It is well known that the small farmers do not have the economic strength to retain the produce with themselves till the market prices are favourable. There has been a felt need in the country to provide the farming community with facilities for scientific storage so that wastage and produce deterioration are avoided and also to enable it to meet its credit requirement without being compelled to sell the produce at a time when the prices are low. A network of rural godowns will enable small farmers to enhance their holding capacity in order to sell their produce at remunerative prices and avoid distress sales. Accordingly, Gramin Bhandaran Yojana, a capital investment subsidy scheme for construction / renovation of rural godowns was introduced in 2001-2002.
The main objectives of the scheme include creation of scientific storage capacity with allied facilities in rural areas to meet the requirements of farmers for storing farm produce, processed farm produce and agricultural inputs; promotion of grading, standardization and quality control of agricultural produce to improve their marketability; prevention of distress sale immediately after harvest by providing the facility of pledge financing and marketing credit; strengthen agricultural marketing infrastructure in the country by paving the way for the introduction of a national system of warehouse receipts in respect of agricultural commodities stored in such godowns and to reverse the declining trend of investment in agriculture sector by encouraging private and cooperative sectors to invest in the creation of storage infrastructure in the country.
The project for construction of rural godowns can be taken up by individuals, farmers, groups of farmers/growers, firms, non-Government organizations (NGOs), Self Help Groups(SHGs), companies, corporations, co-operatives, federations and agricultural produce marketing committees in the country.
Under the scheme, the entrepreneur will be free to construct godown at any place, as per his/her commercial judgment except that it should be outside the limits of Municipal Corporation area. Rural godowns constructed in the food parks promoted by the Ministry of Food Processing Industries shall also be eligible under the scheme for assistance.
Capacity of a godown shall be decided by an entrepreneur. However, Subsidy under the scheme shall be restricted to a capacity of minimum 100 tonnes and maximum 30,000 tonnes. Rural godowns of smaller size upto 50 tonnes capacity will also be eligible for subsidy under the scheme as a special case based on viability analysis. In hilly areas, rural godowns of smaller size upto 25 tonnes capacity will also be eligible for subsidy.
Conditions for Scientific Storage
Godowns built under the scheme shall be structurally sound on account of engineering considerations and functionally suitable to store the agricultural produce. The entrepreneur may obtain a licence to operate the godown, if required by the State Government concerned, under the State Warehousing Act or any other relevant laws. The rural godowns of 1,000 tonnes capacity and more should get accreditation from Central Warehousing Cooperation (CWC).
Credit Linked Assistance
Subsidy under the scheme is linked to institutional credit and will be available to only such projects as are financed by commercial banks, Regional Rural Banks, state cooperative banks (SCBs), State Co-operative Agricultural and Rural Development Bank (SCARDBs), Agricultural Development Finance Companies (ADFCs), North Eastern Development Finance Corporation (NEDFI), Urban Cooperative Banks etc. Loan to the entrepreneurs from banks for the construction of godowns would carry an adequate long-term repayment period.
Assistance under the scheme shall be available on capital cost of construction of godown including the cost of allied facilities like boundary wall, internal road, platform, internal drainage system, weighing, grading, packaging, quality certification, warehousing facilities which are functionally required to operate the godown.
Pledge Loan Facility
The farmers keeping their produce in the godown shall be eligible to avail pledge loan on hypothecation of their produce. The terms and conditions governingpledge loans, rate of interest, period of pledge, amount etc. will be as per the guidelines issued by RBI/NABARD and as per normal banking practices followed by the financial institutions.
Rate of subsidy shall be:-
(a) 33.33% of the capital cost of the project for SC/ST entrepreneurs and their cooperatives andin case of projects located in North - Eastern States, hilly areassubject to a maximum ceiling on subsidy of Rs.3.00 crores.
(b) 25% of the capital cost of the project to all categories of farmers, agriculture graduates and cooperatives subject to a maximum ceiling on subsidy of Rs.2.25 crores.
(c) 15% of the capital cost of the project to all other categories of individuals, companies & corporations etc., subject to a maximum ceiling on subsidy of Rs.1.35 crores.
(d) 25% of the capital cost of the project for renovation of godowns of cooperatives with assistance from NCDC.
Capital cost of the project for the purpose of subsidy under the scheme shall be calculated as follows:
a) For godowns up to 1000 tonnes capacity - project cost as appraised by financing bank or actual cost or Rs.3500/- per tonne of storage capacity, whichever is lower;
b) For godowns exceeding 1000 tonnes capacity - project cost as appraised by bank or actual cost or Rs.1500/- per tonne of storage capacity, whichever is lower.
Subsidy shall be released through NABARD for projects financed by commercial, cooperative banks and RRBs. It will be kept in the Subsidy Reserve Fund Account of the financing bank and shall be tax free.