Agriculture Infrastructure Fund (AIF)

Agriculture Infrastructure Fund (AIF)

Subject – Agriculture

Context – Disbursal of funds to strengthen agricultural infrastructure through setting up of warehouses and other projects under the ₹1-lakh crore Agriculture Infrastructure Fund (AIF) has been slow

Concept –

• National Bank for Agriculture and Rural Development (Nabard) is providing re-finance facility under AIF to co-operative banks at 4 per cent interest, while the Centre is granting a further 3 per cent interest subvention to all beneficiaries of AIF, making the effective rate for PACS at just 1 per cent, whereas private sector is getting the credit at 5-6 per cent interest from commercial banks.
• Launched in August 2020, the AIF is a medium to long-term debt financing facility for investment in viable projects for post-harvest management infrastructure and community farming assets during 2020-29 (10 years).
• Besides interest subsidy, credit guarantee coverage under Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme for loans up to ₹2 crore has been provided.
• AIF will fund projects at farm gates and where primary agricultural co-operative societies, farmers producer organisations, agriculture entrepreneurs and start-ups aggregate harvested farm produce.
• While the Agriculture Ministry has taken responsibility for interest subsidy, the States provide government guarantee to commercial banks for projects under AIF, which are not available to cooperative banks.
• Since the co-operative structure is a 3-tier one, to avail of the AIF credit, PACS have to first approach the district co-operative bank which will forward the proposal to Nabard via respective state co-operative bank.

To know more about AIF, please refer September 2021 DPN.