The Union Cabinet chaired by Prime Minister Narendra Modi has given its approval to a new pan-India central-sector scheme: the Agriculture Infrastructure Fund. The scheme will provide a medium-long term debt financing facility for investment in viable projects for post-harvest management infrastructure and community farming assets through interest subvention and financial support.

Under the scheme, Rs 1 trillion will be provided by banks and financial institutions as loans to primary agricultural credit societies, marketing cooperative societies, farmers’ producer organisations (FPOs), self-help groups, farmers, joint liability groups, multipurpose cooperative societies, agri-entrepreneurs, start-ups, aggregation infrastructure providers and central or state agency or local body-sponsored PPS, according to a PIB release.

Loans will be disbursed in four years, starting with a sanction of Rs 100 billion in the current year and Rs 300 billion each in the next three financial years.

All loans under this financing facility will have interest subvention of 3 per cent per annum up to a limit of Rs 20 million. This subvention will be available for a maximum period of seven years. Further, credit guarantee coverage will be available for eligible borrowers from this financing facility under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme for a loan up to Rs 20 million. The fee for this coverage will be paid by the Government. In case of FPOs, the credit guarantee may be availed from the facility created under the FPO promotion scheme of Department of Agriculture, Cooperation & Farmers Welfare (DACFW). The total outflow as budgetary support from the Government of India will be Rs 107.36 billion:

Moratorium for repayment under this financing facility may vary, subject to a minimum of six months and maximum of two years, said the release.

By way of facilitating formal credit to farm and farm processing-based activities, the project is expected to create numerous job opportunities in rural areas. The Agri Infra Fund will be managed and monitored through an online management information system platform. It will enable all qualified entities to apply for a loan under the fund. National, state and district-level monitoring committees will be set up to ensure real-time monitoring and effective feedback. The duration of the scheme will be for 10 years, from FY2020 to FY2029.