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Context: The "Credit Guarantee Scheme" for the Livestock Sector was launched by the Department of Animal Husbandry & Dairying (DAHD) under the Ministry of Fisheries, Animal Husbandry, and Dairying. The scheme was introduced to revitalize the rural economy by empowering Micro, Small & Medium Enterprises (MSMEs) engaged in the Livestock sector.

Details

• The Department of Animal Husbandry & Dairying (DAHD), under the Ministry of Fisheries, Animal Husbandry, and Dairying, is implementing the Credit Guarantee Scheme as part of the Animal Husbandry Infrastructure Development Fund (AHIDF).
• It aims to provide financial support to un-served and under-served sections of society, especially first-generation entrepreneurs and underprivileged individuals who lack collateral security for their Livestock-related ventures.

Features

Collateral-free Credit

• The scheme facilitates easy access to credit for MSMEs in the Livestock sector without the need for collateral security. The credit facilities are secured based on the viability of the projects and primary assets financed.

Credit Guarantee Fund Trust

• DAHD established a Credit Guarantee Fund Trust with a corpus of Rs. 750.00 crores to provide credit guarantee coverage of up to 25% to eligible lending institutions for the credit facilities extended to MSMEs in the Livestock sector.

Eligible Investments

• The scheme encourages investments in various areas, including dairy processing and value addition infrastructure, meat processing and value addition infrastructure, animal feed plants, breed improvement technology and multiplication farms, animal waste to wealth management (agricultural waste management), and setting up of veterinary vaccine and drugs manufacturing facilities.

Interest Subvention

• The scheme offers an interest subvention of 3% on loans up to 90% of the total project cost, which can be obtained from Scheduled Banks and the National Cooperative Development Corporation (NCDC).

Significance

Promoting MSMEs in the Livestock Sector

• The credit guarantee scheme provides a major boost to MSMEs operating in the Livestock sector. By facilitating access to credit without the need for collateral security, it encourages new and existing entrepreneurs to invest in Livestock-related activities, thereby enhancing production, value addition, and employment opportunities in rural areas.

Empowering First-Generation Entrepreneurs

• The scheme focuses on supporting first-generation entrepreneurs and underprivileged individuals who often face difficulties in accessing traditional credit facilities due to the lack of collateral. Providing credit guarantee coverage encourages these entrepreneurs to take up Livestock-related ventures and contributes to their socio-economic upliftment.

Strengthening Credit Delivery

• The credit guarantee scheme strengthens the credit delivery system by mitigating the risk for lending institutions. With the government-backed credit guarantee, banks and other eligible lenders are more willing to extend credit to MSMEs in the Livestock sector, leading to an increased flow of funds to the sector 

Boosting Rural Economy

• The Livestock sector plays a crucial role in the rural economy. By promoting investments and growth in this sector, the credit guarantee scheme contributes to the overall economic development of rural areas. It creates employment opportunities, increases farm income, and drives rural prosperity.

Enhancing Infrastructure

• The AHIDF, which is the umbrella scheme under which the credit guarantee scheme operates, incentivizes investments in various Livestock-related infrastructures such as dairy processing, meat processing, animal feed plants, breed improvement, waste management, and veterinary vaccine production. This, in turn, strengthens the overall Livestock sector and its supply chain.

Encouraging Sustainable Practices

• The Livestock sector is integral to sustainable agricultural practices. By promoting investments in Livestock infrastructure and value addition, the scheme encourages sustainable practices and contributes to food security and environmental conservation.

Addressing Credit Constraints

• Historically, MSMEs in the Livestock sector have faced difficulties in accessing credit due to various factors, including the lack of collateral, limited financial literacy, and perception of higher risk. The credit guarantee scheme addresses these constraints, making it easier for MSMEs to access credit for their businesses.

Challenges

• Awareness and Outreach: Ensuring that potential beneficiaries are aware of the scheme and its benefits can be a challenge, especially in remote rural areas.
• Timely Disbursement: Ensuring timely disbursement of credit to eligible MSMEs is crucial for effective implementation.
• Risk Management: Proper risk assessment and management are essential to prevent default and manage the credit guarantee fund effectively.
• Monitoring and Evaluation: Regular monitoring and evaluation of the scheme's impact are necessary to make necessary improvements and address any shortcomings.

Following steps can be taken to make the scheme more effective

• Increased Outreach: Conduct awareness campaigns and workshops in rural areas to reach out to potential beneficiaries and promote the scheme's benefits.
• Capacity Building: Providing training and capacity building to Livestock MSMEs on financial management, project viability, and market linkages.
• Technological Integration: Utilizing technology to streamline the application and disbursement process, making it faster and more efficient.
• Data Analytics: Leveraging data analytics to assess the scheme's performance, identify trends, and make data-driven decisions.
• Collaboration with Stakeholders: Collaborating with financial institutions, industry associations, and other stakeholders to ensure smooth implementation and effective utilization of the scheme.

Conclusion

• The "Credit Guarantee Scheme" for the Livestock Sector represents a significant policy initiative to reboot the rural economy and leverage the potential of MSMEs in the Livestock sector. By providing financial support and risk mitigation, the scheme aims to promote entrepreneurship, enhance Livestock infrastructure, and stimulate economic growth in rural areas, ultimately contributing to India's overall socio-economic development.

Must-Read Articles:

LIVESTOCK SCHEMES IN NEWS: https://www.iasgyan.in/daily-current-affairs/livestock-schemes-in-news

LIVESTOCK CENSUS: https://www.iasgyan.in/daily-current-affairs/livestock-census

LIVESTOCK INSURANCE SCHEME: https://www.iasgyan.in/daily-current-affairs/livestock-insurance-scheme

PRACTICE QUESTION Q. The Livestock Sector plays a crucial role in India's economy. Discuss its significance, highlight the key challenges it faces, and suggest effective strategies for ensuring sustainable growth and development in the sector.

https://pib.gov.in/PressReleasePage.aspx?PRID=1940935