New Agriculture Infrastructure Fund (NAIF)

ECONOMY/ GOVERNANCE

Topic: General Studies 3:

• Infrastructure
• Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

New Agriculture Infrastructure Fund (NAIF)

Context: Agricultural distress that preceded Pandemic and government’s vision of doubling Farmer’s income (Ahok Dalwai Committee)

Previous Government measures to Improve Farm Infrastructure

• National Horticultural Board provides credit-linked subsidy on capital investments in pre-cooling units, controlled/modified atmosphere cold stores, reefer vans, ripening/curing chambers and other such post-harvest infrastructure.
• A lot of storage capacity, including low-cost scientifically-built on-farm structures, has been created for onions under the Rashtriya Krishi Vikas Yojana.

About NAI Fund

• It is financing facility for setting up warehousing, cold chain, processing and other post-harvest management infrastructure
• It provides an interest subvention of 3 per cent on loans of up to Rs 2 crore for a maximum seven-year period.
• To implement the fund effectively and in order to make it attractive for banks, the loans would also have government-backed credit coverage against defaults
• The borrowers are mainly to be FPOs (farmer producer organisations) and primary agricultural cooperative societies
• It has a targeted disbursement of Rs 1 lakh crore over the current and next three fiscals.

Significance of NAI Fund

• Promotes Agro-processing: NAI Fund means increased investments in produce shelf life extension and value addition (indirectly encourages food processing sector)
• Reduces Wastage: 16% of fruits and vegetables and up to 10% of cereals, oil seeds and pulses are wasted in the country due to inadequate post-harvest infrastructure.
• Complementing the recent reforms: Government had issued ordinances removing stockholding restrictions on major foodstuffs and dismantling the monopoly of regulated mandis in the trading of farm produce.
• Phased Disposal of Produce empowers farmer: Being able to store their produce, enables farmers to harvest their crop, say, in March and make staggered sales till November to take advantage of higher off-season rates

Criticisms

• Additional Scheme: It would have made sense to merge all existing schemes with the new fund so as to better leverage government money.
• Its benefits will only accrue in the medium- to long-term. The government must not lose sight of the immediate economic challenge of boosting growth and incomes.
• Not a panacea: Cold chains and agro-processing cannot solve all of agricultural problems for ex: three-fourths of India’s sugarcane crop is “processed” by mills and issue of cane arrears still persist

Value Addition

Do You Know How Policy focus on agriculture has changed since Independence?

• The focus of policymakers during the first 40 years after Independence was raising farm production.
• In the subsequent two decades, they started paying more attention to agri-infrastructure and agro-processing.
• In today’s age of self-sufficiency & surplus produce, focus should be in crop planning and information dissemination (leveraging Data Analytics) to help farmers better align their production decisions to market demand.

Connecting the dots:

• Ashok Dalwai Committee of doubling farm income
• Essential Commodities Act