Agriculture Infrastructure Fund (AIF)

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The Centre is promoting the Agriculture Infrastructure Fund (AIF), a financing facility launched in 2020.

It is a Central Sector Scheme approved by the Union Cabinet in 2020.
It aims to provide a medium long-term debt financing facility for investment in viable projects for post-harvest management Infrastructure and community farming assets.
The duration of the Scheme shall be from FY2020 to FY2032.
Eligible beneficiaries include:
- Farmers, FPOs, PACS, Marketing Cooperative Societies, SHGs, Joint Liability Groups, Agri-entrepreneurs, Start-ups, and Central/State agency or Local Body sponsored Public Private Partnership Projects.
Under the scheme, Rs. 1 Lakh Crore will be provided by banks and financial institutions as loans.
The loans are provided with interest subvention of 3% per annum and credit guarantee coverage under CGTMSE for loans up to Rs. 2 crores.

It provides support facilities to farmers and value chain actors for risk sharing and market access.
Improved marketing infrastructure will help farmers sell their produce directly.
With investments in logistics infrastructure, post-harvest losses can be reduced.
It also provides targeting State-specific APMCs and maintenance of sanitary and phytosanitary standards for organic produce marketing and exports.
District, state or national level monitoring committees will reduce the turnaround time for file processing to less than 60 days.
The scheme tries to mitigate spatial and temporal risks in the agribusiness ecosystem through adequate post-harvest infrastructure facilities.

Finance allocation – The financing facility allocation to the States/UTs based on the value of the output of agriculture and allied activities is skewed.
Over 65% of the total funds were allocated to only eight States: Uttar Pradesh, Rajasthan, Maharashtra, Madhya Pradesh, Gujarat, West Bengal, Andhra Pradesh, and Tamil Nadu.
In contrast, the allocation of AIF to Punjab and Haryana is 9%, and in North-Eastern states, it is 3%.
Integration with debt – AIF is integrated with debt, where the interest rate subvention is facilitated up to ₹2 crore.
So, the scheme’s success depends on the intention and ability of financial institutions.
Bankers look at the projects from their credit assessment lens, where feasibility depends on the project and the promoter.
Credit guarantee – Credit guarantee cover for eligible borrowers is available for ₹2 crore, which is small for a standard project.
Although there is a renewed focus on inclusivity and equity in the scheme, offering grants-in-aid for underprivileged and women entrepreneurs may increase the default (credit) risk.
Large-scale integrated projects cannot be installed singly under this scheme.
Convergence with other schemes remains a crucial enabler for its success.
This scheme will be successful for farm-gate-led hub-and-spoke models where the spokes with prescribed distance can be installed under this scheme.