative societies also.
- viii. License fee reduced for Cooperative Banks :  License  fee  for  onboarding  Cooperative Banks to 'Aadhaar Enabled Payment System' (AePS) has been reduced by linking it to the number  of  transactions.  Cooperative  financial  institutions  will  also  be  able  to  get  the facility free of cost for the first three months of the pre-production phase. With this, farmers will now be able to get the facility of banking at their home with through biometrics.

## ANNEXURE-I

- ix. Non-scheduled UCBs, StCBs and DCCBs notified as Member Lending Institutions (MLIs)  in  CGTMSE  Scheme  to  increase  the  share  of  cooperatives  in  lending: Cooperative banks will now be able to take advantage of risk coverage up to 85 percent on the loans given. Also, cooperative sector enterprises will also be able to get collateral free loans from cooperative banks now.
- x. Notification of Scheduling norms for including Urban Cooperative Banks: UCBs that meet the 'Financially Sound and Well Managed' (FSWM) criteria and have maintained the minimum deposits  required  for  classification  as  Tier  3  for  the  last  two  years  are  now eligible  to  be  included  in  Schedule  II  of  the  Reserve  Bank  of  India Act,  1934  and  get 'Scheduled' status.
- xi. Monetary ceiling doubled by RBI for Gold Loan: RBI has doubled monetary ceiling from Rs. 2 lakhs to Rs.4 lakhs, for those UCBs that meet the PSL targets.
- xii. Umbrella Organization for Urban Cooperative Banks : RBI has accorded approval to the National Federation of Urban Co-operative Banks and Credit Societies Ltd. (NAFCUB) for the formation of an Umbrella Organization (UO) for the UCB sector, which will provide necessary IT infrastructure and operational support to around 1,500 UCBs.

## B. Strengthening of Cooperative Sugar Mills (CSMs):-

- (i) Relief from Income Tax to Cooperative Sugar Mills: Sugar factories operating in the cooperative sector in certain States of India pay to sugarcane growers a final amount, often referred to as Final Cane Price (FCP) which is over and above the Statutory Minimum Price (SMP) fixed by the Central Government under the Sugarcane Control Order, 1996.

The  payment  of  FCP  by  the  co-operative  sugar  factories  over  and  above  the  SMP  for purchase  of  sugarcane  had  resulted  into  tax  litigation.  The  co-operative  sugar  factories  were claiming this excess payment as business expenditure whereas the same has been disallowed in the assessment on the ground that the excess price paid for purchase of sugar cane over and above SMP is in the nature of appropriation/distribution of profit and hence not allowable as deduction. In order to provide certainty in this matter and to encourage co-operative movement in sugar sector, a new clause (xvii) was inserted to amend sub-section (1) of section 36 of the Income-tax Act to provide that the amount paid for purchase of sugarcane by the co-operative societies engaged in the manufacture of sugar at a price which is equal to or less than the price fixed by or fixed with the approval of the Government, including price fixation by State Governments through Statelevel  Acts/Orders  or  other  legal  instruments  that  regulate  the  purchase  price  for  sugarcane, including State Advised Price, which may be higher than the Statutory Minimum Price/Fair and Remunerative Price fixed by the Central Government shall be allowed as deduction for computing business income of the sugar co-operative factories w.e.f. 01.4.2016.

## (ii) Resolving decades old pending issues related to income tax demand on Cooperative Sugar

Mills: The provision at SI. No (i) above resolved the issue of treatment of additional payment for sugar price by CSMs as an income distribution to farmers w.e.f. 01.04.2016. However, pending demands  and  litigation  still  persisted  in  respect  of  assessment  years(AYs)  prior  to  2016-17. Therefore, to conclude the matter logically and to extend the benefit of the abovementioned relief to all the applicable years, section 155 of the Act has been amended to insert a new sub-section (19) vide Finance Act, 2023, w.e.f. 01 April 2023. It provides that in the case of a sugar mill cooperative,  where  any  deduction  in  respect  of  any  expenditure  incurred  for  the  purchase  of sugarcane has been claimed by an assessee and such deduction has been disallowed wholly or partly in any previous year commencing on or before the 1ª day of April, 2014, the Assessing Officer shall, on the basis of an application made by such assessee in this regard, recompute the total  income  of  such  assessee  for  such  previous  year.  The  Assessing  Officer  shall  allow  such deduction to the extent such expenditure is incurred at a price which is equal to or less than price fixed  or  approved  by  the  Government  for  that  previous  year.  CBDT  has  also  issued  Standard Operating Procedure in this regard on 27.07.2023.

(iii)  Rs  10,000 crore loan scheme through NCDC for strengthening of Cooperative Sugar Mills: Ministry of Cooperation has launched a new scheme named 'Grant-in-aid to NCDC for Strengthening of Cooperative Sugar Mills', under which Government of India has provided grant of Rs.1,000 crore to NCDC during financial year 2022-23 and 2024-25. NCDC will use this grant to provide loans up to Rs. 10,000 crores to Cooperative Sugar Mills, for setting up ethanol plants or for setting up cogeneration plants or for working capital or for all three purposes. NCDC has so far sanctioned 87 loans of ₹ 9893.12 crore to 48 CSMs.

For ease of CSMs availing loan for setting up of ethanol plants under the scheme, NCDC has revised its funding pattern from 70:30 to 90:10 wherein the society has to raise only 10% of the project  cost  and  90%  of  the  project  cost  will  be  provided  by  NCDC  subject  to  technical  and financial viability of the project. Further, for benefit of the Cooperative Sugar Mills, NCDC has reduced its floating rate of interest for term loan to 8.50% under the scheme.

(iv)  Preference  in  purchase  of  ethanol  to  Cooperative  Sugar: Oil  Marketing  Companies (OMCs) are according top priority to CSMs participating in ethanol procurement cycles. So far, 24,650 KL ethanol worth ₹ 25.50 crore have been procured by OMCs from 11 CSMs.

(v) Enhancing ethanol production of Cooperative Sugar Mills by converting their molassesbased ethanol plants into multi feed ethanol plants : Ministry of Cooperation has taken initiative for conversion of existing molasses-based ethanol plants of CSMs into multi feed ethanol plants. As that they can operate their distilleries through out the year, under this initiative CSMs will get following benefits:

- a. NCDC will provide a term loan under funding pattern of 90:10, with 90% from the society and 10% from NCDC.
- b. On  March  6,  2025,  the  Department  of  Food  and  Public  Distribution  issued  a  Gazette Notification  notifying  the  revised  scheme  titled "Scheme  for  Financial  Assistance  to Cooperative Sugar Mills (CSMs) for Converting Their Existing Sugarcane-Based Feedstock Ethanol  Plants  into  Multi-Feedstock-Based  Plants  to  Utilize  Grains  Such  as  Maize  and Damaged  Food  Grains  (DFG)  for  Enhancing  and  Augmenting  Ethanol  Production

Capacity', e xclusively for cooperative sugar mills. Under the scheme, Central Government will bear the interest subvention on the loan availed by them at a rate of either 6% per annum or 50% of the interest rate charged by the lending institution, whichever is lower, for a period of five years, including a one-year moratorium.

- c. Cooperative sugar mills availing the benefit of interest subvention will be given Priority-1 by OMCs to facilitate their transition from single-feed ethanol plants to multi-feed ethanol plants.

## C. Strengthening of Dairy Cooperative Societies:-

The  Government  is  implementing  the  following  major  schemes  to  promote  dairy  cooperative societies: -

- a) Supporting  Dairy  Cooperatives  and  Farmer  Producer  Organizations  engaged  in  dairy activities (SDCFPO)
- b) Animal Husbandry Infrastructure Development Fund (AHIDF)
- c) Rashtriya Gokul Mission (RGM)
- d) National Livestock Mission (NLM)
- e) Livestock Health and Disease Control Programme (LH&DCP)

Further,  the  Ministry  of Cooperation  has  launched  cooperative-led  "White  Revolution  2.0' aimed at expanding cooperative coverage, employment generation and women's empowerment with an objective "To increase the milk procurement of dairy cooperatives by 50% from the present level over next five years by providing market access to dairy farmers in uncovered areas and increasing the share of dairy cooperatives in organised sector.

The  Standard  Operating  Procedure  (SOP)  for  White  Revolution  2.0  was  launched  on 19.09.2024. In absolute terms, by the end of fifth year i.e 2028-29, the milk procurement by dairy cooperatives is expected to reach 1007 lakh kg per day. The target will be achieved through two pronged strategies:

- i. Expanding the coverage by dairy cooperatives.
- ii. Deepening the reach of dairy cooperatives.

For the above purpose, the Ministry of Cooperation has envisaged to set up 75,000 new Dairy Cooperative Societies (DCSs) in uncovered panchayats/villages and strengthen 46,422 existing DCSs. These DCSs will be provided market linkage either by expanding the existing milk routes or  by  creating  new  milk  routes.  NDDB  will  coordinate  various  activities  related  to  White Revolution 2.0. So far, 10,263 DCSs have been registered.

## Details of Interest Subvention under SDC&FPO scheme for the state of Punjab (as on 15 March, 2025)

Annexure-II

(Rs. In Crore)

|         | Union / Federation / Milk Producer   | Total Sanction of Interest Subvention   | Total Sanction of Interest Subvention   | Total Sanction of Interest Subvention   | Total Release of Interest Subvention   | Total Release of Interest Subvention   | Total Release of Interest Subvention   |
|---------|--------------------------------------|-----------------------------------------|-----------------------------------------|-----------------------------------------|----------------------------------------|----------------------------------------|----------------------------------------|
| Year    |                                      | Sanction of Interest Subvention         | Sanction of Interest Subvention         | Sanction of Interest Subvention         | Release of Interest Subvention         | Release of Interest Subvention         | Release of Interest Subvention         |
|         | Company                              | Regular (@2% p.a.)                      | Additional (@up to 2% p.a.)             | Total                                   | Regular (@2% p.a.)                     | Additional (@up to 2% p.a.)            | Total                                  |
| 2020-21 | Punjab Milk Federation (Milkfed)     | 9.21                                    | 9.21                                    | 18.42                                   | 5.11                                   | 5.11                                   | 10.23                                  |
| 2020-21 | Total (2020-21)                      | 9.21                                    | 9.21                                    | 18.42                                   | 5.11                                   | 5.11                                   | 10.23                                  |
| 2021-22 | Doaba Milk Union                     | 0.30                                    | 0.30                                    | 0.60                                    | 0.29                                   | 0.28                                   | 0.57                                   |
|         | Ludhiana Milk Union                  | 0.89                                    | 0.87                                    | 1.76                                    | 0.74                                   | 0.73                                   | 1.48                                   |
|         | Patiala Milk Union                   | 0.48                                    | 0.47                                    | 0.95                                    | 0.43                                   | 0.42                                   | 0.85                                   |
|         | Punjab Milk Federation (Milkfed)     | 6.11                                    | 6.11                                    | 12.22                                   | 3.18                                   | 3.18                                   | 6.36                                   |
|         | Ropar Milk Union                     | 0.72                                    | 0.72                                    | 1.44                                    | 0.33                                   | 0.33                                   | 0.65                                   |
|         | Total (2021-22)                      | 8.50                                    | 8.47                                    | 16.97                                   | 4.97                                   | 4.94                                   | 9.92                                   |
|         | Amritsar Milk Union                  | 0.53                                    | 0.53                                    | 1.06                                    | 0.37                                   | 0.37                                   | 0.73                                   |
| 2022-23 | Doaba Milk Union                     | 0.93                                    | 0.93                                    | 1.86                                    | 0.80                                   | 0.79                                   | 1.59                                   |
| 2022-23 | Hoshiarpur Milk Union                | 0.21                                    | 0.21                                    | 0.42                                    | 0.05                                   | 0.00                                   | 0.05                                   |
| 2022-23 | Ludhiana Milk Union                  | 1.12                                    | 1.12                                    | 2.24                                    | 1.05                                   | 1.05                                   | 2.11                                   |
| 2022-23 | Patiala Milk Union                   | 0.76                                    | 0.76                                    | 1.52                                    | 0.26                                   | 0.26                                   | 0.53                                   |
| 2022-23 | Ropar Milk Union                     | 0.13                                    | 0.13                                    | 0.26                                    | 0.13                                   | 0.13                                   | 0.26                                   |
| 2022-23 | Sangrur Milk Union                   | 0.43                                    | 0.43                                    | 0.86                                    | 0.24                                   | 0.23                                   | 0.47                                   |
| 2022-23 | Punjab Milk Federation (Milkfed)     | 4.40                                    | 4.40                                    | 8.80                                    | 2.41                                   | 2.41                                   | 4.83                                   |

|         | Union / Federation / Milk Producer Company   | Total Sanction of Interest Subvention Sanction of Interest Subvention   | Total Sanction of Interest Subvention Sanction of Interest Subvention   | Total Sanction of Interest Subvention Sanction of Interest Subvention   | Total Release of Interest Subvention Release of Interest Subvention   | Total Release of Interest Subvention Release of Interest Subvention   | Total Release of Interest Subvention Release of Interest Subvention   |
|---------|----------------------------------------------|-------------------------------------------------------------------------|-------------------------------------------------------------------------|-------------------------------------------------------------------------|-----------------------------------------------------------------------|-----------------------------------------------------------------------|-----------------------------------------------------------------------|
|         | Union / Federation / Milk Producer Company   | Regular (@2% p.a.)                                                      | Additional (@up to 2% p.a.)                                             | Total                                                                   | Regular (@2% p.a.)                                                    | Additional (@up to 2% p.a.)                                           | Total                                                                 |
|         | Total (2022-23)                              | 8.51                                                                    | 8.51                                                                    | 17.02                                                                   | 5.32                                                                  | 5.24                                                                  | 10.56                                                                 |
| 2023-24 | Amritsar Milk Uion                           | 1.18                                                                    | 1.18                                                                    | 2.35                                                                    | 0.00                                                                  | 0.00                                                                  | 0.00                                                                  |
| 2023-24 | Bathinda Milk Union                          | 0.42                                                                    | 0.42                                                                    | 0.85                                                                    | 0.08                                                                  | 0.00                                                                  | 0.08                                                                  |
| 2023-24 | Doaba Milk Union                             | 0.77                                                                    | 0.77                                                                    | 1.54                                                                    | 0.68                                                                  | 0.00                                                                  | 0.68                                                                  |
| 2023-24 | Hoshiarpur Milk union                        | 0.77                                                                    | 0.77                                                                    | 1.53                                                                    | 0.00                                                                  | 0.00                                                                  | 0.00                                                                  |
| 2023-24 | Ludhiana Milk Union                          | 0.28                                                                    | 0.28                                                                    | 0.55                                                                    | 0.00                                                                  | 0.00                                                                  | 0.00                                                                  |
| 2023-24 | Patiala Milk union                           | 0.27                                                                    | 0.27                                                                    | 0.53                                                                    | 0.16                                                                  | 0.00                                                                  | 0.16                                                                  |
| 2023-24 | Punjab Milk Federation (Milkfed)             | 5.81                                                                    | 5.81                                                                    | 11.62                                                                   | 0.00                                                                  | 0.00                                                                  | 0.00                                                                  |
|         | Total (2023-24)                              | 9.49                                                                    | 9.49                                                                    | 18.97                                                                   | 0.92                                                                  | 0.00                                                                  | 0.92                                                                  |
|         | Grand Total                                  | 35.70                                                                   | 35.67                                                                   | 71.37                                                                   | 16.31                                                                 | 15.30                                                                 | 31.61                                                                 |

*There has been no sanction for Unions in the state of Punjab for FY 2024-25

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