Prime Minister Narendra Modi, on August 9, 2020, launched a Rs 1-lakh-crore central financing scheme under the Agriculture Infrastructure Fund aimed at helping farmers and agri-entrepreneurs for setting up storage and processing facilities, so that farmers can get higher prices for their crops. The states of Karnataka, Gujarat, and Madhya Pradesh, are the initial beneficiaries of the agri-infra fund scheme.
At the same event, the Prime Minister Modi also released the sixth installment under the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) scheme of Rs 17,000 crore to nearly 8.5 crore farmers.
Cold stores and chains, warehousing, silos, assaying, grading and packaging units, e-marketing points linked to e-trading platforms and ripening chambers, besides PPP projects for crop aggregation sponsored by central/state/local bodies will be developed for providing facilities for storage, reducing wastage, and increasing processing and value addition, it will also lead to creation of employment opportunities in villages.
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The scheme was approved by the Union Cabinet on July 8, 2020, as part of the government’s Rs 20 lakh crore Atmanirbhar Bharat (self-reliant) package in response to the COVID-19 pandemic announced in May 2020. The scheme will be implemented over 10 years—from 2020 to 2029.
Under the scheme, Rs 1 lakh crore will be provided by banks and financial institutions as loans to farmers, Primary Agricultural Credit Societies (PACS), Farmer Producers Organisations (FPOs), Self Help Groups (SHG), and others for building ‘community farming assets’ and ‘post-harvest agriculture infrastructure’. There will also be about 3 per cent interest subvention and credit guarantee of up to Rs 2 crore for the beneficiaries to increase the viability of the projects.
Already, 11 of the 12 public sector banks have signed a memorandum of agreement (MoU) with the Agriculture Ministry. Moratorium for repayment under this financing facility may vary, subject to a minimum of six months and maximum of two years. Further, credit guarantee coverage will be available for eligible borrowers from this financing facility under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme for a loan of up to Rs 2 crore. The fee for this coverage will be paid by the government.
In case of FPOs, credit guarantee may be availed from the facility created under the FPO promotion scheme of the Department of Agriculture, Cooperation and Farmers’ Welfare (DACFW).
Loans will be disbursed in four years, starting with a sanction of Rs 10,000 crore in the current year and Rs 30,000 crore each in the next three financial years. The agri-infra fund, which will be managed and monitored through an online Management Information System (MIS) platform, will enable all the qualified entities to apply for loan under the fund.
The first sanction of over Rs 1,000 crore was made to over 2,280 farmer societies on Aug 9, 2020 itself. Wastage of post-harvest produce adversely affects the farmer and causes a lot of damage to the country in terms of loss of agricultural produce.
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