Three Years On, Only 15% Of Rs 1 Lakh Crore Agri Infrastructure Fund Disbursed

Relevance: GS1 - Population and associated issues, Poverty and developmental issue GS3 - Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment, Major crops-cropping patterns in various parts of the country,

(Source: Down To Earth, 08/03/2023)

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Why in the news?

• Recently, the Union Minister for Agriculture stated that only 15% of the ₹1 lakh crore Agriculture Infrastructure Fund (AIF), has been disbursed since 2020.
• The ministry is attempting to popularize the scheme among various stakeholders.
• It was part of the special COVID-19 package under the Aatmanirbhar Bharat initiative.

What is the Agricultural Investment Fund?

• The Agricultural Investment Fund (AIF) is a financing facility that was launched in July 2020 as a central sector scheme with a corpus of ₹1 lakh crore.
• Aim: Provide all-around financial support to farmers, agri-entrepreneurs, Farmer Producer Organisations (FPOs), Self Help Groups (SHGs), Joint Liability Groups (JLGs), etc. to create post-harvest management infrastructure and community farming assets in the country.
• The scheme was initially set to run for ten years from 2020 to 2029. But, it has been extended by three years till 2032-33 in July 2021.
• NABARD will implement the initiative in association with the Ministry of Agriculture and Farmers’ Welfare.
• Benefits:
  • 3% interest subvention
  • Credit guarantee support through the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme for loans of up to Rs. 2 crores
  • Convergence with other Central and State Government schemes.
  • 6 months to 2-year-long moratorium for repayment
  • Reduction of post-harvest losses through the development and modernization of agriculture infrastructure
• Features:
  • Medium to long-term debt financing facility for investment in viable projects through interest subvention and credit guarantees.
  • Reduces wastage, and improves storage facilities, thereby improving farmer incomes.
• Management:
  • An online Management Information System (MIS) platform will monitor and oversee the fund and enable all qualified entities to apply for loans under the Fund.
  • National, State, and District level monitoring committees will be set up to ensure real-time monitoring and effective feedback.

Why is it needed?

• Approximately 58% of the people of the country rely on agriculture and allied activities as their chief sources of income.
• As most of the landholders are small and fragmented landholders, their annual incomes are quite low.
• 15 – 20% of the agricultural output in the country is wasted due to poor connectivity and limited infrastructure.
• This means that agricultural investment in the country has stagnated.
• Therefore, the AIF scheme will boost farmers' income, agricultural production, and exports.

How has the Fund been utilized?

• As of August 1st, 2023, ₹15,448 crores has been disbursed by the Union Government for 27,748 projects.
• However, only 9.66% of the projects i.e. 19,650 projects worth ₹9,660 crore have been completed so far.
• Among the 27 states and Union Territories for which data was available, Madhya Pradesh utilized the most i.e. ₹2,707 crore for 3909 projects followed by Maharashtra and Uttar Pradesh in second and third with 2,424 completed projects worth ₹901 crores and 1,175 projects worth ₹691 crores respectively.
• Punjab, Rajasthan, Telangana, Gujarat, Karnataka, Haryana, and West Bengal reported proper utilization of the funds while Tamil Nadu, Andhra Pradesh, Chhattisgarh, Odisha, Kerala, Bihar, Jharkhand, Himachal Pradesh, Uttarakhand, Jammu and Kashmir, Delhi, Assam, Meghalaya and Manipur were lagging.

What has the government proposed?

• The Union Ministry of Agriculture and Farmers Welfare has proposed a sample study of completed projects by a third party to assess its ground-level impact.
• Various programmes in virtual and physical modes to disburse the remaining amount by the financial year 2025-2026 and continue the interest subvention and credit guarantee assistance till 2032-2033.
• Organize state conclaves to increase awareness and popularity of the scheme among stakeholders.
• Regular bank campaigns and workshops with FPOs, primary agricultural credit societies, officials, and other stakeholders to identify and implement infrastructure projects to promote farmer interests.
• Banks have been advised to nominate an AIF nodal officer in the head office.
  • The nodal officer will coordinate and communicate with others regarding all aspects of the AIF scheme.

Conclusion

• The Indian agriculture supply chain has transformed from one characterized by high wastage, low processing, and exports to a streamlined, and integrated role in global trade.
• Financial and regulatory support from the government, foreign players, and corporations could develop agri-infrastructure in the country.

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FAQs

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MCQs

Question: Consider the following statements:

1. It is a central sector scheme.
2. It was launched in 2020 to deal with the COVID-19 pandemic crisis with a corpus of ₹100000 crores.
3. It provides Interest Subvention and Credit Guarantee to set up post-harvest management Infrastructure.

How many of the above statements are correct?

(a) Only 1

(b) Only 2

(c) All 3

(d)  None