National Agriculture Infra Financing Facility Programme
Development of agriculture and shifting the dynamics of production rely heavily on the presence of adequate infrastructure. Only by improving infrastructure, especially in the post-harvest period, can the harvest be used to its full potential, providing farmers with a chance to increase their earnings through value-added activities. The growth of this type of infrastructure needs to take into account environmental uncertainties, regional differences, human resource development, and making the most of our limited land’s potential.
In light of the preceding, the Finance Minister of India announced on May 15, 2020 a 1 trillion rupee Agri Infrastructure Fund for farm-gate infrastructure for farmers. Agriculture infrastructure projects at farm gates and aggregation hubs will be able to access a funding facility of Rs 1,00,000 crore (Primary Agricultural Cooperative Societies, Farmers Producer Organizations, Agriculture entrepreneurs, Start-ups, etc.) under national agriculture infra financing facility scheme. The need for affordable and sustainable Post-Harvest Management infrastructure at the farm gate and aggregation point.
In light of this need, the Department of Agriculture and Food Welfare (DA & FW) developed the Central Sector Scheme to attract a medium-to-long-term debt financing facility to fund the implementation of economically sound projects involving postharvest management infrastructure and farming assets for rural communities.
Subsequently, it was announced in the 01.02.2021 budget that APMCs would also be eligible to receive benefits from the scheme. Because of this, the Cabinet approved adjustments to the plan to broaden its appeal.
Eligible borrowers can get a credit guarantee from this financing facility for loans up to 2 crore through the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme. The government will foot the bill for this protection. The DA&FW FPO promotion scheme includes a credit guarantee facility that can be used by FPOs.
The annual interest rate on all loans made through this financing option will be subsidised by up to Rs. 2 crore. There’s a cap of 7 years on this subsidy’s duration. There will be no interest subvention for loans over 2 crore, regardless of size. The National Monitoring Committee has the authority to establish maximum levels and percentages of financing for private entrepreneurs from the total financing facility.
From 2020-21 to 2032-33, the Scheme will be active. After six years, all loans under the plan will have been disbursed.
Here are the main features of the programme
- Convergence with all central or state government schemes.
- Collaboration with participating lending institutions to provide an online single-window service.
- The Project Management Unit will provide project management assistance, including project preparation.
- The financing facility is worth 1 lakh crore.
- Credit guarantees are available for loans of up to Rs. 2 crore.
- Interest subsidy of 3% per annum, limited to 2 crore per project in one location, though loan amount can be higher.
- Cap on lending rates, so that the benefit of the interest subsidy reaches the recipient and farmers’ services remain affordable.
- Commercial banks, cooperative banks, RRBs, small finance banks, NCDCs, and NBFCs are among the lending institutions.
- If a single eligible entity establishes projects in multiple locations, all of those projects will be eligible for a loan of up to 2 crore under the scheme.
- There will be a maximum of 25 such projects for a private sector entity, such as a farmer, agri-entrepreneur, or a start-up.
- The 25-project limit will not apply to state agencies, national and state cooperative federations, federations of FPOs, and federations of SHGs.
- Location refers to the physical boundaries of a village or town that has its own LGD (Local Government Directory) code.
- Each of these projects should be located in a different LGD (Local Government Directory) Code.
- Within their designated market area, APMCs will be eligible for multiple projects (of various infrastructure types).
- The interest subsidy will be available for a maximum of seven years.
- The repayment moratorium under this financing facility may vary between a minimum of 6 months and a maximum of 2 years.
- Disbursement will be completed in six years, beginning in 2020-21.
- NABARD will provide need-based refinance assistance to all eligible lending entities, including cooperative banks and RRBs, in accordance with its policy.
India is expanding rapidly, and so is the use of technology in the country’s expanding sectors. A large portion of the population is still reliant on agriculture as its primary source of income. With agriculture and allied sectors employing 46% of the working population, policy efforts to establish institutions and strengthen market linkages will go a long way toward improving farmer welfare in the country. We at Egniol not only help you apply for the National Agriculture Infra Financing Facility, but we also help you find and apply for a variety of other government programmes that will benefit you.