The Union Cabinet approved an expansion of the Agricultural Infrastructure Fund (AIF), enhancing its scope to provide financial support for Farmers’ Producers Organisations (FPOs).
Highlights of recent expansion:
- Financial Support for FPOs: Inclusion of FPOs to enhance their financial security and creditworthiness.
- Viable Farming Assets: Extension to cover all eligible beneficiaries for building community farming assets.
- Integrated Processing Projects: Inclusion of both primary and secondary processing projects under the scheme.
- Convergence with PM KUSUM: Allows convergence with Component-A of the PM-KUSUM scheme for farmers, FPOs, cooperatives, and panchayats.
- Enhanced Credit Guarantee: Introduction of NABSanrakshan (a subsidiary of NABARD) to extend AIF credit guarantee coverage to FPOs, alongside CGTMSE.
Implications of the Expansion
- Improved Access: Enhanced support for a broader range of infrastructure projects and beneficiaries.
- Increased Inclusivity: Better integration with existing schemes and support structures.
- Strengthened Agricultural Ecosystem: Expected to foster growth, enhance farm productivity, and contribute to the overall sustainability of agriculture in India.
About the Agricultural Infrastructure Fund (AIF)
- Objective: The AIF is a debt financing facility designed to support investment in agricultural infrastructure projects, including post-harvest management and community farming assets.
- Funding: The scheme involves a total funding of ₹1 lakh crore from banks and financial institutions.
- Support Mechanisms: Provides interest subvention of 3% per annum and credit guarantee coverage under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) for loans up to ₹2 crore.
Issues with Agricultural Infrastructure in India
- Upstream Challenges:
- Inadequate irrigation infrastructure (51% of agriculture is rainfed).
- Poor farm mechanization (47% mechanized in 2022).
- Limited soil testing facilities and cold-storage infrastructure.
- Downstream Challenges:
- Limited food processing facilities.
- Inefficient supply chain management.
- Poor market intelligence leading to market inefficiencies.
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Frequently Asked Question:
What is the recent expansion of the Agricultural Infrastructure Fund (AIF)?
The expansion includes financial support for Farmers’ Producers Organisations (FPOs) and covering all eligible beneficiaries for building community farming assets.
How does the expansion benefit FPOs?
It enhances their financial security, creditworthiness, and access to the AIF for building viable farming assets.
What projects are now included under the AIF scheme?
Both primary and secondary processing projects are now included under the scheme.
How does the AIF expansion converge with PM KUSUM?
It allows convergence with Component-A of the PM-KUSUM scheme for farmers, FPOs, cooperatives, and panchayats.
What is NABSanrakshan and its role in the AIF expansion?
NABSanrakshan, a subsidiary of NABARD, extends AIF credit guarantee coverage to FPOs, alongside CGTMSE, enhancing their access to credit.