‘Agriculture Infrastructure Fund’

 

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Context

The Union Cabinet approved the expansion of financing facility under ‘Agriculture Infrastructure Fund’.

What is Agriculture Infrastructure Fund?

• The Agriculture Infrastructure Fund is a central sector scheme. Note: Central sector schemes are fully funded by the Union government and executed by central government agencies.
• Agriculture Infrastructure Fund provides medium to long-term loans for projects related to post-harvest management and community farming, with support through reduced interest rates and credit guarantees.
• The duration of the scheme is from FY2020 to FY2029 (10 years).

Provisions under the scheme

• All loans up to a limit of ₹ 2 crores under this financing facility will have interest subvention of 3% per annum. This subvention will be available for a maximum period of 7 years. Note:  interest subvention means the government pays part of the loan interest.
• In case of loans beyond Rs. 2 crores, the interest subvention will be limited up to Rs. 2 crores.
• There is credit guarantee coverage, which is up to Rs. 2 crores. The fee for this coverage will be reimbursed by the Govt. of India.

What kind of infrastructure projects are eligible for funding under the Agriculture Infrastructure Fund Scheme?

Following activities are eligible under National Agriculture Infra Financing Facility:

• All post-harvest management projects
• Primary processing activities
• Community farming assets like tissue culture
• Organic inputs production – Vermicomposting etc.,
• Financing hydroponic farming
• Mushroom farming
• Vertical farming
• Aeroponic farming
• Poly house/ Greenhouse
• Logistics facilities
• Tractors for groups like FPOs, PACS, SHGs, JLGs, Cooperatives, National and State Level Federation of Co-operatives, FPOs federations, Federations of SHGs, National and State Level Agencies as they qualify as community farming assets.

Eligible Applicants

• Primary Agricultural Credit Societies (PACS).
• Marketing Cooperative Societies.
• Farmer Producers Organizations (FPOs).
• Self Help Group (SHG)
• Joint Liability Groups (JLG).
• Multipurpose Cooperative Societies.
• Agri-entrepreneurs, Startups.
• Central/State agency or Local Body sponsored Public-Private Partnership Projects.

Benefits of the Scheme:

• Better Marketing: Farmers can sell directly to more consumers, increasing their income.
• Reduced Losses: Improved logistics reduce post-harvest losses and fewer intermediaries, making farmers more independent.
• Modern Storage: Access to advanced packaging and cold storage helps farmers decide the best time to sell.
• Cost Savings: Community farming assets improve productivity and save costs.
• Increased Investment: Government support through interest discounts and guarantees boosts innovation and private sector investment.
• Reduced Food Waste: Improved infrastructure lowers food wastage and enhances global competitiveness.
• Attracting Investments: Viable Public-Private Partnership projects attract more investment in agricultural infrastructure.
• Lower Risk for Lenders: Credit guarantees and incentives reduce risk and help lenders expand their customer base.
• Support for Cooperative Banks: Refinance facilities allow cooperative banks and Regional Rural Banks (RRBs) to play a larger role.

Significance of AIF

• Since 2020, AIF has supported building 6623 warehouses, 688 cold stores, and 21 silos. This has added 500 LMT of storage capacity: 465 LMT for dry storage and 35 LMT for cold storage.
• The new capacity saves 18.6 LMT of food grains and 3.44 LMT of horticultural produce annually.
• 74,508 projects under it have attracted crores of investment, primarily from private sources. The projects have created over 8 .19 Lakh rural jobs in agriculture.

The recent expansion of AIF

The government has introduced measures to improve the Agricultural Infrastructure Fund (AIF) and support farming:

• Viable Farming Assets: As part of the recent expansion, all eligible beneficiaries can now create infrastructure under 'viable projects for community farming assets.' This aims to enhance community farming capabilities, boosting productivity and sustainability.
• Integrated Processing Projects: The expansion includes integrated primary and secondary processing projects in the list of eligible activities. However, standalone secondary projects will not be eligible and will be covered under Ministry of Food Processing Industries schemes.
• PM KUSUM Component-A: The recent update allows the convergence of Component-A of the Pradhan Mantri Kisan Urja Suraksha Evam Utthaan Mahabhiyan with the Agricultural Infrastructure Fund for farmers, Farmer Producer Organizations, Cooperatives, and Panchayats. This alignment promotes sustainable clean energy solutions and agricultural infrastructure development.
• NABSanrakshan: In addition to the Credit Guarantee Fund Trust for Micro and Small Enterprises, the Agricultural Infrastructure Fund credit guarantee coverage for Farmer Producer Organizations will now be extended through NABSanrakshan Trustee Company Pvt. Ltd. This aims to enhance financial security and encourage investments in agricultural infrastructure projects.

Significance of expansion

The expansion of the AIF scheme will boost growth, increase productivity, raise farm incomes, and make agriculture more sustainable.

READ ALL ABOUT PM KUSUM: https://www.iasgyan.in/daily-current-affairs/pm-kusum-scheme-27#:~:text=Objectives%20of%20KUSUM%20Scheme&text=The%20main%20objectives%20of%20this,energy%20than%20diesel%20driven%20pumps.

READ ALL ABOUT CREDIT GUARANTEE FUND TRUST FOR MICRO AND SMALL ENTERPRISES: https://www.iasgyan.in/daily-current-affairs/credit-guarantee-scheme-for-micro-small-enterprises

NABSanrakshan Trustee Private Limited NABSanrakshan Trustee Private Limited is a wholly owned subsidiary of NABARD. NABSanrakshan aims to carry out credit guarantee and related activities towards sustainable and equitable agriculture and rural development. The two credit guarantee schemes under NABSanrakshan are: Credit Guarantee Scheme for Animal Husbandry and Dairying (CGSAHD): Launched under the Atmanirbhar Bharat Abhiyan, this scheme supports investments in animal husbandry and dairying. It includes a Rs. 750 crore credit guarantee fund, with the Government of India and NABSanrakshan managing it. This fund helps Scheduled Banks provide loans for animal husbandry projects. Credit Guarantee Scheme for Farmer Producer Organizations Financing (CGSFPO): This scheme, launched by the Ministry of Agriculture and Farmer’s Welfare, supports the formation and promotion of Farmer Producer Organizations (FPOs). It features a Rs. 1000 crore credit guarantee fund, co-funded by the Government of India and NABARD. NABSanrakshan oversees the fund to facilitate financing for FPOs.

 

PRACTICE QUESTION Q. Consider the following statements: 1.The Agriculture Infrastructure Fund is a central sector scheme. 2.Agriculture Infrastructure Fund provides short term loans for projects related to post-harvest management and community farming. 3.All loans up to a limit of ₹ 2 crores under this financing facility will have interest subvention of 3% per annum.  Which of the above statements is/are correct? A)1 only B)1 and 3 only C)1,2 and 3 D)None   Answer: B) 1 and 3 only Explanation Statement 1 is correct: The Agriculture Infrastructure Fund is a central sector scheme. Central sector schemes are fully funded by the Union government and executed by central government agencies. Statement 2 is incorrect: Agriculture Infrastructure Fund provides medium to long-term loans for projects related to post-harvest management and community farming, with support through reduced interest rates and credit guarantees. Statement 3 is correct: All loans up to a limit of ₹ 2 crores under this financing facility will have interest subvention of 3% per annum. This subvention will be available for a maximum period of 7 years.

SOURCE: PIB