R. Sairam

Scheme shifts emphasis to production from sales

MADURAI: In a move intended to ensure that the Government subsidies directly benefit the khadi artisans, the Khadi and Village Industries Commission (KVIC) has introduced a new system of assistance.

The earlier system of providing rebates on retail sales has been replaced by ‘Market Development Assistance' (MDA) scheme, which shifts the emphasis to production rather than the sales.

The MDA would ensure that the subsidy benefits reached the artisans directly, M.T. Wakode, Director, Madurai Division of KVIC, told The Hindu here on Tuesday. The Madurai Region comprises 10 southern districts.

The Directorate of Khadi Co-ordination has directed all divisions across the country to give top priority to this scheme. The MDA, which came into effect on April 1, will be operational for 2010-11 and 2011-12, the terminal two fiscals in the XI Five Year Plan.

The scheme is intended to provide the khadi institutions with the necessary flexibility to fix prices competitively.

Under the earlier system, the Central Government gave 10 per cent of the production costs as rebate, based on the retail sale figures throughout the year. Further, in 108 days in a year that has festivals and other special events, the Centre and the State Government gave a special rebate of 10 per cent each, taking the total rebate to 30 per cent.

The MDA scheme gives an assistance of 20 per cent on production costs uniformly throughout the year. This is intended to ensure sale of khadi clothes remained high through the year rather than during festival occasions alone.

This assistance would be split among the stakeholders — spinners and weavers, producing institutions and selling institutions — in the ratio of 25 per cent, 30 per cent and 45 per cent respectively.

The 25 per cent for spinners and weavers would go directly to bank/post office accounts as incentives or bonus, informed Mr. Wakode.