The Union Cabinet has recently sanctioned the Agriculture Infrastructure Fund, a nationwide central sector scheme designed to introduce formal credit into farming and farm processing activities. This step forms part of the stimulus package exceeding Rs. 20 lakh crore announced in response to the Covid-19 crisis. Furthermore, the Union Cabinet has given its approval for amending the Essential Commodities Act (ESA), 1955.
Main Objectives
The scheme primarily seeks to provide medium to long-term debt financing facility for investment in feasible projects centered around post-harvest management infrastructure and community farming assets. The allocated funds will enable the establishment of cold stores and chains, warehouses, silos, assaying, grading and packaging units, e-marketing points linked to e-trading platforms, and ripening chambers. Moreover, Public Private Partnership (PPP) projects for crop aggregation sponsored by central/state/local bodies will also be supported by these funds.
Timeline
The duration for this finance scheme will span from Financial Year 2020 to 2029.
Key Features and Financial Support
An amount of Rs. 1 Lakh Crore will be furnished as loans by financial institutions and banks to several key sectors. This includes Primary Agricultural Credit Societies (PACS), Marketing Cooperative Societies, Farmer Producers Organizations (FPOs), Self Help Group (SHG), Farmers, Agri-entrepreneurs, and Central/State agencies or Local Bodies engaged in Public Private Partnership Projects. The disbursement of these loans will occur over four years, beginning with the allocation of Rs. 10,000 crore in the present year followed by Rs. 30,000 crore each in the subsequent three financial years.
Moratorium and Interest Subvention
The moratorium on repayment can vary, ranging from a minimum of 6 months to a maximum of 2 years. The loans will offer an interest subvention of 3% per annum up to a limit of Rs. 2 crore. This subvention will be available for up to seven years.
CGTMSE Scheme and Farmer Producer Organizations
Eligible borrowers from the scheme can avail credit guarantee coverage under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme for loans up to Rs. 2 crore. In the case of Farmer Producer Organizations, the credit guarantee may be derived from the facility established under the FPO promotion scheme.
Fund Management and Monitoring
The online Management Information System (MIS) platform will manage and monitor the fund. It will enable all eligible organizations to apply for loans under the fund. National, State, and District-level monitoring committees will be established to enable real-time monitoring and effective feedback.
The source of this information is PIB.
