The Agriculture Infrastructure Fund is a central government initiative to empower Indian agriculture infrastructure development which is new. Observe how the largest Fund like Agriculture Infrastructure Fund (AIF) in the world is changing the agricultural environment in India. Know about its prospects, requirements and how it helps farmers.
The Agriculture Infrastructure Fund (AIF) has been one of the major government projects launched by India in order to improve agricultural infrastructure. This positive feedback aims to improve the lives of farmers and support agricultural economy development. The goals of AIF, its benefits and management structure are discussed in this paper, while addressing most of the frequently asked questions regarding this scheme.
An introduction to the Agriculture Infrastructure Fund
This is especially the case in India, which is mainly an agricultural economy, and has continued to struggle with factors within the post-harvest operations which include storage and transportation of agricultural produce . This arises due to inefficiencies which result in loss, hence affecting the farmers’ income and food security.
The Agriculture Infrastructure Fund was launched in May 2020 as a central sector scheme to offer financial facility up to ₹1 lakh crore (approx USD 13. This fund seeks to improve post-harvest handling and create community farming infrastructure that farmer groups, co-operatives and agri-businesses can provide to support their operations as well as fund critical infrastructure which reduce waste, adds value and increases production.
The backdrop to the Agriculture Infrastructure Fund (AIF)
The AIF is a government policy meant to provide funding for the growth of facilities pertaining to post-harvest handling and other communal agriculture assets. This is due to the government’s efforts to fix funding in these core areas so that losses after the crops have been harvested could be cut, earnings of farmers could be boosted and, more importantly, the development of the agricultural industry could be spurred.
Objectives of the AIF
The primary objectives of the Agriculture Infrastructure Fund include:
- Improving Post-Harvest Management: These are 15-20% of the production due to lack of infrastructure; the AIF wants to reduce these losses. The fund should be channelled towards storage, processing, marketing facilities so as to ensure farmers get the necessary capital inputs to store and market their produce well.
- Assisting Smallholder Farmers: According to the latest census data, small farmers constitute about 85% of the farming community in India most of which farm below two hectares of area. The AIF is intended to meet these farmers by enhancing credit as well as improved farming methods.
- Promoting Agribusinesses: The fund targets the generation of startups and agribusinesses innovatively providing services and products to farmers in the sector.
- Building Sustainable Infrastructure: The AIF wants to provide adequate basic support structures for agriculture and develop the structures for future needs as well in other to foster continued growth within this sector.
Implementation and Disbursement
It is further implemented by the National Bank for Agriculture and Rural Development (NABARD) with an active cooperation of the Ministry of Agriculture and Farmers’ Welfare. This fund will function up to the financial year 2025-26. Also, interest subvention and credit guarantees would remain in force till 2032-33.
Key Features of AIF
- Medium to Long-Term Financing: This fund entails additional funding to initiatives targeted to infrastructure.
- Interest Subvention: To encourage investments, the government accords an interest subvention on the loans to a certain extent of amount.
- Credit Guarantee: The scheme has credit guarantee facility to minimize potential risks element in it.
- Eligible Beneficiaries: Farmers, FPOs, cooperatives and private entrepreneurs can all have advantage on this program of the government.
- Infrastructure Coverage: Warehouse, cold storage, processing facilities, transportation networks are some of the categories of infrastructure financed by the fund.
Benefits of AIF
The AIF offers several benefits to the agricultural industry:The AIF offers several benefits to the agricultural industry:
- Reduced Post-Harvest Losses: Availability of storage and handling facilities reduces on cases of wasted agricultural produce.
- Increased Farmers’ Income: Post harvest management enable farmers to sell their produce at better prices hence more profits.
- Enhanced Market Access: Infrastructure development also assists in carrying out the transportation processes and expand the coverage in the market.
- Job Creation: These aspect suggests that development of proper farmer’s infrastructure draws more employment chances in agricultural sector.
- Promotion of Value Addition: Processing units and other facilities optimise the process of improving the value of agricultural products.
Eligibility Criteria
To take advantage of the AIF benefits, projects must satisfy the following requirements:To take advantage of the AIF benefits, projects must satisfy the following requirements:
- The project must be closely related to post-harvest or community resources for farming.
- A business plan must also be sketched out clearly and the project must show that the business plan is financially feasible.
- The beneficiary has to satisfy the standard prescribed by the prescribed lending organizations
How to apply for AIF
- The application procedure for the AIF consists of several key steps:The application procedure for the AIF consists of several key steps:
- Project Preparation: A project report can be defined as a report that is encompassed the project objectives, costs and projected expenditure.
- Loan Application: Contact a financial institution affiliated to AIF scheme in order to seek for a loan.
- Documentation: Some of the requirements may include the project report, financial statements, and documents proving one owns the piece of land on which the project is to be implemented.
- Approval Process: The lending institution will look at it and approve the loan application which has been submitted.
the part played by NABARD in the Agriculture Infrastructure fund
NABARD is pivotal to the AIF proposal and all in India. NABARD was set up in July 1982 as a fully-fledged development bank that focuses on credit delivery and development of financial institutions especially in the rural hinterland and particularly in the agricultural sector. It is as follows to give a brief of NABARD and its roles and responsibilities in the AIF.
About NABARD and Its Role in the AIF
1. Steering the Initiative
It must also lead the operation of the AIF with the Ministry of Agriculture and Farmer’s Welfare NABARD. This involves coming up with standard practices as well as code of operation that would help in the achievement of the aim of the fund to boost the agricultural structures in India.
2. Financial Support and Refinance
Among others, one of the key roles of NABARD under the AIF is to extend refinance facilities in the long term as well as the middle term to various financial institutions. This support is especially crucial to the banking and cooperative societies, with help them extend credit to farmers and agri-business for envisaged projects in infrastructure development. Refinancing from NABARD is available at reasonably low interest rates so the institutions that take up the refinance will be more active in the AIF.
- Interest Subvention: NABARD has given a prospect of getting an interest subvention of up to $27000 on projects that cost up to ₹2 crore (approximately $270000). This in turn lowers the cost of financing for the beneficiaries who can then afford to finance such basic needs such as the development of infrastructure.
3. Credit Guarantee
Business loans for the AIF purpose come under the Credit Guarantee Fund Trust for Micro and Small Enterprise (CGTMSE) under which NABARD offers credit guarantee coverage. This credit guarantee reduces the risk burden for the lending institutions hence encouraging them to extend credit to the farmers and agribusiness that may not provide sufficient security.
4. Capacity Building and Training
NABARD also has the major responsibility of building capacity and providing training to the participants associated with the AIF. These are training for the financial institutions on how to appraise and assess risks of projects funded with the money, and seminars for farmers, agri-businessmen and other beneficiaries on proper utilization of the funds for their projects.
5. Monitoring and Evaluation
The AIF is funded by NABARD which is also assigned the task of monitoring and evaluating projects under this policy. It includes analysis of the outcome of the developed infrastructure, checking the influence of the infrastructure on farmers’ income, and ensuring that funds are utilized properly. To the specific grant-making process, frequent evaluations help improve the approaches to its implementation and make the function as a whole more efficient.
6. Collaboration with Other Entities
Different strategies are adopted for allocating resources for the AIF and one of the important requirements for successful implementation is the involvement of the state governments, the financial institutions as well as agricultural organizations. This is important in the mobilization of other resources and expertise hence increasing the effectiveness of the fund in enhancement of agricultural infrastructure.
To the success of this initiative, it must be appreciated that NABARD is involved in various functions under the Agriculture Infrastructure Fund. In its operations, NABARD supports agricultural structures through provision of financial facilities, participation in credit guarantees and capacity building. This, in turn, sustains the living of millions of farmers and boosts the agriculture financial system as nicely. In this way, NABARD is working for the enhancement of a stable and sustainable agricultural system in India, which is important for food security and the progress of the country’s economy.
The agriculture infrastructure fund has been specially established by NABARD and the following projects have been undertaken by the bank:
Since its commencement, a lot of project financing has been done by the National Bank for Agriculture and Rural Development (NABARD) under the Agriculture Infrastructure Fund (AIF). The AIF is aimed at developing the agricultural base in India with the help of financial support for initiatives aimed at the development of post-harvest processing and communal agricultural resources. Below are some particular projects and areas that NABARD has supported through the AIF:Below are some particular projects and areas that NABARD has supported through the AIF:
1. Facilities such as cold storage and cold chain system.
NABARD has sanctioned credit for construction of cold storages and the cold chain intending to reduce post harvest losses. These are necessary infrastructures that will help preserve the freshness of the perishable agricultural produce, ensure that the farmers can hold their produce in stock as they wait for the market situations to improve. There is the public as well as private financing of this important infrastructure to be created within these sectors.
2. Warehouse Construction
The AIF has facilitated construction of warehouses and silos across the country. In the case of agricultural and allied products, projects financed in this context have to be of a minimum capacity of 5,000 metric tons. This initiative supports scientific storage which is important for preserving the quality of stored commodities as well as cutting on spoilage wastage.
3. Food Processing Units
It has also provided support in setting up food processing units through the AIF at NABARD. This comprises support for establishment of Mega Food Parks and Agro Processing Clusters with an objective of increasing the processing capacity of agricultural produce. Till March 2023, the NABARD has sanctioned ₹ 1,126 crore. Rs 60 crore for several food processing schemes will help in improving the value addition of perishable agricultural products and thus augment growers’ income to a substantial extent.
4. Dairy Processing Infrastructure
The projects have been financed by NABARD under DIDF so as to improve and modernize the milk processing units. It has an overall corpus of ₹8,004 crore and seeks to augment the processing capacity and requisite facilities in the dairy segment for better price discoveries for the dairy farmers.
5. Fisheries and Aquaculture Infrastructure
FIDF has been funded by NABARD to finance the projects in the fisheries and aquaculture sector. This has included the financing for construction of fishing harbours, fish landing facilities, and improved state fish hatcheries. NABARD sanctioned ₹1,987 crore to various states during the fiscal year 2022-23, of which ₹ 860 crore was for lending to priority sectors. of Rs 99 crore for different fisheries infrastructure measures is also a clear indication of their focus on the advancement of aquaculture.
6. The assistance that was provided to the state governments for Building Rural Infrastructure was known by the abbreviated name as RIAS.
The RIAS was launched by NABARD to provide refinance to the state governments for developing the basic support structure for rural income generation. It is a multisectoral thrust for rural development that covers numerous fields including water resources development and management, land improvements, and animal production.
7. Agri-Storage Information System
To this end, while supporting the formation and development of APMs, NABARD has recently started developing a an online Agri-Storage Information System to detail the picture and geographic co-ordinates of storage. This system is intended for applicants such farmers to enhance transparency and make them get a list of available storage facilitates easily. Under the project, there is also the development of the mobile application called KisanBhandar to facilitate the identification of geotagged assets between farmers and traders.
Real examples of the implementation of fixed-capital business projects financed with the assistance of AIF
Many effective projects show the impact of the fund on the sphere of agriculture : For example, through Additional Central Assistance an FPO from Maharashtra secured fund to have cold storage built to make storage of perishable items a possibility and sale at better prices.
Challenges and opportunities
In implementing the AIF while exhibiting positive outcomes such as last mile connectivity and needing capacity building. However, the fund also has the potential of opening up private investment and improvement of technology in the agriculture sector.
Conclusion
The Agriculture Infrastructure Fund therefore is a key initiative in changing the face of agriculture in India. When the government lends support to the post-harvest structures, farmers are able to get improved markets and at the same time reduce on food waste leading to improvements in the agricultural circulation. While this scheme is unfolding it is expected to have significant contribution to the planned farmers income doubling by 2022.
FAQ.
Who can be considered as being eligible to benefit from AIF?
From the Article and the Regulation, the eligible beneficiaries are farmers who are individual entities, FPOs, co-operatives as well as private entrepreneurs.
This paper seeks to determine the kinds of infrastructure that fall in the category of AIF?
Some of the accepted structures are warehouses, cold storages, processing houses, transportation and others that are incident on post harvest handling of produce.
How do I apply for an application of the AIF?
To apply, submit an elaborate project report to a participating financial institution.
Truly, I need to know whether there has been interest subvention under AIF?
The interest subvention rate is not constant and depends on the guidelines of the government formulated from time to time.
Is there any provision of credit guarantee facility under the AIF?
Yes a credit guarantee facility exists for qualified loans.
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