The Centre on Wednesday approved setting up of an agri-infra fund with a corpus of Rs 1 lakh crore to extend subsidised credit for farm infrastructure projects, a move that will boost private investment and generate more jobs in rural areas.
A decision in this regard was taken at a meeting of the Union Cabinet, headed by Prime Minister Narendra Modi.
The agri-infra fund was part of the over Rs 20 lakh crore stimulus package announced in response to the COVID-19 crisis.
Briefing the media, Agriculture Minister Narendra Singh Tomar said: “It is a historic decision. This will further strengthen the agriculture sector.”
There is lack of infrastructure in rural areas at present which can ensure that farmers are able to store their produce and sell when prices are higher. Even private investments do not reach rural areas, he said.
“To encourage private investment in rural areas, the Rs 1 lakh crore agri-infra fund will become a medium. The Cabinet has approved this. It will help in transforming the agriculture sector,” Tomar noted.
Strengthening rural farm infrastructure will ensure farmers get better prices, reduce food wastage by improving processing levels and generate more jobs, he added.
The new agri-infra fund, the duration of which will be 10 years till 2029, aims to provide medium-to-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, he said.
Under this, about Rs 1 lakh crore will be provided by banks and financial institutions as loans to primary agri credit societies, farmer groups, farmer producer organisations (FPOs), agri-entrepreneurs, start-ups and agri-tech players.
Loans will be disbursed in four years starting with sanction of Rs 10,000 crore in the current year and Rs 30,000 crore each in the next three financial years, he said.
The minister said all loans under this financing facility will have interest subvention of 3 per cent per annum up to a limit of Rs 2 crore. 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 of up to Rs 2 crore. The fee for this coverage will be paid by the government.
In case of FPOs, credit guarantee may be availed from the facility created under the FPO promotion scheme of the Department of Agriculture, Cooperation and Farmers Welfare (DACFW).
The funds will be provided for setting up of cold stores and chains, warehousing, silos, assaying, grading and packaging units, e-marketing points linked to e-trading platforms and ripening chambers, besides PPP projects for crop aggregation sponsored by central/state/local bodies, he added.
In a statement, the agriculture ministry said the total outflow as budgetary support from the Government of India will be Rs 10,736 crore.
Moratorium for repayment under this financing facility may vary, subject to a minimum of six months and maximum of two years.
The ministry said the agri-infra fund, which will be managed and monitored through an online Management Information System (MIS) platform, will enable all the qualified entities to apply for loan under the fund.
The online platform will also provide benefits such as transparency of interest rates offered by multiple banks, scheme details including interest subvention and credit guarantee offered, minimum documentation, faster approval process as also integration with other scheme benefits.
The ministry said that facilitating formal credit to farm and farm processing-based activities is expected to create numerous job opportunities in rural areas.
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