India’s cabinet approves Rs 10,000 crore financing facility under Agriculture Infrastructure Fund

The Indian cabinet has approved a new national fund that will provide a 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.

The India Agriculture Infrastructure Fund envisages disbursement of Rs 10,000 crore worth of loans at concessional rates to cooperative societies, farmer-producer organisations (FPOs), start-ups, and others in the current fiscal year under its ambitious Rs 1-trillion fund to create storage and processing infrastructure at the farm-gate level.

Under the scheme, Rs. 1 lakh crore will be provided by banks and financial institutions as loans to Primary Agricultural Credit Societies (PACS), Marketing Cooperative Societies, Farmer Producers Organizations (FPOs), Self Help Group (SHG), Farmers, Joint Liability Groups (JLG), Multipurpose Cooperative Societies, Agri-entrepreneurs, Startups, Aggregation Infrastructure Providers and Central/State agency or Local Body sponsored Public Private Partnership Project

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 next three financial years. Loans up to Rs 2 crore will be provided to entrepreneurs at 3 per cent interest subvention for a period of seven years, according to the Union Cabinet’s decision. The loans will have moratorium on repayment that will vary from six months to two years.

The fund, along with the three facilitating Ordinances on freeing agriculture marketing, amending Essential Commodities Act and framework for contract farming, is aimed at providing an ecosystem to private companies to encourage them to invest in storage and warehousing in a big way.

The total outflow as budgetary support from Government of India (GoI) will be Rs.10,736 crore: Moratorium for repayment under this financing facility may vary from 6 months to 2 years. National, state and district level monitoring committees will be set up to ensure real-time monitoring and effective feed-back. The duration of the Scheme shall be from FY2020 to FY2029 (10 years).

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