How the agri infra fund strengthens primary agricultural cooperative societies


A year after its launch, the central government’s Agricultural Infrastructure Fund (AIF) gave major impetus to strengthening primary agricultural cooperative societies (PACS) – the lifelines of village-level credit systems.

Ministry of Agriculture data provided to Rajya Sabha last month reveals that a total of 6,524 projects, costing 4,503 yen, have been sanctioned under the AIF. Of this total, 76 percent (4,963) of the projects went to PACS with a sanctioned amount of 2,934. This means that 65 percent of the program funds went to PACS projects.

Cooperative credit structures

The rural cooperative credit system in India, which ensures the flow of credit to the agricultural sector, includes short and long term cooperative credit structures. The short-term cooperative 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 facilities for inputs in the form of cash or in-kind components, agricultural implements on a rental basis, and storage facilities.

The AIF program enabled 3,898 warehouses, 155 analysis units, 136 primary processing units, 135 sorting and grading units, 20 smart and precision agriculture projects and around 3,000 other types of post-management projects. harvest and community agricultural assets.

Last year, the central government launched the AIF as part of the Aatmanirbhar Bharat package. The aim was to fill the existing infrastructure gaps and mobilize investments in agricultural infrastructure by providing medium to long term debt financing facility of ₹ 1-lakh crore. The scheme provides financial support for eligible post-harvest management infrastructure and community agricultural assets.

FILE PHOTO: A farmer carries saplings for planting in a paddy field on the outskirts of Ahmedabad, India – REUTERS

The funding facility under the scheme will be available until 2025-2026 and benefits will be paid until 2032-2033. The government provides a 1.3 percent interest subsidy under this program. As a result, the effective interest rate is as low as 4.85 percent to a high of 6 percent. The government also provides a credit guarantee for loans of up to 2 crore.

Why infrastructure is vital for the agricultural sector

In July of this year, the Union Cabinet approved changes to the program extending eligibility to state agencies / APMCs, national and state federations of cooperatives, federations of agricultural producer organizations (FPOs) and to federations of self-help groups (SHG).

For APMCs, an interest subsidy for a loan of up to 2 crore will be provided for each different infrastructure project. These projects include cold storage, sorting, classification and analysis units, silos, etc. in the same market courtyard.

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According to the government, the program is vital because improved marketing infrastructure will help farmers sell their produce directly. Thanks to investments in logistics infrastructure, farmers will be able to sell in the market with reduced post-harvest losses and fewer middlemen.

It will further make farmers independent and improve market access, according to the ministry. Access to the packaging and cold storage system will help farmers decide when to sell their produce and improve fulfillment.

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