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Polyvastra in place of existing Rebate Scheme

29
Jan '10
The Cabinet Committee on Economic Affairs approved the introduction of a Market Development Assistance (MDA) scheme envisaging financial assistance @ 20% of production value on Khadi and Khadi products and polyvastra with effect from 1.4.2010 to be shared among spinners/weavers, producing institutions and selling institutions @ 25%, 30% and 45% respectively of total value of MDA in place of existing rebate scheme on Khadi and polyvastra at an estimated cost of Rs.345.05 crore, to be incurred between 2010-11 and 2011-12 as recommended by Expenditure Finance Committee (EFC).

The MDA Scheme has certain significant advantages over the earlier rebate scheme. Rebate was meant only for price subsidization with little emphasis on quality improvement, where MDA proposes to improve the quality of the products, marketing standards and techniques, besides trying to bring in a modern and competitive trend in its entire approach.

Though normal rebate was provided throughout the year, the sales usually picked up only during the period when the special rebate was extended. Thus sales were getting concentrated only during the period of special rebate. The MDA scheme proposes to distribute sales throughout the year.

The MDA Scheme provides specific earmarking and distribution of allocation / commitment for enhanced wages to artisans, which would help improve the standard of living of khadi artisans, majority of whom belong to the Below Poverty Line (BPL) category. Rebate does not have any specific component in this regard.

The MDA Scheme strives to bring in a competitive approach in the Khadi sector, since any subsidy or grant approach cannot last forever and the sector will survive only it takes up the challenge of sustaining itself through its internal resources.

Rebate on sales included the component on value addition on production which included dyeing, colouring, designing, stitching, packaging etc. which will not be covered under the MDA.

The Scheme is expected to result in sustainability and effective development of khadi, enhancement of artisans' welfare through their effective empowerment, sale of Khadi on its own strength and gradual reduction in reliance on government grant for growth in the Khadi sector.

It is estimated that a minimum of 200 beneficiaries per institution, in more than 1600 institutions across the country, will be benefited by the MDA Scheme.

KVIC will be responsible for implementation of the MDA Scheme. Implementation of the programme will be monitored by the Ministry of Micro, Small and Medium Enterprises.

Background:
The Government of India had constituted a ten member Expert Committee (EC) in December, 2004 to examine the structure, functioning and performance of Khadi and Village Industries Commission (KVIC) and recommend measures to revamp the KVIC and launch new programmes. One of the recommendations of this Expert Committee related to the existing scheme of rebate on the sale of khadi and polyvastra.


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