Agriculture Infrastructure Fund – UPSC Prelims

By /
Ministry / Department: Department of Agriculture Cooperation and Farmers Welfare(DAC&FW).
Aim: To provide medium-long term debt financing facility for investment in viable projects. This includes post-harvest management Infrastructure and community farming assets through incentives and financial support.

Agriculture Infrastructure Fund

  • It is a Central Sector Scheme meant for setting up storage and processing facilities, which will help farmers, get higher prices for their crops.
  • Funding: Under the Scheme, Rs. 1 Lakh Crore will be provided by banks and financial institutions as loans to eligible beneficiaries.
  • Eligible Beneficiaries: 
    • Farmers, FPOs, PACS, Marketing Cooperative Societies, SHGs, Joint Liability Groups(JLG). The beneficiaries also include Agri-entrepreneurs, startups and Central/State agency or Local Body sponsored Public-Private Partnership Projects.
    • Eligibility for credit under the scheme has been extended to State Agencies/ APMCs, National & State Federations of Cooperatives, Federations of Farmers Producers Organizations(FPOs) and Federations of Self Help Groups (SHGs).
  • Lending Institutions: Multiple lending institutions including Commercial Banks, Cooperative Banks, NCDC, NBFCs etc.
  • Duration of the Scheme: FY2020 to FY2033 (13 years)
  • Interest Subvention: 
    • Loans will have an interest subvention of 3% per annum up to a limit of Rs. 2 crores. This subvention will be available for a maximum period of seven years.
    • Entities would be able to get interest subvention of 3% per annum not just for one loan up to ₹2 crores but for multiple projects at different locations.
    • But for a private sector entity, there will be a limit of a maximum of 25 such projects. This limitation of 25 projects will not be applicable to State agencies, national and state federations of cooperatives, federations of FPOs, and federation of SHGs.
  • Credit Guarantee: A credit guarantee coverage will be available for eligible borrowers from the scheme. This coverage is provided under Credit Guarantee Fund Trust for Micro and Small Enterprises(CGTMSE) scheme for a loan up to Rs. 2 crores. The fee for this credit coverage will be paid by the Government.
  • Project Management Unit to provide handholding support for projects including project preparation.
  • The moratorium for repayment of a loan under this financing facility may vary subject to a minimum of 6 months and a maximum of 2 years.
  • Need-based refinance support will be made available by NABARD to all eligible lending entities.
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