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Union Cabinet Approves Expansion of Agriculture Infrastructure Fund to Transform Rural Farming

By Syandita Malakar

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In a decisive move to strengthen India’s agricultural infrastructure, the Union Cabinet, chaired by Prime Minister Narendra Modi, has approved an ambitious expansion of the Agricultural Infrastructure Fund (AIF) on August 28, 2024. This landmark decision aims to enhance the effectiveness and inclusivity of the scheme, addressing critical needs within the agricultural sector and driving sustainable growth. This article explores the key aspects of this expansion and its potential impact on India’s farming ecosystem.

Overview of the Agricultural Infrastructure Fund (AIF)

Launched in 2020, the Agricultural Infrastructure Fund was conceived as a central sector scheme with an initial budget of ₹1 lakh crore. Its primary objective is to develop robust infrastructure that supports the agricultural sector, encompassing storage facilities, processing units, and other essential components. The AIF has been instrumental in addressing gaps in agricultural infrastructure, facilitating significant improvements in storage and processing capacities, and fostering rural employment opportunities.

Key Features of the Expansion

1. Viable Farming Assets

One of the most significant changes in the expanded AIF is the inclusion of all eligible beneficiaries for creating infrastructure under viable projects, particularly for building community farming assets. This adjustment aims to foster the development of community-oriented projects that enhance farming capabilities and sustainability. By focusing on community assets, the scheme seeks to improve productivity and ensure that agricultural benefits are widely distributed.

2. Integrated Processing Projects

The expansion broadens the scope of eligible activities under the AIF to include integrated primary and secondary processing projects. This change reflects a strategic shift towards comprehensive processing solutions that address various stages of agricultural production. However, it is important to note that standalone secondary processing projects will no longer be covered under AIF and will instead fall under the purview of the Ministry of Food Processing Industries (MoFPI) schemes. This realignment aims to streamline processing support and ensure that projects are adequately funded and managed.

3. PM KUSUM Component-A Integration

The integration of Component-A of the Pradhan Mantri Kisan Urja Suraksha Evam Utthaan Mahabhiyan (PM-KUSUM) with the AIF marks a significant step towards sustainable energy solutions in agriculture. This component allows for the convergence of AIF with PM-KUSUM for farmers, farmer groups, Farmer Producer Organizations (FPOs), cooperatives, and panchayats. By aligning these initiatives, the government aims to promote clean energy solutions alongside the development of agricultural infrastructure, thereby supporting a more sustainable farming environment.

4. NABSanrakshan Credit Guarantee

Another crucial development is the extension of credit guarantee coverage for FPOs through NABSanrakshan Trustee Company Pvt. Ltd., in addition to the existing coverage under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). This enhancement is designed to bolster the financial security and creditworthiness of FPOs, encouraging greater investment in agricultural infrastructure projects. By improving access to credit, the scheme aims to facilitate more substantial investments and drive growth in the sector.

Impact and Achievements of the AIF

Since its inception, the AIF has played a pivotal role in transforming India’s agricultural infrastructure. The fund has supported the establishment of 6,623 warehouses, 688 cold storage units, and 21 silo projects, contributing to an additional storage capacity of approximately 500 lakh metric tonnes (LMT). This expansion includes 465 LMT of dry storage and 35 LMT of cold storage, which collectively help preserve 18.6 LMT of food grains and 3.44 LMT of horticultural produce annually.

The AIF has also sanctioned ₹47,575 crore for 74,508 projects, mobilizing a total investment of ₹78,596 crore in the agriculture sector. Notably, ₹78,433 crore of this investment has been mobilized from private entities, underscoring the private sector’s commitment to agricultural development. Moreover, the infrastructure projects supported by AIF have generated over 8.19 lakh rural employment opportunities, further contributing to the economic upliftment of rural areas.

Future Prospects and Benefits

The expanded scope of the AIF is set to bring about several key benefits:

  1. Enhanced Agricultural Productivity: By focusing on community farming assets and integrated processing projects, the expansion is expected to significantly boost agricultural productivity. Improved infrastructure will facilitate better storage, processing, and distribution of agricultural products, leading to higher yields and reduced losses.
  2. Sustainable Farming Practices: The integration of PM-KUSUM with AIF promotes the adoption of clean energy solutions in agriculture. This alignment supports sustainable farming practices, reducing reliance on conventional energy sources and minimizing environmental impact.
  3. Increased Investment and Financial Security: The extension of credit guarantee coverage through NABSanrakshan will enhance financial security for FPOs, making it easier for them to access funding and invest in infrastructure projects. This increased financial support is crucial for fostering growth and innovation in the agricultural sector.
  4. Rural Employment Generation: The continued focus on infrastructure development is likely to generate additional rural employment opportunities. This not only provides livelihoods for rural populations but also contributes to the overall economic development of these areas.

Conclusion

The Union Cabinet’s approval of the expansion of the Agricultural Infrastructure Fund represents a significant milestone in India’s efforts to strengthen its agricultural sector. By broadening the scope of eligible projects, integrating supportive measures, and enhancing financial security, the expanded AIF is poised to drive substantial improvements in agricultural infrastructure. This initiative underscores the government’s commitment to fostering a sustainable and productive farming environment, ultimately contributing to the overall growth and development of India’s rural economy.

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