Sarat Chandra IAS Academy

Agriculture Infrastructure Fund

#GS3 # Issues related to direct and indirect farm subsidies

Context: Recently, the Union cabinet approves modifications to the Agriculture Infrastructure Fund to increase investment.

Key Details of these modifications:

  • Eligibility has now been extended to State Agencies/APMCs, National & State Federations of Cooperatives, Federations of Farmers Producers Organizations (FPOs) and Federations of Self Help Groups (SHGs).
  • For APMCs, interest subvention for a loan upto Rs. 2 crore will be provided for each project of different infrastructure types e.g. cold storage, sorting, grading and assaying units, silos, et within the same market yard.
  • Modifications also allowed the agriculture minister to make necessary changes in future without seeking its approval with regard to addition or deletion of beneficiary without altering basic spirit of the scheme.
  • The repayment period has been increased from 4 years to 6 years up to 2025-26 and overall period of the scheme has been extended from 10 years to 13 years up to 2032-33.

About the Agriculture Infrastructure Fund:

  • The Union Cabinet in July 2020 approved this Central Sector Scheme.
  • This provides a medium – long term debt financing facility for investment in viable projects for post-harvest management Infrastructure and community farming assets through interest subvention and financial support.
  • Under the scheme, Rs. 1 Lakh Crore will be provided by banks and financial institutions as loans with interest subvention of 3% per annum and credit guarantee coverage under CGTMSE for loans up to Rs. 2 Crores.
  • Intended beneficiaries include: Farmers, Marketing Cooperative Societies, Joint Liability Groups (JLG), Multipurpose Cooperative Societies, Agri-entrepreneurs, Start-ups, and Central/State agency or Local Body sponsored Public-Private Partnership Projects.
  • All loans under this financing facility will have interest subvention of 3% per annum up to a limit of Rs. 2 crore.
    • This subvention will be available for a maximum period of seven years.
  • Credit guarantee coverage will be available for eligible borrowers from this financing facility under Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme for a loan up to Rs. 2 crore.
    • The fee for this coverage will be paid by the Government.
    • In case of FPOs the credit guarantee may be availed from the facility created under FPO promotion scheme of Department of Agriculture, Cooperation & Farmers Welfare (DACFW).
  • It will be managed and monitored through an online Management Information System (MIS) platform.
  • The National, State and District level Monitoring Committees will be set up to ensure real-time monitoring and effective feed-back.

Central Sector Schemes:

  • These schemes are 100% funded by the Central government.
  • Implemented by the Central Government machinery.
  • Formulated on subjects mainly from the Union List.
  • g.: Bharatnet, Namami Gange-National Ganga Plan, etc.

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