NABARD to help fund tiny infrastructure projects in villages
With most of the banks concentrating on funding the mainstream infrastructure projects, the National Bank for Agriculture and Rural Development (NABARD) is exploring the feasibility of supporting development of micro-infrastructure in villages.
To work on developing the micro-infrastructure projects in villages in areas such as bore-wells, sanitation, electrification (solar/ biogas/ windmill), warehouse to store farm produce, and farm equipment — power-tillers, combine harvesters, reapers, etc., NABARD could support the ‘gram panchayat’ (a local self-government institution at the village level)
Chairman of NABARD, Mr. Harsh Kumar Bhanwala, while speaking on this says, while the banks fund mainstream infrastructure projects, there is an imminent need to evolve a framework for meeting the funding requirements of micro-infrastructure projects to ensure the prosperity of the villages.
NABARD wishes to carry out a detailed study on the feasibility of providing collateral-free finance to micro-infrastructure projects in villages and plans to rope in Indian Institute of Management, Ahmedabad for the same.
“When there is micro-credit, microfinance, and micro-insurance…then why not micro-infrastructure?” asked Bhanwala.
In India, a total of about 80 per cent of the total agriculture land-holding is fragmented and these farmers cannot afford to own mechanized farm equipment as each one of them holds less than two hectares)
RIDF
In such cases, joint-ownership of equipments can be explored through joint liability groups.
Though, the organization has not committed any capital for the micro-infrastructure foray as of yet, NABARD chief, however, said that his organization could consider carving out a portion of the RIDF (Rural Infrastructure Development Fund) for micro-infrastructure projects.
RIDF comprises money that banks forfeit in a particular financial year for not meeting their priority sector targets. Banks have been ordained to set aside 40 per cent of their total loan portfolio for priority sectors such as agriculture, micro and small enterprises, education and affordable housing. Being unable to meet this target in full, the banks, then have to deposit the balance in the RIDF operated by NABARD, which is invested in rural infrastructure development.
The major difference between financing for regular rural infrastructure and micro-infrastructure is that for the latter, funds will be made available for small and highly-localized projects, mostly on an individual basis.
Source: The Hindu Business Line
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