The UPA government has introduced a proposal for a new law in the Lower House of Parliament aimed at enabling the National Cooperative Development Corporation to give loans to companies and such units managed by farmers selling agricultural produce on the market.
Sources say companies managed by farmers can greatly improve the living conditions of primary producers and thus contribute to a rapid transformation of the rural economy.
Analysts are of the view that the companies run by farmers are generally handicapped by their lack of resources and credit and this has prevented them from doing their work well.
Traditionally, NCDC has been involved in financing the agricultural and allied sectors only but over a period of time it expanded its gamut to include other areas of economic activities such as tourism, rural housing and power generations.
Till 2002 NCDC had a minor role to play in cooperative financing as it would finance only those projects which are sent through the state governments. Given the political culture in the states, government lackadaisical approach was leading to nowhere. An amendment in 2002 empowered NCDC to finance a project directly.
In a short period of eight years NCDC financing rose from rupees 350 crore to about 3600 crores. The sixteen spread out branches of NCDC began to organize meetings of cooperative societies and motivated people to come up with viable projects.
They helped cooperative societies in making financial proposal and began to collect forms. The collected forms were sent to headquarters where an expert team would examine them for viability from every angle.