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Home / Industry / Agriculture /  This new infra fund is just what agri sector needs

A robust agriculture infrastructure is crucial to reduce post-harvest wastage that remains high in India. The new Agriculture Infrastructure Fund (AIF) has got investment proposals worth 23,000 crore, accelerating change in this direction. Mint decodes its benefits.

What is the rationale of the agri fund?

Approximately 58% of India’s population is engaged in agriculture and allied activities. Out of them, 85% manage 45% of the farm land—small holding farmers with less than 2 hectares, and have limited or no access to storage and warehousing facilities. Out of India’s total farm yield, 15-20% gets wasted due to poor post-harvest infrastructure, while in other countries, the wastage is 5-15%. The aim of the AIF is to provide medium to long-term debt financing facilities to build affordable and financially viable post-harvest management infrastructure, strengthening the country’s agricultural ecosystem.

How does the agri infra fund work?

The government announced the 1 trillion fund in 2020 to provide a financing facility for agriculture infra projects at farm gates and aggregation points. The loans, with an interest subvention of 3% per annum for a seven-year period, provide financial support and credit guarantee for building processing and storage facilities. This will help improve access to storage and warehousing facilities, cold chains and ripening chambers, etc., cutting post-harvest losses. Its intended beneficiaries are farmer producers’ organizations, agriculture produce marketing committees, farmers and self-help groups

Farm chart
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Farm chart

What is the current status of the agri infra fund?

The Centre recently notified that proposals for 23,000 crore worth of investments have been received, of which investment proposals worth 13,000 crore are under consideration. The government has also proposed to set up 10,000 farmer producer organizations through NABARD. Robust post-harvest infrastructure will aid farmers and the country at large.

How will an efficient AIF help the economy?

Development of agriculture infrastructure will help India take agriculture production dynamics to the next level. It would help reduce food wastage, and thus enable agricultural production to become more competitive, benefits of which would percolate to the level of the farmer in terms of higher income. Also, the farmer would be in a position to hold on to his produce, and supply to the market based on demand conditions. Access to community farming assets will help improve productivity levels.

What is in it for the general public?

The fact that agri infra projects worth 23,000 crore are in the pipeline should be reassuring for farmers and consumers. Studies have shown that from farm to the final sales point, almost half of the farm produce get wasted due to poor infrastructure facilities. Efficient AIF usage will minimize wastage, in turn bringing down prices, leading to improved consumption, especially among the marginal sections. It may lead to overall improvement in the standard of living, healthcare and longevity.

 

 

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