States to get loan from agriculture infrastructure fund for Kusum scheme

States have the option to get funding at discounted interest rate through the Rs 1-lakh-crore Agriculture Infrastructure Fund (AIF) if they want to implement the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-Kusum) scheme which aims to remove the use of diesel in irrigation and promote solar technology in the agriculture sector. “The ministry of new and renewable energy (MNRE) will provide Rs 34,422 crore as central financial assistance (CFA) towards the scheme, and for the rest of the amount, states can avail loans at cheaper interest rate from Nabard,” Union power minister RK Singh said on Friday in one of the sessions of RE-Invest, the renewable energy investors’ meet organised by the government every year.

The total outlay of the Kusum scheme, unveiled in February 2019, is pegged around Rs 1.2 lakh crore. The scheme aims to set up 10 giga-watt (GW) of solar plants in barren lands of farmers, install 17.5 lakh agricultural solar pumps and connect agricultural electricity feeders with solar power to ensure only clean energy is used for irrigation. The Centre will provide 30% CFA for the scheme, while the state governments will give a 30% subsidy and the remaining 40% will be provided by the farmer. “We have converged part of the Kusum scheme with the AIF,” Amitesh Kumar Sinha, joint secretary, MNRE, said on Friday.

Prime Minister Narendra Modi in August had formally launched the AIF to provide credit at subsidised interest to agri-entrepreneurs, start-ups, agri-tech players and farmer groups for building warehouses, cold storages and other facilities to reduce post-harvest losses. Under the AIF, the Centre will bear about 3% interest subsidy and up to Rs 2-crore credit guarantee to increase the viability of the projects.

Apart from providing additional source of income to farmers who can sell surplus power from their solar plants to state-run power distribution companies, the Kusum scheme is seen to lower the subsidy burden of the states by reducing the quantum of electricity to be supplied for irrigation. Singh said that large states pay agricultural power subsidies of around Rs 12,000 crore annually, and Kusum loans can be paid back in 4-5 years by the states using that money if they not have to foot that bill.