- About:
- The Agriculture Infrastructure Fund is a financing facility launched in July 2020.
- Agriculture Infrastructure Fund aims to provide all-around financial support to the farmers, agri-entrepreneurs, farmer groups like Farmer Producer Organisations (FPOs), Self Help Groups (SHGs), Joint Liability Groups (JLGs) etc. and many others to create post-harvest management infrastructure and build community farming assets throughout the country.
- Features:
- Agriculture Infrastructure Fund provides support of 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 crore, and facility of convergence with other Central and State Government schemes.
- Agriculture Infrastructure Fund is helping to reduce post-harvest losses by creating and modernizing agriculture infrastructure, which includes primary processing centers for vegetables and hi-tech hubs for the rental of agricultural machinery.
- Management:
- The Agriculture Infrastructure Fund will be managed and monitored through an online Management Information System (MIS) platform. It will enable all the qualified entities to apply for loans under the Fund.
- The National, State, and District level monitoring committees will be set up to ensure real-time monitoring and effective feedback.
What is Post Harvest Management?
- About:
- Post-harvest management refers to the activities and techniques used to preserve and protect crops after they have been harvested.
- This includes activities such as cleaning, sorting, grading, packaging, storage, and transportation.
- The goal of post-harvest management is to maintain the quality and safety of the crops, as well as to extend their shelf life, so that they can be sold and consumed at a later time.
- Challenges:
- Lack of Convenient Access to Credit: A convenient line of credit is not available to small and marginal farms. As per the NABARD 2018 survey, farmers with smaller plot sizes took a greater share of loans from the non-institutional lenders than did farmers with larger plot sizes (> 2 hectares).
- This indicates that more small and marginal farmers rely on (expensive) informal sources of credit than large ones.
- Stubble Burning: The problem of ‘on-farm’ burning or stubble burning is intensifying in recent years due to shortage of human labour, high cost of removing the crop residue from the field and mechanised harvesting of crops, contributing majorly to air pollution in Northern India.
- Infrastructure Bottlenecks: More than 30% of the produce from farm gate is lost due to inadequate cold chain infrastructure.
- The NITI Aayog cited a study that estimated annual post-harvest losses close to Rs 90,000 crore.
- Lack of all-weather roads and connectivity make supply erratic.
How can India harvest rich returns from agriculture?
- Integrating Traditional and Frontier Technologies: Rainwater harvesting and recycling of organic waste for plant nutrient, pest management, etc., are examples of traditional technologies that can be used to complement frontier technologies like tissue culture, genetic engineering, to achieve higher productivity.
- Upgrading Agricultural Surplus Management: An infrastructure upgrade and development program are needed for post-harvest handling, seed, fertiliser and agrochemical quality regulation. Additionally, it is necessary to promote grading and standardisation of procurement centres.
- Harvesting Rich Returns Through Market Integration: There is a need to streamline domestic markets and put in place the infrastructure and institutions to connect local markets with national and global markets. To facilitate smooth integration between domestic and world markets, and to manage trade liberalisation more effectively, India needs a nodal institution that can monitor world and domestic price movements closely and take timely and appropriate measures to avoid major shocks.
How has the Agriculture Infrastructure Fund performed to date?
- Finance allocation – The financing facility allocation to the States/UTs based on the value of the output of agriculture and allied activities is skewed.
- Over 65% of the total funds were allocated to only eight States: Uttar Pradesh, Rajasthan, Maharashtra, Madhya Pradesh, Gujarat, West Bengal, Andhra Pradesh, and Tamil Nadu.
- In contrast, the allocation of AIF to Punjab and Haryana is 9%, and in North-Eastern states, it is 3%.
- Integration with debt – AIF is integrated with debt, where the interest rate subvention is facilitated up to ₹2 crore.
- So, the scheme’s success depends on the intention and ability of financial institutions.
- Bankers look at the projects from their credit assessment lens, where feasibility depends on the project and the promoter.
- Credit guarantee – Credit guarantee cover for eligible borrowers is available for ₹2 crore, which is small for a standard project.
- Although there is a renewed focus on inclusivity and equity in the scheme, offering grants-in-aid for underprivileged and women entrepreneurs may increase the default (credit) risk.
- Large-scale integrated projects cannot be installed singly under this scheme.
- Convergence with other schemes remains a crucial enabler for its success.
- This scheme will be successful for farm-gate-led hub-and-spoke models where the spokes with prescribed distance can be installed under this scheme.
