September 27, 2022

Lukmaan IAS

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CABINET EXTENDS AGRI INFRA FUND LOANS TO APMCS

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THE CONTEXT: The Centre has decided to allow state-run market yards to access financing facilities through its Agricultural Infrastructure Fund to calm the fears of protesting farmers that such market yards are being weakened.

Analysis

  • The Union Cabinet decided to extend the Central Sector Scheme of financing facility under the Agriculture Infrastructure Fund to State agencies and Agricultural Produce Marketing Committees (APMCs), as well as federations of cooperative organisations, Farmers Producers Organizations and self-help groups,
  • They will now be eligible for interest subvention for loans up to ₹2 crore, with APMCs allowed to access separate loans for different kinds of infrastructure projects to build cold storage, silos, sorting, grading and assaying units in their market yards.
  • The period of the financial facility has been extended by two additional years up to 2025-26, while the overall period of the scheme has been extended to 2032-33.
  • The modifications in the Scheme will help to achieve a multiplier effect in generating investments while ensuring that the benefits reach small and marginal farmers.

ABOUT AGRI INFRA FUND

  • It is a Central Sector Scheme meant for setting up storage and processing facilities, which will help farmers, get higher prices for their crops.
  • It will support farmers, PACS, FPOs, Agri-entrepreneurs, etc. in building community farming assets and post-harvest agriculture infrastructure.
  • These assets will enable farmers to get greater value for their produce as they will be able to store and sell at higher prices, reduce wastage and increase processing and value addition.
  • The AIF is a medium – long term debt financing facility for investment in viable projects for post-harvest management infrastructure and community farming assets through interest subvention and credit guarantee.
  • Under the scheme, Rs. 1 Lakh Crore will be provided by banks and financial institutions as loans with interest subvention of 3% per annum.
  • It will provide credit guarantee coverage under Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) for loans up to Rs. 2 Crore.

ABOUT APMC

  • Agricultural Produce Market Committees (APMC) is the marketing boards established by the state governments in order to eliminate the exploitation incidences of the farmers by the intermediaries, where they are forced to sell their produce at extremely low prices.
  • Under the APMC Act, the states can establish agricultural markets, popularly known as mandis.
  • The sale of agricultural commodities can occur only in the mandis through auction.
  • The sales process in mandis is regulated through commission agents (CAs) who mediate between the farmers and traders.
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