How agri infra fund is strengthening primary agri co-op societies

One year after its launch, the Central government’s Agriculture Infrastructure Fund (AIF) has given a major boost to the strengthening of Primary Agricultural Cooperative Societies (PACS) – the lifelines of village-level credit systems.

The Ministry of Agriculture data provided to Rajya Sabha last month reveal that a total of 6,524 projects, at cost of ₹4,503, has been sanctioned under AIF. Out of this, 76 per cent (4,963) of the projects have gone to PACS with a sanctioned amount of ₹2,934. This means that 65 per cent of the funds under the scheme have gone to PACS projects.

Cooperative credit structures

The rural cooperative credit system in India, which ensures the flow of credit to the agriculture sector, comprises of short-term and long-term cooperative credit structures. The short-term co-operative credit structure operates with a three-tier system – PACS at the village level, Central Cooperative Banks at the district level and State Cooperative Banks at the State level.

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PACS being registered cooperative societies provide credit and other services including input facilities in the form of cash or kind component, agriculture implements on hiring basis and storage facilities.

The AIF scheme has enabled 3,898 warehouses, 155 assaying units, 136 primary processing units, 135 sorting and grading units, 20 smart and precision agriculture projects and around 3,000 other kinds of post-harvest management projects and community farming assets.

Last year, the Central government launched AIF under Aatmanirbhar Bharat package. The aim was to address the existing infrastructure gaps and mobilise investment in agriculture infrastructure by providing a medium-long term debt financing facility of ₹1-lakh crore. The scheme provides financial support for eligible post-harvest management infrastructures and community farming assets.

FILE PHOTO: A farmer carries saplings to plant in a rice field on the outskirts of Ahmedabad, India

The financing facility under the scheme will be available up to 2025-26 and the benefits will be provided upto 2032-33. The government provides 1.3 per cent interest subvention support under the scheme. As a result, the effective rate of interest is as low as 4.85 per cent to a maximum of 6 per cent. The government also provides credit guarantee support for loans upto ₹2 crore.

Why infrastructure is vital for agri sector

In July this year, the Union Cabinet approved modifications in the scheme extending eligibility to State Agencies/APMCs, National and State Federations of Cooperatives, Federations of Farmers Producers Organisations (FPOs) and Federations of Self Help Groups (SHGs).

For APMCs, interest subvention for a loan upto ₹2 crore will be provided for each project of different infrastructure. These projects include cold storage, sorting, grading, and assaying units, silos, et al within the same market yard.

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According to the government, the scheme is vital because improved marketing infrastructure will help farmers sell their produce directly. With investments in logistics infrastructure, farmers will be able to sell in the market with reduced post-harvest losses and a smaller number of intermediaries.

This further will make farmers independent and improve access to the market, as per the Ministry. Packaging and cold storage system access will help farmers to decide when to sell their produce and improve realisation.

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