Union Cabinet Approves “Agriculture Infrastructure Fund” Scheme

A Central Sector Scheme called “Agriculture Infrastructure Fund” has been approved by the Union Cabinet chaired by the Prime Minister Shri Narendra Modi. The pan India scheme will offer a medium – long term debt financing facility to fulfil the demand of investment in viable projects for post-harvest management Infrastructure as well as community farming assets through interest subvention and financial support. Government of India will allocate Rs 10,736 crore as budgetary support to the scheme.

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Beneficiaries of the Scheme?

Under the scheme, banks and financial institutions will provide loans of Rs. 1,00,000 Crore to Primary Agricultural Credit Societies (PACS), Marketing Cooperative Societies, Multipurpose Cooperative Societies, Agri-entrepreneurs, Startups, Farmer Producers Organizations (FPOs), Self Help Group (SHG), Farmers, Joint Liability Groups (JLG), Aggregation Infrastructure Providers and Central/State agency or Local Body sponsored Public Private Partnership Project.

Features of the scheme:

  • There would be a interest subvention of 3% per annum up to a limit of Rs 2 crore for all loans extended under the “Agriculture Infrastructure Fund”.
  • The interest subvention would be available for a maximum duration of seven years.
  • There would be a facility of credit guarantee coverage which would be available for all the eligible borrowers from this financing facility under Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme for a loan with upper limit of Rs 2 crore. Government will borne all the fees related to this credit guarantee coverage.
  • Under the scheme “Agriculture Infrastructure Fund”, the moratorium for repayment may vary subject to minimum period of 6 months and maximum period of 2 years.
  • The duration of the scheme shall be from fiscal year 2020-2029 i.e foa a period of 10 years.
  • The disbursement of loans will take place in a time period of four years, starting with sanction of Rs. 10,000 crore in the current financial year while Rs 30,000 crore each in next three financial years.

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Operation of the scheme:

  • It will be managed and monitored via an online Management Information System (MIS) platform which will facilitate all the qualified entities to apply for loan under the “Agriculture Infrastructure Fund”.
  • The Management Information System (MIS) will also offer various benefits to the beneficiaries such as transparency of interest rates offered by multiple banks, scheme details including interest subvention and credit guarantee offered, minimum documentation, faster approval process as also integration with other scheme benefits
  • To ensure real-time monitoring and effective feed-back, a National, State and District level Monitoring Committees would be established.

Impact of the scheme:

The “Agriculture Infrastructure Fund” scheme will led to the establishment of cold storages and chains, assaying, warehousing, silos, grading and packaging units, ripening chambers besides PPP projects for crop aggregation sponsored by central/state/local bodies. Hence, the scheme is expected to further strengthen the agriculture sector by facilitating formal credit to farm and farm processing-based activities which will led to the creation of numerous job opportunities in rural areas.

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