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Everything to Know About the Agriculture Infrastructure Fund (AIF)

The Union Cabinet approved a new pan-India Central Sector Scheme called Agriculture Infrastructure Fund (National Agriculture Infra Financing Facility) in July 2020. Through interest subsidy and financial support, the initiative would provide investments in qualifying projects for post-harvest management infrastructure and community farming assets through a medium-long term loan financing facility.

The Union Cabinet approved a new pan-India Central Sector Scheme called Agriculture Infrastructure Fund (National Agriculture Infra Financing Facility) in July 2020. Through interest subsidy and financial support, the initiative would provide investments in qualifying projects for post-harvest management infrastructure and community farming assets through a medium-long term loan financing facility.

Objectives of the Scheme

Mobilize a medium-long term debt financing facility for investment in viable post-harvest management infrastructure and community farming assets through incentives and financial support to improve agriculture infrastructure in the country. This financing facility will serve a variety of functions for all agricultural stakeholders.

1. Farmers

  • Improved marketing infrastructure to enable farmers to sell directly to a larger consumer base.
  • Farmers will be able to sell in the market with lower post-harvest losses and fewer intermediaries thanks to investments in logistics infrastructure.
  • Farmers will be able to better decide when to sell in the market with access to modern packaging and cold storage systems.
  • Farmers will benefit significantly from community farming assets for increased productivity and input optimization.

2. Government

  • Through interest subvention, incentive, and credit guarantee, the government will be able to direct priority sector lending in currently unviable projects.
  • Government will be able to further reduce national food waste due to improvements in post-harvest infrastructure.

3. Agri-entrepreneurs and start-ups

  • Entrepreneurs will push for agricultural innovation by leveraging new-age technologies with a dedicated source of funding.
  • It will also connect ecosystem players, improving avenues for collaboration between entrepreneurs and farmers.

4. Banking ecosystem

  • This scheme will assist them in expanding their customer base and diversifying their portfolio.
  • The refinancing facility will allow cooperative banks and RRBs to play a larger role.

5. Consumers

  • Reduced inefficiencies in the post-harvest ecosystem will result in a larger share of produces reaching the market and, as a result, better quality and prices for consumers.

Scheme Duration

The Scheme will run from the fiscal year 2020 to the fiscal year 2032. (10 years). Disbursement over four years, beginning with a sanction of Rs. 10,000 crore in the first year and increasing to Rs. 30,000 crore in each of the next three fiscal years. Under this financing option, the repayment moratorium may range from a minimum of 6 months to a maximum of 2 years.    

Assistance with money from the Agriculture Infrastructure Fund

In accordance with the plan, banks and other financial institutions will lend Rs. 1 lakh crore at a 3 percent annual interest subsidy and give credit guarantee coverage under the CGTMSE plan for loans up to Rs. 2 crore.

Cost of Interest Subvention

  • All loans made through the AIF would be subject to a 3% annual interest subsidy, up to a maximum of Rs. 2 crores.
  • This subsidy will be offered for a maximum of seven years. Interest subvention would be capped at Rs. 2 crore for loans exceeding that amount.
  • The loans will be paid back over the course of four years, commencing with the current fiscal year's sanction of Rs. 10,000 crore and the next three fiscal years' sanction of Rs. 30,000 crore apiece.
  • The National Monitoring Committee may determine the amount and proportion of financing provided to private entrepreneurs relative to the entire financing facility.

Read More: https://tractornews.in/articles/the-mission-for-integrated-development-of-horticulture-midh/

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