NEW DELHI: The government wants to turn the milk cooperative system cashless, with awards to help make the churn smoother. More than Rs 120 crore is paid out everyday to close to 20 million farmers who sell milk to cooperatives — the foundation on which India’s dairy revolution was built. That’s about Rs 44,000 crore or even more annually, making for a potentially significant boost for the cashless economy campaign.
“The dairy cooperative maximising cashless payments will stand to win three quarterly awards of Rs 5 lakh each,” said Devendra Chaudhary, secretary, department of animal husbandry, dairying and fisheries. “We believe this will enable cooperatives to procure more milk and also help the farmers by getting the payment straight in their bank accounts.”
This follows the launch of the Lucky Grahak Yojana and Digi Dhan Vyapari Yojana by the government to encourage consumers and merchants, respectively, to adopt digital payments with cash awards.
About 42.7 million litres of milk was procured daily by 174,000 cooperatives from 16 million milk producers in 2015-16, according to official data. The daily payment of about Rs 120 crore was mostly in cash. In a recent month, the daily payout rose to as much as Rs 200 crore to 18.4 million farmers.
The Centre told the states last week in a letter that the aim of the move was to bring about “an overall change in the present system, bring about more transparency, remove exploitation, reduce the discretionary mode of operation and thereby also reduce corruption.” Farmers and cooperatives, however, won’t be compelled to shift to the digital mode, said officials.
Payments through bank accounts amounted to Rs 344 crore to 2.8 million farmers in November, Chaudhary said. “Now in January 2017, payment through bank accounts has jumped toRs 833 crore to 4.6 million farmers,” he told ET.
The move comes amid reports that the boom in digital transactions after the demonetisation announcement on November 8 last year was fading as more currency notes have entered the system and people have been shifting back to cash.
When the government first started to push for cashless payments in this sector after the note-swap decision, it realised that banking penetration among dairy farmers was poor, especially the small and marginal ones. For instance, only 41% of farmers selling to the pioneering Gujarat Cooperative Milk Marketing Federation, better known by the brand name Amul, had bank accounts till last October.
The Centre then asked cooperatives to ensure that all dairy farmers open bank accounts by December 30.
“The banking penetration among dairy farmers has gone up considerably now,” Chaudhary said. “We have pursued this on a weekly basis through a call centre and special meetings with cooperatives. Now we are incentivising digital mode for payments made to the farmers.”
To qualify for the Gokul Cashless Management Award, cheque payments won’t be enough. Payments by cooperatives will need to be either through net banking or digital transfers via the internet or through mobile apps. Awards for the first quarter of the year will be announced November 26.