Every FPO formed under the scheme receives up to ₹18 lakh over its first three years for its running costs. The money is not meant to pay for everything: the guidelines set a limit for each head, and from the fourth year the FPO pays its own way. This part explains each head and includes a planner.
The short version
- Up to ₹18 lakh per FPO, including taxes, over the first three years from formation.
- The largest heads are salaries: CEO up to ₹25,000 a month, accountant up to ₹10,000 a month.
- Other heads: rent, utilities, travel, stationery, registration, minor equipment and accounting software.
- From the fourth year, the FPO meets all these costs from its own business.
The Heads and Their Limits
Each head has its own ceiling, and the total over three years cannot pass ₹18 lakh.
| Head | Limit |
|---|---|
| CEO or Manager salary | Up to ₹25,000 a month, with up to 5% increase a year |
| Accountant salary | Up to ₹10,000 a month, with up to 5% increase a year |
| Registration (one time) | Up to ₹40,000 or the actual cost |
| Office rent | Up to ₹48,000 a year |
| Electricity and telephone | Up to ₹12,000 a year |
| Travel and meetings | Up to ₹18,000 a year |
| Cleaning, stationery and other | Up to ₹12,000 a year |
| Furniture, fixtures and minor equipment (one time) | Up to ₹1,00,000, only from savings under other heads |
| Accounting software, ERP or Tally | Allowed by the Addendum |
Source: Operational Guidelines 10.1, 10.4 and 10.5; Addendum items 12 and 13
Did you know?The Addendum made it explicit that both the ₹18 lakh and the CBBO's ₹25 lakh include applicable taxes.
How the Numbers Add Up
At every limit, the heads total about ₹17.3 lakh over three years, just within the ₹18 lakh ceiling.
Use the planner with your FPO's real figures. It applies each limit and the overall ceiling, and shows what the FPO pays from its own income.
This interactive tool needs JavaScript. The rules it applies are set out in the text of this episode.
How It Is Paid and Accounted For
The implementing agency pays into the FPO's bank account on the CBBO's recommendation; the FPO reports its use through utilisation certificates.
- Recommendation. The CBBO recommends release of the management cost for the FPO.
- Payment. The implementing agency pays it directly into the FPO's bank account.
- Use and records. The FPO spends within the heads and keeps bills and books.
- Utilisation certificate. The FPO sends periodic utilisation certificates to the implementing agency through the CBBO.
Source: Operational Guidelines 8.2.1 and 10.6
The Fourth Year
The support is a start-up aid, not a permanent subsidy; from year four the FPO's business must pay its costs.
"The financial support is not meant for reimbursing the entire administrative and management cost of FPO but it is to provide the financial support to the FPOs to the extent provided to make them sustainable and economically viable." (Operational Guidelines 10.1)
From the fourth year the FPO pays the CEO, the accountant and the office from its own business. It may also pay more than the supported salary from its own funds at any time, to attract good staff (10.4). Plan the business so that its margin covers these costs by the end of year three; see the five-year roadmap.
Check yourself
Tap an answer to see whether you are right, and why.
What is the most the scheme supports for a CEO's salary in the first year?
- ₹10,000 a month
- ₹25,000 a month
- ₹50,000 a month
Up to ₹25,000 a month, with up to 5% increase in each following year.
When can the FPO use the ₹1,00,000 furniture and equipment head?
- Any time, in addition to the ₹18 lakh
- Only from savings on other heads, within the ₹18 lakh
- Only in year four
Clause 10.1(v) allows it only from savings, within the overall ceiling.
Who pays the CEO's salary from the fourth year?
- The implementing agency
- The FPO, from its own income
- The CBBO
Support is for the first three years only.
Remember these things
- Up to ₹18 lakh including taxes, over three years.
- Salaries are the largest heads: ₹25,000 and ₹10,000 a month at most.
- Paid into the FPO's account on the CBBO's recommendation, accounted for by utilisation certificates.
- From year four, the FPO pays its own costs.
Part 10 covers who can be the CEO and the accountant, and what the board should expect of them. For FPOs whose members are also certified under PGS-India, KrushiFlow submits farmer records to the PGS-India portal in bulk.