GS3- Agriculture
About
- This is a Central Sector Scheme
- Also known as the National Agriculture Infra Financing Facility
- Duration of the Fund: FY2020 to FY2023
- Under the Fund, banks and financial institutions will provide Rs. 1 Lakh Crore as loans to eligible beneficiaries.
- All loans under this financing facility will have an interest subvention of 3% per annum up to a limit of Rs. 2 crore. This subvention will be available for a maximum period of seven years.
- Objective: To provide medium - long-term debt financing facilities for investment in viable projects relating to post-harvest management Infrastructure and community farming assets through incentives and financial support.
- Beneficiaries: Farmers, FPOs, PACS, Marketing Cooperative Societies, SHGs, Joint Liability Groups (JLG), Agri-entrepreneurs, Start-ups and Central/State agency or Local Body sponsored Public-Private Partnership Projects.
- Interest Subvention: Loans will have interest subvention of 3% per annum up to a limit of Rs. 2 crore. This subvention will be available for a maximum period of seven years.
- Credit Guarantee: Credit guarantee coverage will be available for eligible borrowers from the scheme under Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme for a loan up to Rs. 2 crore.
About beneficiaries:
Farmers, FPOs, PACS, Marketing Cooperative Societies, SHGs, Joint Liability Groups, Agri-entrepreneurs, Start-ups, and Public Private Partnership Projects financed by Central/State agencies or locally.
Banks and financial institutions would issue 1 lakh as loans with a 3% annual interest subsidy and credit guarantee coverage under the CGTMSE for loans up to 2 crores.
But was it really required?
Yes, since it delivers, and provides risk management and market entrance assistance to farmers and supply chain partners.
It improves marketing infrastructure for direct selling, reduces post-harvest losses through logistical expenditures, and maintains organic food quality requirements.
Administrative processes are streamlined for speedier approvals. Through post-harvest infrastructure, the initiative attempts to decrease risks in agribusiness.
Performance till date
- The money allocated to the Agriculture Infrastructure Fund (AIF) is imbalanced, with 65% going to only eight states, including Uttar Pradesh and Rajasthan.
- Haryana and Punjab: 9% and 3%, respectively, in the North Eastern States.
- The performance of the AIF is determined by financial institutions; nonetheless, banks evaluate initiatives based on their feasibility and creditworthiness.
- The loan guarantee limit of 2 crore may be insufficient for larger projects.
- In order to achieve diversity and fairness, grants for underprivileged and female entrepreneurs may increase credit risk.
- Large integrated projects are not fit for this strategy, and success requires coordination with other programs.
- The approach works well for farm-gate-led hub-and-spoke arrangements with fixed spoke distances.
