The Indian government is expected to announce a substantial increase in the Agriculture Infrastructure Fund (AIF) in the upcoming Union Budget, according to Mint. Launched as a pandemic-era stimulus over five years ago, the AIF could receive an additional allocation exceeding Rs.1 trillion over the next five years. This move aims to strengthen post-harvest infrastructure, reduce losses, and improve farmers’ price realization, particularly for perishable crops.
How the Fund Works
The AIF is part of a broader Rs. 20 trillion stimulus package introduced in 2020. It offers financial support to eligible agricultural projects, with banks and financial institutions providing loans up to Rs. 2 crore at a concessional 3% interest rate for seven years. The government also offers credit guarantee coverage for the same loan amount, while beneficiaries contribute at least 10% of project costs.
Since its launch in July 2020, the fund has sanctioned over Rs. 1.18 trillion for 146,106 projects across India. The support has helped set up custom hiring centers for farm machinery, primary processing units, warehouses, cold chains, and collection centers in key agricultural states such as Maharashtra, Madhya Pradesh, Uttar Pradesh, Punjab, and Gujarat. An unutilized allocation of around Rs. 20,000 crore, combined with the proposed new allocation, could be disbursed if approved in the Budget.
Reducing Post-Harvest Losses
One of the driving goals behind the proposed expansion is to address India’s post-harvest losses, which government estimates suggest account for about 6% of crops. These losses are particularly high for perishable fruits, vegetables, and other sensitive commodities. By directing additional funds toward farm-gate storage, modern warehouses, and cold chain logistics, the government hopes farmers can store produce longer, sell at fair prices, and avoid losses caused by spoilage.
“Strengthening post-harvest infrastructure will not only reduce losses but also improve price realization for farmers and decrease their dependence on intermediaries,” said an anonymous government source. The measure is expected to help farmers capture more value close to the farm gate, facilitating a shift toward organized, scientific, and sustainable farming practices.
Supporting Agricultural Reforms
The AIF is also central to India’s broader agricultural reform agenda. Agriculture and allied activities contribute nearly 18% of the country’s GDP and employ about 46% of the workforce. By investing in storage, cold chains, grading, and processing units, the fund encourages scientific handling of produce, reduces distress sales immediately after harvest, and promotes value addition near farms.
Over the years, the fund has supported initiatives such as farm machinery hubs, cold storage facilities, and processing units that enhance shelf life and improve market access. The proposed increase in allocation could help replicate these successes at a larger scale, particularly in underserved regions where infrastructure gaps remain significant.
Looking Ahead
The expansion of the Agriculture Infrastructure Fund signals the government’s commitment to building a modern, resilient, and market-oriented agricultural sector. With better storage, improved logistics, and enhanced processing facilities, farmers can expect reduced post-harvest losses, more stable incomes, and greater control over their produce’s market journey.
As India continues to modernize its agricultural sector, the AIF could play a critical role in supporting farm-level reforms, bridging infrastructure gaps, and driving inclusive growth across rural economies. For farmers and investors alike, the fund represents a key lever for improving efficiency, profitability, and sustainability in Indian agriculture.
