Scheme Guidelines for CENTRAL SECTOR SCHEME of financing facility
under ‘Agriculture Infrastructure Fund’
1 Introduction
The role of infrastructure is crucial for agriculture development and for taking the
production dynamics to the next level. It is only through the development of infrastructure,
especially at the post-harvest stage that the produce can be optimally utilized with
opportunity for value addition and fair deal for the farmers. Development of such
infrastructure shall also address the vagaries of nature, the regional disparities, development
of human resource and realization of full potential of our limited land resource.
In view of above, the Hon’ble Finance Minister announced on 15.05.2020, ₹1 lakh
crore Agri Infrastructure Fund for farm-gate infrastructure for farmers. Financing facility of ₹
1,00,000 crore will be provided for funding Agriculture Infrastructure Projects at farm-gate &
aggregation points Primary Agricultural Cooperative Societies, Farmers Producer
Organizations, Agriculture entrepreneurs, Start-ups, etc. Impetus for development of farmgate & aggregation point, affordable and financially viable Post Harvest Management
infrastructure.
Accordingly, DA&FW has formulated the Central Sector Scheme to mobilize a medium
– long term debt financing facility for investment in viable projects relating to post-harvest
management Infrastructure and community farming assets through incentives and financial
support.
Subsequently, in the budget announcement made on 01.02.2021, it was decided to
extend the benefit of the scheme to APMCs. Accordingly, modifications in the scheme were
carried out with the approval of Cabinet to make it more inclusive.
2 Rationale of the Scheme
Agriculture and allied activities are the primary income source for ~58% of total
population of India. ~85% of the farmers are Small Holding Farmers (SHFs) with less than 2
hectares of land under cultivation and manage ~45% of agricultural land. Annual income of
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majority of the farmers is very low. Further, India has limited infrastructure connecting
farmers to markets and hence, 15-20% of yield is wasted which is relatively high in
comparison to other countries where it ranges between 5-15%. Investment in agriculture in
India has further been stagnant with less than 2% CAGR over last 5 years. Investment in
FY17 was ~ ₹ 2.19 lakh crore out of which private sector share was ~83% vs. a higher
investment of ~ ₹ 2.50 lakh crore in FY14 and a higher share of private sector at ~88%. Also,
lack of investor confidence is leading to lower plowback ratio (~14% of Gross Value addition
in FY18) vs. other sectors (~33% of Gross Value addition in FY18).
3 Objectives of the Scheme
To mobilize a medium – long term debt financing facility for investment in viable
projects for post-harvest management Infrastructure and community farming assets through
incentives and financial support in order to improve agriculture infrastructure in the country.
This financing facility will fulfil numerous objectives for all the stakeholders in the agriculture
eco-system.
a. Farmers (including FPOs, PACS, Marketing Cooperative Societies, Multipurpose cooperative societies,
State Agencies, Agricultural Produce Market Committees (Mandis), National & State Federations of
Cooperatives, Federations of FPOs and Federations of Self Help Groups (SHGs) etc.).
– Improved marketing infrastructure to allow farmers to sell directly to a larger base
of consumers and hence, increase value realization for the farmers. This will
improve the overall income of farmers.
– With investments in logistics infrastructure, farmers will be able to sell in the
market with reduced post-harvest losses and a smaller number of intermediaries.
This further will make farmers independent through improved access to market.
– With modern packaging and cold storage system access, farmers will be able to
further decide when to sell in the market and improve realization.
– Community farming assets for improved productivity and optimization of inputs
will result in substantial savings to farmers.
b. Government
– Government will be able to direct priority sector lending in the currently unviable
projects by supporting through interest subvention, incentive through
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convergence and credit guarantee. This will initiate the cycle of innovation and
private sector investment in agriculture.
– Due to improvements in post-harvest infrastructure, government will further be
able to reduce national food wastage percentage thereby enable agriculture
sector to become competitive with current global levels.
– Central/State Government Agencies or local bodies will be able to structure
viable projects on their own or PPP projects for attracting investment in
agriculture infrastructure.
c. Agri-entrepreneurs and startups
– With a dedicated source of funding, entrepreneurs will push for innovation in
agriculture sector by leveraging new age technologies including IoT, AI, etc.
– It will also connect the players in ecosystem and hence, improve avenues for
collaboration between entrepreneurs and farmers.
d. Banking ecosystem
– With Credit Guarantee, convergence and interest subvention lending institutions
will be able to lend with a lower risk. This scheme will help to enlarge their
customer base and diversification of portfolio.
– Refinance facility will enable larger role for cooperative banks and RRBs.
e. Consumers
– With reduced inefficiencies in post-harvest ecosystem, key benefit for consumers
will be a larger share of produce reaching the market and hence, better quality
and prices. Overall, the investment via the financing facility in agriculture
infrastructure will benefit all the stakeholders in the eco-system.
4 Implementation Period of Scheme
The Scheme will be operational from 2020-21 to 2032-33. Loan disbursement under
the scheme will complete in six years, i.e. by the end of Financial Year 2025-26. As on 31st
December 2022, ₹14,118 crores have been sanctioned, out of which ₹9117 crores have
been disbursed under the scheme. Remaining ₹90,883 crores out of ₹1 lakh crores will be
disbursed during the remaining period between 2022-23 and 2025-26. Repayment period
covered under the financing facility will be for a maximum period of 7 years including the
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moratorium period of up to 2 years.