Context:
India’s agricultural sector, a fundamental component of its economy, impacts the lives of over 55% of its populace. Despite ranking as the world’s second-largest agricultural producer after China, the sector has encountered challenges, particularly in managing post-harvest processes and ensuring market access. Acknowledging these issues, the Indian government initiated the Agriculture Infrastructure Fund (AIF) in July 2020 with the goal of transforming the sector through improved infrastructure, reduced losses, and the encouragement of innovation.
Relevance:
- GS-1-Agricultural Resources
- GS-2-Government Policies and Interventions
- GS-3-E-Technology in the Aid of Farmers
Mains Question:
Highlighting the details of the Agriculture Infrastructure Fund (AIF), evaluate its performance in improving India’s agricultural sector. (10 Marks, 150 Words).
Agriculture Infrastructure Fund (AIF):
About:
- The AIF scheme had clear and compelling objectives: mobilizing medium to long-term debt financing, enhancing farm gate infrastructure, reducing post-harvest losses, and fostering investment and innovation in agriculture and related sectors.
- The AIF represented more than just an investment; it symbolized a commitment to change. Spanning from FY 2020-21 to FY 2025-26, the scheme aimed to provide targeted funding and disbursement, incorporating various financial support mechanisms such as a 3% interest subvention and credit guarantee coverage.
- This approach created a fertile ground for growth and development. With an ambitious financial allocation of Rs. One Lakh Crore, the scheme offered interest subvention, credit guarantees, and the convergence of benefits, opening new opportunities for farmers, cooperatives, and agricultural entrepreneurs.
Success of the Agriculture Infrastructure Fund (AIF):
- As the wheels of the AIF were set in motion, India’s agricultural landscape underwent a remarkable transformation. By February 15th, 2024, the fund had allocated Rs. 37,653 Crore for 52,671 projects and disbursed Rs. 23,000 Crores, mobilizing a total investment of Rs. 63,580 Crore in the sector.
- Sprouting across diverse regions, from the fertile fields of Punjab to the vibrant farms of Tamil Nadu, a multitude of projects emerged, including custom hiring centers, warehouses, and cold storage facilities, each exemplifying the nation’s dedication to revitalizing agriculture.
- The AIF played a pivotal role in establishing 51,248 post-harvest and community farming assets, comprising 11,434 Custom Hiring Centers, 11,284 Warehouses, and 1,549 Cold Store projects.
- This infrastructure development significantly contributed to the reduction of post-harvest losses and improved market access for farmers, leading to an estimated annual savings of 11 LMT of food grains and a decrease of 2.7 LMT in post-harvest losses of horticulture produce.
- Additionally, it is projected that farmers can command 11-14% higher prices for their produce, thanks to the infrastructure created by AIF.
- Equipped with improved infrastructure, farmers witnessed their produce fetching higher prices, resulting in increased incomes akin to the swelling monsoon rivers.
- The creation of over 5.1 lakh employment opportunities heralded a season of prosperity, sowing the seeds for over 24,000 agri-entrepreneurs.
- The AIF portal facilitated the integration of approximately 0.99 lakh bank branches and attracted 1.27 lakh registered applicants, standing as a unified platform for beneficiaries, lending institutions, and other crucial stakeholders involved in the scheme.
The Other Side of the Coin:
- The Agriculture Infrastructure Fund (AIF), has disbursed only 15% of its Rs 1 lakh crore target within the initial three years.
- On August 1, 2023, the Union Agriculture minister informed Parliament that Rs 15,448 crore had been sanctioned for 27,748 AIF projects, with 19,650 projects worth Rs 9,660 crore (9.66% of the total allocation) completed.
- The utilization pattern revealed Madhya Pradesh as the leading state, followed by Maharashtra and Uttar Pradesh.
Several potential reasons underlie the low utilization of the AIF scheme:
Lack of awareness and outreach:
- Many farmers, FPOs, and agri-entrepreneurs remain uninformed about the scheme and its advantages, or they lack knowledge on the application process.
- The report recommends intensifying efforts to raise awareness through various channels like media, social platforms, webinars, workshops, and training programs.
Lack of bankable projects:
- Numerous potential beneficiaries struggle to develop viable project proposals meeting the eligibility criteria and technical standards.
- The report suggests providing more guidance and support to help them formulate feasible and high-quality project proposals that can attract funding from banks and financial institutions.
Lack of coordination and convergence:
- Insufficient coordination among various stakeholders, including central and state governments, banks, financial institutions, implementing agencies, nodal departments, monitoring committees, and beneficiaries, hampers the scheme’s effectiveness.
- The report recommends establishing more regular meetings, reviews, and feedback mechanisms to ensure smooth implementation and monitoring.
Lack of infrastructure and logistics:
- Many rural areas face inadequate infrastructure and logistics facilities, such as roads, electricity, water supply, storage, processing, and marketing, essential for developing post-harvest infrastructure and community farming assets.
- The report suggests increased investment and support to enhance rural infrastructure and logistics networks.
Conclusion:
The AIF’s legacy, characterized by improved infrastructure, reduced losses, and empowered farmers, envisions a future where agriculture in India transcends mere survival to become a thriving, vibrant sector. In this future, as the sun rises over the fields, it illuminates a transformed land—a testament to the enduring spirit of India and its farmers, nurtured by the waters of the Agriculture Infrastructure Fund.
