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Agriculture Infrastructure Fund (AIF) Scheme

Context;

The government recently expanded the scope of the Agricultural Infrastructure Fund (AIF) scheme to make it more attractive, as part of its objective to strengthen farm-related infrastructure facilities in the country.

Relevance:

GS II: Government Policies and Interventions

Dimensions of the Article:

  1. Agriculture Infrastructure Fund (AIF) Scheme:
  2. Characteristics of the AIF Scheme:

Agriculture Infrastructure Fund (AIF) Scheme:

  • It is a Central Sector Scheme which was launched in 2020.
  • Duration: From FY2020 to FY2032 (12 years)
  • Purpose: To offer medium to long-term debt financing for viable projects focused on post-harvest management infrastructure and community farming assets. This includes interest subvention and financial support.
Eligibility:
  • Primary Agricultural Credit Societies (PACS)
  • Marketing Cooperative Societies
  • Farmer Producers Organizations (FPOs)
  • Farmers
  • Self Help Groups (SHG)
  • Joint Liability Groups (JLG)
  • Multipurpose Cooperative Societies
  • Agri-entrepreneurs and Startups
  • Central/State agency or Local Body sponsored Public-Private Partnership Projects
Exclusions:
  • Public Sector Undertakings (PSUs) are not eligible unless involved in PPP projects.
Financing and Support:
  • Participating Financial Entities: Includes all scheduled commercial banks, cooperative banks, RRBs, Small Finance Banks, NBFCs, and the NCDC.
  • Refinance Support: NABARD will provide need-based refinance support to eligible lending entities.

Characteristics of the AIF Scheme:

  • Loan Limit and Interest Subsidy: Each loan under this facility is eligible for up to ₹2 crores with a 3% annual interest subsidy lasting up to seven years.
  • Project Allocation: Entities in the private sector, including farmers, agricultural entrepreneurs, and startups, can manage up to 25 distinct projects nationwide, each qualifying for financial support up to the specified loan cap.
  • Exclusions for Certain Groups: The 25-project limit does not extend to state agencies, cooperative societies, or any federations thereof, including those for Farmer Producer Organizations (FPOs) and Self-Help Groups (SHGs).
  • Project Cap in a Single Location: It’s permissible to undertake multiple projects within the same locality, maintaining an aggregate funding limit of ₹2 crores.
  • Equity Contribution Requirement: Borrowers are required to fund at least 10% of the total project cost, notwithstanding the extent of capital subsidy provided.
  • Repayment Flexibility: The repayment moratorium spans a minimum of six months to a maximum of two years, varying by case.
Special Provisions:
  • Targeted Support: 24% of grants-in-aid are allocated specifically for SC/ST entrepreneurs (16% for SC and 8% for ST).
  • Priority for Weaker Sections: Women and other weaker segments get priority in loan provision.
  • Credit Guarantee: Coverage is available under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) for loans up to ₹2 crores. The government covers the fee for this guarantee.
Aim of the Scheme:
  • The scheme aims to bolster India’s agricultural infrastructure, thereby enhancing productivity and ensuring better returns for farmers while fostering a more structured and efficient agricultural sector.

-Source: Indian Express


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