Context
The recent redesign of the Agricultural Infrastructure Fund (AIF) by the Indian government marks a significant step towards enhancing agricultural infrastructure and supporting Farmers’ Producer Organizations (FPOs). This initiative is part of a broader strategy to improve the agricultural sector’s productivity and sustainability.
Overview of the Agricultural Infrastructure Fund (AIF)
- The Agricultural Infrastructure Fund was launched in 2020 with a financial outlay of ₹1 lakh crore. Its primary objective is to create and enhance agricultural infrastructure across India, thereby facilitating better post-harvest management, storage, and processing of agricultural products.
- The fund aims to reduce post-harvest losses and improve the overall efficiency of the agricultural supply chain.
Key Features of the AIF
- Financial Support: AIF gives financial help to farmers, cooperatives and FPOs for creation of such infrastructure in the agri allied sector.
- Diverse Projects: The fund which is aimed at development provides a vast number of projects covering construction of warehouses and cold storages, processing units and markets etc.
- Employment Generation: These include employment opportunities since AIF has been funding infrastructure that has helped uplift the farming communities in terms of employment opportunities in the rural areas.
Recent Redesign of the AIF
- On 28th August 2024, more expansion and redesign of the AIF took place in the Union Cabinet with Narendra Modi as prime minister.
- This redesign strategy will help in bringing out the best in the fund as well as serve the FPOs in the best way possible.
Inclusion of FPOs
The redesign in particular encompasses approved measures for FPOs that are important in raising the bargaining capability of farmers and obtaining better market access. The government recognizes FPOs as vital players in the agricultural ecosystem, and their inclusion in the AIF is expected to:
- Enhance Financial Security: Through expansion of credit guarantee program the government intends to enhance credit guarantee to FPOs under NABSanrakshan Trustee Company Pvt. Ltd. This is expected to increase funds sourced towards funding the agricultural infrastructure projects.
- Support Community Farming Projects: The redesign also permits all the qualified beneficiaries to develop structures under ‘reasonable undertakings for developing community farming amenities’. Through this venture it is believed that the farming abilities of communities will be boosted as well as their productivity.
Expanded Scope of Eligible Activities
The redesign also expands what kinds of activities are permitted under the AIF. Key changes include:
- Integrated Processing Projects: Integrated primary and secondary projects have been made eligible activities under AIF that will help in the processing of agricultural products to a large extent but standalone secondary projects will be still covered under other schemes floated by the Ministry of food processing industries.
- Convergence with PM-KUSUM: This way, the part Component –A of PM KUSUM scheme combined efforts of programming with AIF to make a positive change and build the sustainable solutions of clean energy along with agricultural infrastructure.
Expected Outcomes of the Redesign
The redesign of the AIF is poised to yield several positive outcomes for the agricultural sector:
- Improved Infrastructure: Expected benefits arising from the implementation of the AIF include enhancements of infrastructure that are crucial in the agricultural value chain hence reducing post harvest losses, which currently constitute a relatively large proportion of agricultural produce. Improved methods of storage and handling capacity will also help farmers in retaining the quality of their produce and finding markets for their produce easily.
- Increased Investment: It will be expected that credit guarantee and inclusion of FPOs will help in mobilizing private investment for agricultural infrastructure projects. This increases financial feasibility because with better financial position FPOs can take up bigger projects that are pro growth in the agricultural sector.
- Enhanced Productivity and Sustainability: This will lead to increase in productivity of the farming assets that are owned jointly by members of a community as well as integration in processing. Sustainability practices practiced through convergence with PM-KUSUM will also be imparted to environment conservation and energy-use efficiency on farms.
- Job Creation: Significant as Infrastructure projects are implemented there will be a direct relationship with employment of the rural populace. The AIF has already generated over 8.19 lakh jobs, and the redesigned fund is expected to create even more opportunities in rural areas, helping to alleviate poverty and improve living standards.
Conclusion
The restructuring of the Agricultural Infrastructure Fund of the Indian government is one brilliant step in enhancing agriculture. As such, it opens up the AIF to not only embrace FPOs, but also widen the criteria for eligible projects, in an effort to foster further development of the agricultural infrastructure ecosystem. The present undertaking does not only resolve existing problems within farmers and farming communities but also sets foundations for long-term viable agriculture and prosperity of rural sectors. With the increasing changes that characterize the agricultural sector, the improvements that have been made in the AIF will be vital in the development of the sector in the country.
Source : The Hindu