Context: Prime Minister launched a new Central Sector Scheme of financing facility under the Agriculture Infrastructure Fund of Rs. 1 Lakh Crore. He also released the 6th installment under the PM-KISAN scheme of Rs. 17,000 Crore to nearly 8.5 Crore farmers.
Agriculture Infrastructure Fund
- It is a medium - long term debt financing facility for investment for post-harvest management infrastructure and community farming assets through interest subvention and credit guarantee.
- Rs. 1 Lakh Crore will be provided by banks and financial institutions as loans with interest subvention of 3% per annum and credit guarantee coverage under CGTMSE scheme for loans up to Rs. 2 Crore.
- The Central sector scheme will support farmers, primary agriculture cooperatives (PACs), Farmer Produce Organizations (FPOs), Agri-entrepreneurs, etc. in building community farming assets and post-harvest agriculture infrastructure.
- These assets will enable farmers to get higher prices for their crops as they will be able to store and sell at higher prices, reduce wastage, and increase processing.
Under Central sector schemes, it is 100% funded by the Union government and implemented by the Central Government machinery. Central sector schemes are mainly formulated on subjects from the Union List.
Significance: India has a huge opportunity to invest in post-harvest management solutions like warehousing, cold chain, and food processing, and build a global presence in areas such as organic and fortified foods.
Image Source: AIR
Credit Guarantee Funds Trust for Micro and Small Enterprises (CGTMSE) is a trust established by the Government of India, Ministry of Medium, Small and Micro Enterprises (MSME) and Small Industries Development Bank of India (SIDBI).
- Launched in 2000, CGTMSE offers credit guarantee to financial institutions that provide loans to MSMEs.
- CGTMSE provides a guarantee to lending institutions up to a certain limit for all lending done by them to the MSME sector.
- Credit guarantee refers to a situation where the loan to the applicant is backed by a party without the need for any external collateral or third party guarantee.
- The PM-KISAN scheme was launched in December 2018 to provide income support by way of a cash benefit to all landholding farmers (subject to certain exclusion criteria) to enable them to fulfill their agricultural requirements and support their families.
- Under the scheme, the financial benefit of Rs.6000/- per year is provided to eligible beneficiary farmers in three equal installments.
Difference between primary agriculture cooperatives (PACs), Farmer Produce Organizations (FPOs)
- After the stagnation of growth in the cooperative sector, the government introduced the FPO model in 2011-12 to unite farmers by forming a company to achieve economy of scale in marketing their products for better prices.
- Since farmers are the member-shareholder in FPOs, the profit earned by the company will be distributed among them.
- Regulation: FPOs will not be under the control of the local registrar, unlike a PAC, which remains cooperatives .
- There are 819 FPOs promoted by SFAC (Small Farmers’ Agribusiness Consortium) while other bodies such as NABARD (National Bank for Agriculture and Rural Development), too, have supported the creation of FPOs which include cooperatives.