Union Budget 2026: Centre planning ₹1T boost for farm infrastructure
What's the story
The Indian government is likely to announce a major increase in the Agriculture Infrastructure Fund (AIF) in the upcoming Union Budget, according to Mint. The fund, which was launched as a pandemic-era stimulus over five years ago, could get an additional allocation of over ₹1 trillion over the next five years. The move is part of a broader strategy to improve post-harvest infrastructure and reduce losses at the farm level, especially for perishable crops.
Fund details
AIF's role in agricultural infrastructure development
The AIF, which is part of a ₹20 trillion pandemic stimulus package, has a current loan support ceiling corpus of ₹1 trillion. Under the scheme, banks and financial institutions lend money for eligible projects with a 3% interest subvention on loans up to ₹2 crore for seven years. The government also provides credit guarantee cover for loans of the same amount. Beneficiaries are required to contribute at least 10% toward project costs.
Fund utilization
Impact and future plans
Since its launch in July 2020, the AIF has sanctioned over ₹1.18 trillion across 146,106 projects nationwide as of December 24. The fund has been used to set up custom hiring centers for farm machinery, primary processing units, warehouses, cold chains and collection centers in states like Maharashtra, Madhya Pradesh, Uttar Pradesh, Punjab, and Gujarat. An unutilized allocation of around ₹20,000 crore along with the proposed additional allocation could be provided through budgetary allocation if approved.
Loss reduction
Addressing post-harvest losses and improving price realization
The proposal comes amid rising concerns over post-harvest losses, with government estimates suggesting around 6% of crops in India are lost after harvest. The additional funding would be directed primarily into farm-gate storage, warehousing, and modern logistics to help farmers store produce for longer periods and sell at remunerative prices. "By strengthening post-harvest infrastructure, the government expects to minimize losses, improve price realization, and reduce farmers' dependence on intermediaries," according to an anonymous source.
Reform impact
AIF's contribution to agricultural sector reforms
The AIF is a key part of the government's plan to make agricultural infrastructure a key part of farm sector reforms. Agriculture and allied activities account for about 18% of India's GDP and employ nearly 46% of its workforce. The fund has financed scientific storage, cold chains, grading, and processing facilities to help farmers avoid distress sales immediately after harvest and facilitate value addition closer to the farm gate.