Union Cabinet approved expansion of ‘Agriculture Infrastructure Fund’

Posted 29 Aug 2024

2 min read

Recently, Union Cabinet approved progressive expansion in Central Sector Scheme of financing facility under ‘Agriculture Infrastructure Fund (AIF)’ to make it more attractive, impactful, and inclusive.

Key highlights of the recent expansion of AIF

Viable Farming Assets: To allow all eligible beneficiaries of scheme for creation of infrastructure covered under 'viable projects for building community farming assets'.
Integrated Processing projects: To include integrated primary and secondary processing projects in list of eligible activities under AIF.
PM KUSUM Component-A: To allow convergence of Component-A of PM-KUSUM with AIF for farmer/group of farmers/ Farmer Producer Organizations/ Cooperatives/ Panchayats.

Issues with Agriculture Infrastructure in India

Upstream (Production and initial processing): Inadequate irrigation infrastructure (~51% rainfed agriculture in net sown area), poor farm mechanization (47% in 2022), inadequate soil testing facilities, limited cold-storage infrastructure, etc.
Downstream (Post-harvest, processing, and distribution): Limited food processing facilities, inefficient supply chain management, poor market intelligence leading to ‘cobweb phenomenon’, etc.

In addition to Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), now NABSanrakshan (wholly owned subsidiary of NABARD) has also been proposed to extend AIF credit guarantee coverage of FPOs.

About Agriculture Infrastructure Fund (AIF)

It is 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 credit guarantee support.
₹ 1 Lakh Crore will be provided by banks and financial institutions as loans with interest subvention of 3% per annum and credit guarantee coverage under CGTMSE for loans up to ₹ 2 Crores.