What is National Agriculture Infra Financing Facility? - By Egniol

National Agriculture Infra Financing Facility

What Is National Agriculture Infra Financing Facility Scheme (NAIF)?

A well-developed infrastructure scheme like National Agriculture Infra Financing Facility Scheme is essential for agriculture to progress and for increasing the output dynamics. Until infrastructure, particularly in the post-harvest phase, is developed, the fruits of farmers’ labour will not be used to their full potential, and they will not receive a just price for their efforts. The growth of such infrastructure needs to account for natural hazards, geographical differences, human resource development, and the maximisation of our finite land’s potential.

For this reason, the Department of Agriculture and Food and Workforce Development (DA&FW) developed the Central Sector Scheme to attract a medium-to-long-term debt financing facility to fund investments in economically sound projects involving postharvest management infrastructure and farming assets for communities.

Subsequently, it was announced in the 01.02.2021 budget that APMCs would also be eligible to receive benefits from the scheme. With the Cabinet agreement, the scheme was revised to be more welcoming of many perspectives.

Objectives of National Agriculture Infra Financing Facility Scheme (NAIF)

What is National Agriculture Infra Financing Facility? - By Egniol

Multiple objectives of national agriculture infra financing facility can be accomplished with the help of this finance facility for the various players in the agricultural ecosystem.

A. Farmers (including FPOs, PACS, Marketing Cooperative Societies, and Multipurpose cooperative societies)
  • A better marketing system would facilitate farmers’ increased value realization on by enabling them to sell directly to a wider audience of consumers. The result will be a rise in farmers’ average income.
  • Farmers will have fewer post-harvest losses and fewer need for intermediaries if they invest in logistical infrastructure. This will increase farmers’ autonomy and enhance their market access.
  • Farmers will be better able to maximise profits by timing market sales with access to modern packaging and cold storage systems.
  • Farmers may save a lot of money by pooling their resources and using them to boost output and maximise the efficiency of their inputs.
B. Government
  • Through interest subvention, incentive, and credit guarantees, the government can steer priority sector lending toward economically feasible projects. Because of this, a virtuous cycle of agricultural innovation and private-sector investment will begin.
  • Government efforts to lower national food waste percentages as a result of post-harvest infrastructure upgrades will position the agricultural industry to compete with global norms.
  • Central/State Government Agencies and local governments will be able to design successful PPP projects to attract investment in agricultural infrastructure.
C. Agri entrepreneurs and start-ups
  • If investors are willing to put money specifically toward the agricultural sector, innovative new technologies like the Internet of Things and artificial intelligence will be implemented.
  • Connecting the ecosystem’s participants will increase opportunities for business owners to work with farmers.
D. Banking ecosystem
  • With Credit Guarantees, incentives, and interest subvention, lending institutions will be able to extend credit with a lower level of risk. This plan will aid in expanding their consumer base and diversifying their business.
  • The refinancing facility will enable cooperative banks and RRBs to play a larger role.
E. Consumers
  • With fewer inefficiencies in the post-harvest ecosystem, the primary advantage for consumers will be a greater proportion of products reaching the market and, consequently, improved quality and prices. Overall, all eco-system participants will profit from the funding facility’s investment in agricultural infrastructure.

Who Can Apply?

What is National Agriculture Infra Financing Facility? - By Egniol
  • Agricultural Produce Market Committee
  • Agri-Entrepreneur
  • Central sponsored Public-Private Partnership Project
  • Farmer
  • Farmer Producers Organization
  • Federation of Farmer Producer Organisations
  • Joint Liability Groups
  • Local Body sponsored Public-Private Partnership Project
  • Marketing Cooperative Society
  • Multipurpose Cooperative Society
  • National Federations of Cooperatives
  • Primary Agricultural Credit Society
  • Self-Help Group
  • Federations of Self-Help Groups
  • Start-Up
  • State Agencies
  • State Federations of Cooperatives
  • State-sponsored Public-Private Partnership Project.

Loans up to Rs. 2 crores would be eligible for credit guarantee coverage from this financing facility under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme. The government will fund the cost of this insurance. The DA&FW FPO promotion scheme includes a credit guarantee facility that can be used by FPOs.

Interest on loans taken out under this financing facility would be subsidized at a rate of 3% per year, up to a maximum of 2 crores. Subsidy funding will be provided for a maximum of 7 years. Whenever a debt exceeds 2 crores, the amount of interest that can be subsided is capped at 2 crores. The National Monitoring Committee has the authority to establish maximum levels and fixed percentages of financing for private entrepreneurs from the total financing facility.

The Scheme’s implementation period extends from the 2020-21 fiscal year to the 2032-33 fiscal year. The program’s loan disbursement period is set to conclude in six years.

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