India Region

Financing Agri-Infrastructure Growth: NABARD’s Initiatives and Funds

10 July 2024, New Delhi: Infrastructure is the backbone of economic growth for any nation since it provides the basic physical and organisational structures and facilities needed for the operation of any economy. Key components of Agri- agri-infrastructure relate to irrigation, roads and bridges, soil and water conservation, animal husbandry and fisheries, and activities allied to agriculture like warehousing, cold storage, rural market yards and godowns. 

NABARD – National Bank For Agriculture And Rural Development

NABARD, as a Development Bank, is mandated to provide and regulate credit and other facilities for the promotion and development of agriculture, small-scale industries, cottage and village industries, handicrafts and other rural crafts and other allied economic activities in rural areas to promote integrated rural development and securing prosperity of rural areas, and for matters connected therewith or incidental thereto.

NABARD has been playing a very crucial role in setting up Agri- agri-infrastructure in India since its inception. NABARD with the support of GoI, has initiated several programmes over the years to enhance Agri- infrastructure facilities in the country. Some of the major initiatives in this regard are as under: 

1.    Rural Infrastructure Development Fund (RIDF)

Against the backdrop of declining public investment in agriculture and rural infrastructure, RIDF was instituted in NABARD during 1995-96 with an initial corpus of ₹2,000 crore with the main objective of providing loans to State Governments for completing ongoing rural infrastructure projects. It covers as many as 39 activities, classified under three broad sectors, viz., (i) Agriculture and Related sector (ii) Social Sector and (iii) Rural Connectivity.  RIDF corpus has grown from an initial corpus of ₹2,000 crore in 1995–96 to ₹40,474.55 crore in 2023-24.  The cumulative allocations during these years have reached to ₹4,98,411 crore (including Bharat Nirman). Since Inception, an aggregate amount of Rs. 4,37,441 crore has been disbursed. With the assistance of RIDF, it is estimated to create/restore irrigation potential of 422 lakh ha, 5.62 lakh km of rural roads and 14.08 lakh meters of bridges. 

2.   Long-Term Irrigation Fund (LTIF)

Long-Term Irrigation Fund (LTIF) was announced in the Union Budget 2016–17 for fast-tracking 99 identified medium and major irrigation projects, spread across 18 states in mission mode by December 2019. Subsequently, GoI also approved funding for four more projects under LTIF.  During 2016-2021, NABARD provided a loan towards a Central share to the National Water Development Agency (NWDA), SPV of Govt. of India, as well as a State share to willing State Governments with a tenor of 15 years.  So far 13 states have executed the MoA to avail funding assistance from NABARD. Further, the GoI has approved the continuation of financial assistance under LTIF up to 31 March 2026 to willing State Governments for ongoing projects.  The cumulative loan sanctioned as of 31 March 2024 is ₹85,790.78 crore and the cumulative amount released as of 31 March 2024 was ₹61350.92 crore.

3.    Micro Irrigation Fund (MIF)

Micro Irrigation Fund with an initial corpus of ₹5000 crore was operationalized in NABARD in 2019-20 to facilitate efforts of State Governments in mobilizing additional resources for expanding coverage under micro irrigation and incentivizing its adoption beyond provisions of Pradhan Mantri Krishi Sinchayee Yojana-Per Drop More Crop. The MIF funding arrangement for the initial corpus is in operation up to 31 July 2024. The cumulative loan sanctioned under MIF stood at ₹4724.74 crore, against which ₹3387.80 crore has been released as of 31 March 2024. The sanctions made by NABARD to date under MIF envisage the expansion of micro irrigation coverage by an area of 19.10 lakh ha. 

4.   Fisheries and Aquaculture Infrastructure Development Fund

In line with its announcement in the Union Budget 2018–19, the Government of India created the Fisheries and Aquaculture Infrastructure Development Fund (FIDF) with a total corpus of ₹7,522.48 crore to be implemented over five years (FY 2018-19 to 2022-23). NABARD provides funds to the State Governments for various facilities like fishing harbors, fish landing centres, modernized State fish seed farms, modern fish markets, disease diagnostic laboratories, aquatic quarantine facilities, etc. During the FY2023-24, total disbursements stood at ₹289.21 Crore.

5.    Dairy Processing and Infrastructure Development Fund

In line with its announcement in the Union Budget 2017–18, the Government of India created a Dairy Processing and Infrastructure Development Fund (DIDF) in NABARD, with a total corpus of ₹8,004 crores to be utilised over a period of five years (2018-19 to 2022-23). The objectives of the scheme are modernisation and infrastructure augmentation for milk processing and value addition, and to ensure optimum price realisation by the primary producer. Cumulatively 32 proposals amounting to ₹3015.60 have been sanctioned under the scheme. Sanctioned projects have created a liquid milk processing capacity of 7.39 million litres per day, 265 Metric tonnes per day milk powder processing capacity and 3.4 Lakh litres per day Bulk Milk Coolers capacity.

6.   NABARD Infrastructure Development Assistance (NIDA)

NIDA was designed as an alternative line of credit to address the gap between public investment in agriculture and rural infrastructure.  The product is funded by NABARD on its own either through its cash flows or through market borrowings. The entities eligible for NIDA loans are State Governments, State government-owned entities/corporations, SPVs formed for raising off-budget resources, etc. NIDA was designed for on-budget and off-budget borrowings by the State Governments and State-owned organisations for the creation of infrastructure.  In FY 2023-24, total sanctions under NIDA stood at ₹9,934.40 crore, for 15 credit proposals. The disbursement under NIDA for the FY 2023-24 was ₹7,303.96 crore.

7.    New Agriculture Marketing Infrastructure sub-scheme of Integrated Scheme for Agricultural Marketing (ISAM)

NABARD is a subsidy channelizing agency for the New Agriculture Marketing Infrastructure sub scheme of Integrated Scheme for Agricultural Marketing (ISAM). The scheme is being implemented by the Ministry of Agriculture and Farmers’ Welfare (MoA&FW). The scheme lays special focus on promoting innovation and the latest technologies in post-harvest and agricultural marketing infrastructure.
A scientific storage capacity of 812.36 lakh MT involving 49758 units has been created under the scheme since its inception including old schemes.  

The inadequacy of public investment in agriculture is a matter of general concern. This is an area that is the responsibility of the States, but many States have neglected investment in infrastructure for agriculture. There are many rural infrastructure projects, which have been started but are lying incomplete for want of resources. They represent a major loss of potential income and employment to the rural population. NABARD is playing a major role in setting up the agri-infrastructure by providing necessary funds for these schemes through various funds in collaboration with the Government of India.

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