Modi Cabinet Provides Booster Dose to Agri-Infrastructure

Punjab leads the nation in the implementation of the Agriculture Infrastructure Fund (AIF) scheme, which is fully funded by the Central Government.

Centra Rejigs Key Agriculture Scheme

The significant expansion and strengthening of the Agriculture Infrastructure Fund (AIF) by the Union Cabinet in its meeting of today (28th August) chaired by Prime Minister Narendra Modi, is a major initiative aimed at enhancing agricultural infrastructure in India. The AIF scheme, originally launched in 2020, has been comprehensively revised and ramped up to be more attractive, impactful, and inclusive, with a focus on strengthening the farming community and boosting the agricultural sector. Here's an overview of the key aspects of this expansion:

Key Highlights of the AIF Scheme Expansion

1. Expanded Scope of Eligible Projects:

• Viable Community Farming Assets: Under the expanded scheme, all eligible beneficiaries can now develop infrastructure for 'viable projects for building community farming assets'. This change is expected to boost community farming capabilities, leading to improved productivity and sustainability in agriculture. By encouraging shared resources and collective farming practices, the scheme aims to enhance the efficiency and effectiveness of farming operations. This is virtual change of paradigm since it prioritizes the community projects over individual ones, which are often unviable owing to small land holding in the country.

• Integrated Processing Projects: The scheme now includes integrated primary and secondary processing projects among the eligible activities. This allows for a more comprehensive approach to agricultural processing, enhancing the value chain from farm to market. However, it is important to note that standalone secondary projects are not eligible under this scheme and will instead be covered by the Ministry of Food Processing Industries (MoFPI) schemes. This differentiation ensures that the AIF focuses on projects that support a holistic development of agricultural infrastructure.

2. Integration with Other Schemes:

• PM KUSUM Component-A Convergence: A significant addition to the AIF scheme is its integration with Component-A of the PM-KUSUM scheme (Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan)¹, which promotes sustainable clean energy solutions. This convergence allows for the combined benefits of agricultural infrastructure development and renewable energy adoption, supporting farmers, farmer groups, Farmer Producer Organizations (FPOs), cooperatives, and panchayats. By aligning with the PM-KUSUM scheme, the AIF promotes environmentally sustainable practices alongside agricultural growth.

• NABSanrakshan Credit Guarantee: To further support financial security for farmers and agricultural entities, the AIF scheme has expanded its credit guarantee coverage. In addition to the existing coverage under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), the AIF now offers credit guarantee coverage for FPOs through the NABSanrakshan Trustee Company Pvt. Ltd. This extension is designed to enhance the creditworthiness of FPOs, encouraging more investments in agricultural infrastructure projects by providing greater financial assurance.

Impact and Achievements of the AIF Scheme

Since its launch, the AIF scheme has made significant contributions to agricultural infrastructure development in India:

• Creation of Infrastructure: The scheme has facilitated the establishment of 6,623 warehouses, 688 cold stores, and 21 silo projects. This has resulted in an additional storage capacity of about 500 lakh metric tonnes (LMT), including 465 LMT of dry storage and 35 LMT of cold storage. The expanded storage capacity has led to substantial annual savings, preventing the loss of 18.6 LMT of food grains and 3.44 LMT of horticulture produce, thereby reducing waste and enhancing food security.

• Financial Support and Investment: The AIF scheme has sanctioned Rs. 47,575 crore for 74,508 projects, which has mobilised an investment of Rs. 78,596 crore in the agriculture sector. This financial support has not only enabled the development of critical infrastructure but has also stimulated economic activity in rural areas, fostering growth and development in the agricultural sector.

• Employment Generation: A noteworthy impact of the AIF scheme is the creation of over 8.19 lakh rural employment opportunities. By supporting various infrastructure projects, the scheme has contributed to job creation in rural areas, enhancing livelihoods and supporting rural development.

Funding Pattern and Ownership

The Agriculture Infrastructure Fund is a fully funded Central Sector Scheme, with the Central Government providing a financing facility of Rs. 1 lakh crore (100,000 crore) for agricultural infrastructure projects. The government's budgetary support covers interest subvention, credit guarantee fees, and administrative costs of the Project Management Unit (PMU).

There is no mandatory financial contribution required from state governments, although states have the option to participate through convergence with their own schemes if they choose to do so. This centralised funding approach ensures that the AIF scheme is widely accessible and can be implemented efficiently across the country, irrespective of the financial constraints of some of the state governments.

Asset Ownership

The assets created under the AIF scheme can be owned by a diverse range of eligible beneficiaries. These include:

• Individual Farmers: Farmers can own infrastructure assets individually, enhancing their farming capabilities and productivity.

• Farmer Producer Organizations (FPOs): FPOs can create various post-harvest management infrastructures such as warehouses, cold chains, and primary processing centres. They are also eligible for credit guarantees under the facility created by the Department of Agriculture & Farmers Welfare (DA&FW) and can receive reimbursement for credit guarantee fees under the AIF.

• Primary Agricultural Credit Societies (PACS), Marketing Cooperative Societies, Self Help Groups (SHGs), Joint Liability Groups (JLGs), Multipurpose Cooperative Societies, Agri-entrepreneurs, and Startups: These groups can also own assets under the scheme, promoting collective ownership and management of agricultural infrastructure.

• Central/State Agencies or Local Body Sponsored Public-Private Partnership Projects: Public-Private Partnership projects promoted by government agencies can also benefit from the scheme, facilitating infrastructure development in a collaborative manner.

The scheme allows for both individual and collective ownership of assets, promoting a wide range of farming models and infrastructure management approaches. This flexibility ensures that the AIF can support diverse agricultural needs across the country.

Punjab's Leadership in AIF Implementation

Punjab has emerged as a leading state in the implementation of the Agriculture Infrastructure Fund (AIF) scheme, demonstrating remarkable efficiency and utilisation of the available resources.

Here are the key details about Punjab's performance under the AIF scheme:

Punjab Takes Lead

1. Highest Number of Sanctioned Projects:

   • Punjab has sanctioned the maximum number of projects under the AIF scheme, making it a frontrunner among all states in terms of implementation. The state’s proactive approach and efficient administrative processes have contributed to this achievement.

2. Significant Fund Disbursement:

   • The Punjab Government has disbursed Rs 2,000 crore as term loans under the AIF scheme. This substantial funding has supported 7,646 projects worth Rs 3,500 crore out of a total of 8,298 sanctioned projects. The high disbursal amount indicates effective fund management and prompt action in providing financial assistance to agricultural projects.

3. High Disbursal Rate:

   • Punjab's disbursal rate of 92%, tied with Madhya Pradesh for the highest among Indian states, reflects the state's remarkable efficiency in implementing the Agriculture Infrastructure Fund scheme. This high disbursal rate showcases the effectiveness of both the political leadership and the bureaucracy at the policy level, as well as the field administration in processing and distributing funds.

   • Additionally, it highlights the proactive nature of traditional Punjabi farmers in adopting new schemes and practices, which further contributes to the successful implementation of these initiatives. By ensuring that projects receive timely financial support, Punjab has facilitated robust infrastructure development and set a strong example for other states in terms of efficient governance, proactive management, and farmer adaptability in agricultural initiatives.

4. Top Performing Districts:

   • Several districts in Punjab have excelled in utilising the AIF funds, with Patiala leading the way at Rs 250.3 crore. Other top districts include:

     • Ludhiana: Rs 206.2 crore

     • Sangrur: Rs 201.9 crore

     • Bathinda: Rs 182.3 crore

     • Ferozepur: Rs 159.5 crore

   • These districts have shown a robust capacity for implementing projects and managing agricultural infrastructure development effectively.

5. Diverse Range of Funded Projects:

   • The projects funded under the AIF scheme in Punjab include a diverse range of post-harvest management infrastructure, such as:

     • Primary Processing Centres: Facilities that handle the initial processing of crops, which adds value to the produce and reduces post-harvest losses.

     • Storage Facilities: Enhanced storage capabilities help in reducing wastage and maintaining the quality of agricultural produce over time.

     • Custom Hiring Centres: Centres that provide access to agricultural machinery and equipment on a rental basis, which helps small and marginal farmers reduce operational costs.

     • Solar Panels and Solar Pumps: Investments in sustainable energy solutions for agricultural practices, supporting both productivity and environmental sustainability.

6. Effective State-Level Management:

   • Since April 2022, Punjab's horticulture department has been acting as the nodal agency for implementing the AIF scheme. The establishment of a dedicated State Project Monitoring Unit (SPMU) has further strengthened the state's capacity to oversee the scheme's implementation, monitor progress, and ensure efficient utilisation of resources.

Punjab’s Commitment to Agricultural Development

Punjab’s outstanding performance in implementing the Agriculture Infrastructure Fund (AIF) scheme highlights its commitment to improving agricultural infrastructure and supporting its farmers. By achieving the highest number of sanctioned projects and maintaining a leading disbursal rate, Punjab has set a high standard for the utilisation of central government schemes. The state’s proactive approach, evident in its diverse range of funded projects such as storage facilities, primary processing centres, custom hiring centres, and sustainable energy solutions like solar panels and pumps, showcases its strategic investment and efficient fund management in agricultural development.

A Model for National Progress

The success of Punjab in utilising the AIF serves as an inspiring model for other states to emulate, demonstrating the transformative impact of thoughtful implementation of government schemes. The expansion of the AIF is a strategic move to further strengthen India’s agricultural infrastructure, broadening the scope of eligible projects and integrating with other schemes to provide robust financial support. By driving growth, enhancing productivity, and increasing farm incomes, the AIF has the potential to significantly contribute to the sustainability of agriculture nationwide, ensuring a resilient and prosperous future for India’s farming community.

A Second Green Revolution for Punjab: Embracing Sustainable Agriculture and Diversification

Punjab's success in implementing the Agriculture Infrastructure Fund scheme showcases its potential to drive a second Green Revolution, focusing on sustainable and diversified agricultural practices, including organic farming. By shifting from water-guzzling paddy cultivation to more sustainable crops like Basmati rice, fruits, vegetables, floriculture, and hardy millets, Punjab can reduce its water consumption and enhance agricultural resilience. The promotion of local agri-processing industries, combined with water conservation techniques like drip irrigation, further supports this transformation. To truly capitalise on these opportunities, a remunerative Minimum Support Price (MSP) for these crops, provided collaboratively by the Central and State governments, will be essential. With these strategies in place, Punjab could lead the nation in sustainable agricultural growth, benefiting farmers and consumers alike, with increasing potential to capture even the international markets.

1. This stands for "Prime Minister's Farmer Energy Security and Upliftment Campaign" in English.