Scheme Guidelines for CENTRAL SECTOR SCHEME of financing facility
under ‘Agriculture Infrastructure Fund’
- Introduction
The role of infrastructure is crucial for agriculture development and for taking the
production dynamics to the next level. It is only through the development of infrastructure,
especially at the post harvest stage that the produce can be optimally utilized with opportunity
for value addition and fair deal for the farmers. Development of such infrastructure shall also
address the vagaries of nature, the regional disparities, development of human resource and
realization of full potential of our limited land resource.
In view of above, the Hon’ble Finance Minister announced on 15.05.2020 Rs 1 lakh
crore Agri Infrastructure Fund for farm-gate infrastructure for farmers. Financing facility of Rs.
1,00,000 crore will be provided for funding Agriculture Infrastructure Projects at farm-gate &
aggregation points (Primary Agricultural Cooperative Societies, Farmers Producer
Organizations, Agriculture entrepreneurs, Start-ups, etc.). Impetus for development of farmgate & aggregation point, affordable and financially viable Post Harvest Management
infrastructure.
Accordingly, DAC&FW has formulated the Central Sector Scheme to mobilize a
medium – long term debt financing facility for investment in viable projects relating to postharvest management Infrastructure and community farming assets through incentives and
financial support.
2 Rationale of theScheme
Agriculture and allied activities are the primary income source for ~58% of total
population of India. ~85% of the farmers are Small Holding Farmers (SHFs) with less than 2
hectares of land under cultivation and manage ~45% of agricultural land. Annual income of
majority of the farmers is very low. Further, India has limited infrastructure connecting farmers
to markets and hence, 15-20% of yield is wasted which is relatively higher vs. other countries
where it ranges between 5-15%.Investment in agriculture in India has further been stagnant
with less than 2% CAGR over last 5 years. Investment in FY17 was ~ Rs. 2.19 lac crore out of
which private sector share was ~83% vs. a higher investment of ~ Rs. 2.50 lac crore in FY14
and a higher share of private sector at ~88%. Also, lack of investor confidence is leading to
lower plowback ratio (~14% of Gross Value addition in FY18) vs. other sectors (~33% of Gross
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Value addition in FY18).
3 Objectives ofScheme
Tomobilize a medium – long term debt finances facility for investment in viable projects for
post-harvest management Infrastructure and community farming assets through incentives
and financial support in order to improve agriculture infrastructure in the country. This financing
facility will have numerous objective for all the stakeholders in the agriculture eco-system.
a. Farmers (including FPOs, PACS, Marketing Cooperative Societies, Multipurpose
cooperative societies)
- Improved marketing infrastructure to allow farmers to sell directly to a larger
base of consumers and hence, increase value realization for the farmers.
This will improve the overall income of farmers. - 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 market. - With modern packaging and cold storage system access, farmers will be
able to further decide when to sell in the market and improve realization. - Community farming assets for improved productivity and optimization of
inputs will result in substantial savings to farmers.
b. Government - Government will be able to direct priority sector lending in the currently
unviable projects by supporting through interest subvention, incentive and
credit guarantee. This will initiate the cycle of innovation and private sector
investment in agriculture. - Due to improvements in post-harvest infrastructure, government will further
be able to reduce national food wastage percentage thereby enable
agriculture sector to become competitive with current global levels. - Central/State Government Agencies or local bodies will be able to structure
viable PPP projects for attracting investment in agriculture infrastructure.
c. Agri entrepreneurs and startups
5 - With a dedicated source of funding, entrepreneurs will push for innovation
in agriculture sector by leveraging new age technologies including IoT, AI,
etc. - It will also connect the players in ecosystem and hence, improve avenues
for collaboration between entrepreneurs and farmers.
d. Banking ecosystem - With Credit Guarantee, incentive and interest subvention lending institutions
will be able to lend with a lower risk. This scheme will help to enlarge their
customer base and diversification of portfolio. - Refinance facility will enable larger role for cooperative banks and RRBs.
e. Consumers - With reduced inefficiencies in post-harvest ecosystem, key benefit for
consumers will be a larger share of produce reaching the market and
hence, better quality and prices. Overall, the investment via the financing
facility in agriculture infrastructure will benefit all the eco-system players.
4 Implementation Period of Scheme
The Scheme will be operational from 2020-21 to 2029-30. Disbursement in four years starting
with sanction of Rs. 10,000 crore in the first year and Rs. 30,000 crore each in next three
financial years. Moratorium for repayment under this financing facility may vary subject to
minimum of 6 months and maximum of 2 years.
5 Government Budgetary Support
Budgetary support will be provided for interest subvention and credit guarantee fee as also
administrative cost of PMU. The details are as below:-
Sl. No. Name of
Component
Norms
1 Interest
Subvention
Cost
All loans under this financing facility will have interest
subvention of 3% per annum up to a limit of Rs. 2 crore. This
subvention will be available for a maximum period of 7 years.
In case of loans beyond Rs.2 crore, then interest subvention
will be limited up to 2 crore. The extent and percentage of
funding to private entrepreneurs out of the total financing
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facility may be fixed by the National Monitoring Committee.
2 Credit
Guarantee
Cost
Credit guarantee coverage will be available for eligible
borrowers from this financing facility under Credit Guarantee
Fund Trust for Micro and Small Enterprises (CGTMSE)
scheme for a loan up to Rs. 2 crore. The fee for this
coverage will be paid by the Government. In case of FPOs
the credit guarantee may be availed from the facility created
under FPO promotion scheme of DACFW.
3 Administration
Cost of PMU
Farmers Welfare Programme Implementation Society under
DACFW will provide PMU support to the scheme at the
central level and state PMUs of PM KISAN at state level.
Services of knowledge partners will be engaged to identify
clusters including export clusters and gaps in supply chains
to target projects and prepare viable project reports to
support the beneficiaries.
6 Eligible Projects
The scheme will facilitate setting up and modernization of key elements of the value
chain including
(A) Post Harvest Management Projects like:
(i) Supply chain services including e-marketing platforms
(ii) Warehouses
(iii)Silos
(iv)Pack houses
(v) Assaying units
(vi)Sorting &grading units
(vii) Cold chains
(viii) Logistics facilities
(ix)Primary processing centers
(x) Ripening Chambers
(B) Viable projects for building community farming assets including –
(i) Organic inputs production
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(ii) Bio stimulant production units
(iii)Infrastructure for smart and precision agriculture.
(iv)Projects identified for providing supply chain infrastructure for clusters of crops
including export clusters.
(v) Projects promoted by Central/State/Local Governments or their agencies under PPP
for building community farming assets or post harvest management projects.
7 Size of the financing facility and eligible beneficiaries
Rs. 1 Lakh Crore to be provided by banks and financial institutions as loans to Primary
Agricultural Credit Societies (PACS), Marketing Cooperative Societies, Farmer Producers
Organizations(FPOs), Self Help Group (SHG), Farmers, Joint Liability Groups (JLG),
Multipurpose Cooperative Societies, Agri-entrepreneurs, Startups and Central/State agency or
Local Body sponsored Public Private Partnership Projects.
PACS who have adopted digitization for handling its operations will be given preference under
this scheme.
8 Participating institutions
All scheduled commercial banks, scheduled cooperative banks, Regional Rural Banks (RRBs),
Small Finance Banks, Non-Banking Financial Companies (NBFCs) and National Cooperative
Development Corporation (NCDC) may participate to provide this financing facility, after
signing of Memorandum of Understanding (MoU) with National Bank for Agriculture & Rural
Development (NABARD)/DAC&FW.
9 Refinance
If required, need based refinance support will be made available by NABARD to all eligible
lending entities including cooperative banks and RRBs as per its policy.
10 Cap on lending rate
Lending rate of participating lending entities will be decided after due consultation with lending
entities and same will be circulated to all stake holders. Lending institutions will sign MOU with
DAC&FW/ NABARD for implementation of the Scheme. MOUs to be signed by
DAC&FW/NABARD with banks/financial institutions with a view that NABARD will negotiate
cap on lending rates in a fair manner.
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11 Project Management and handholding support
An online platform will be made available in collaboration with participating lending institutions
to provide information and loan sanctioning facility. Agri Infra fund will be managed and
monitored through an online MIS platform. It will enable all the qualified entities to apply for
loan under the fund. The system will also provide benefits such as transparency of interest
rates offered by multiple banks, scheme details including interest subvention and credit
guarantee offered, minimum documentation, faster approval process as also integration with
other scheme benefits. At the back end, the platform will also provide multiple views of
dashboards across district; state and national level PMUs to monitor the total sanctioned
amount and number of borrowers, total interest subvention benefit availed, loan statement
summary, demographic and geographic mix of borrowers and type of projects.
Farmers Welfare Programme Implementation Society under DACFW will provide PMU support
to the scheme at the central level and state PMUs of PM KISAN at state level. Services of
knowledge partners will be engaged to identify clusters including export clusters and gaps in
supply chains to target projects and prepare viable project reports to support the beneficiaries.
Project reports with indicative unit costs will be prepared by Central and State PMUs for
guidance of beneficiaries and lending entities. Such project reports shall be available on online
platform.
12 Convergence – Any grant or subsidy available under any present or future scheme of
Central/State government can be availed for projects under this financing facility. In cases of
capital subsidy such amount shall be considered as promoter’s contribution. However, a
minimum of 10% of the project cost shall be mandatory as promoter’s contribution.
13 Revisit of the Scheme
The scheme will be re-visited by Department of Expenditure after disbursement of Rs. 20,000
crores is completed, for evaluation and midcourse correction if required.Concurrent/mid-term
third party independent evaluation of the scheme in addition to end- line evaluation will be
conducted as and when required.
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14 Monitoring framework
The National, State and District Level Monitoring Committees to ensure real-time
monitoring and effective feed-back about the implementation of the proposed scheme. The
Committees will be set up as per Annexure-A.
All assets created under this financing facility shall be geo tagged. The District Monitoring
Committee and respective lending entity shall ensure that updated information on such geo
tagged assets is available on the online portal.
15 OUTPUT AND OUTCOME MONITORING FRAMEWORK (OOMF)
The Output and Outcome Monitoring Framework (OOMF) (Annexure-B)will be a part of
monitoring system and the measurement of outcome indicators will be monitored periodically
by DLMC, SLMC and NLMC.
16 Linkage with PFMS
Interest subvention and credit guarantee support will be released to Banks and lending
institutions through PFMS.
Disbursal of funds by lending entities to beneficiaries under this scheme shall be in Aadhaar
linked bank account.
17 Criteria for selection of Eligible Borrower
Lending institutions will decide criteria for selection of eligible borrower in consultation with
NABARD and monitoring committees, PMUs and keeping in mind the viability of the projects
and to avoid NPA.
18 VGF Requirement
In case VGF requirement is projected by central / state / local bodies, norms as prescribed by
DEA for PPP projects will be adhered to.
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