Animal Husbandry Infrastructure Development Fund & Loan Details

You may have come across the term animal husbandry but you’re probably unsure what it really means. Animal husbandry refers to raising domestic animals for various purposes. It could include for food, fur, leather, selective breeding for better livestock, etc. 

Are you interested in setting up animal husbandry farm? Is the lack of funds stopping you from going forward with your plan? The government has various schemes and provides support to farmers in different ways. The AHIDF(Animal Husbandry Infrastructure Development Fund) scheme is one such helping hand from the government. 

The AHIDF Scheme has been formed to promote Animal Husbandry in the rural and village areas of India. Since animal husbandry is a reliable and profitable venture for small farmers raising cattle can be an alternative source of income. It also balances their risk of seasonal unemployment from crop farming and failures from natural calamities like floods.

Did You Know? 

The fund shall only be reimbursed in your favour only if a Detailed Project Report (DRP) is submitted with the competent authority stating the viability, employment generation opportunities, and other matters.

The Objectives of AHIDF

The Prime Minister recently announced the AtmaNirbhar Bharat Abhiyan Stimulus package to fuel the economic development of India, setting aside a fund up to ₹1500 crore for the Animal Husbandry Infrastructure Development Fund (AHIDF). 

This fund has been approved for small businesses, MSMEs, small farmers, or individuals to develop and grow Animal Husbandry farms. Let us find out the various incentives, usage, objectives, and guidelines for fund utilisation.

The scheme also aims to move the animal husbandry business to an organised corporate form of business like Amul or like other farms have been doing for so long. As per the guidelines issued by the Ministry of Fisheries, Animal Husbandry and Dairying, the fund has the following objectives – 

1. To assist in increasing milk and meat processing capacity and product diversification. 
2. To construct increased price realisation for the producer.
3. To produce quality milk and meat products for local market consumers.
4. To encourage affordable price consumption to prevent malnutrition in children.
5. To develop the idea of entrepreneurship and generate employment 
6. To promote exports of milk and meat.
7. To make available quality animal feed for poultry animals at an affordable price.

Eligible Entities for Support Under the Scheme

AHIF has been implemented by the Ministry of Fisheries, Animal Husbandry, and Dairying for the following certain eligible entities

1. Farmer Producer Organisation
2. Private Companies
3. Individual Enterprenuers
4. Sec. 8 Companies under The Companies Act, 2013
5. Micro Small and Medium Enterprises (MSMEs)

Also read: Understand Unsecured Business Loans and Its Types, Advantages & Features

Loan Disbursement Under AHIDF

The project under AHIDF is eligible for a loan of up to 90% of the actual or estimated project cost from specified schedule banks on submission of a Detailed Project Report by the eligible beneficiaries under the scheme. The beneficiary contribution in the case of MSMEs could be 10%, while in the case of other beneficiaries, it could go from 15% to 25%.

Suppose the project report contains an escalation clause for any unavoidable increase in the project’s cost like natural calamity, technical failures, etc. Then, the loan can be enhanced but not later than 2 years from the date of approval of the particular project.

Currently, interest subvention is 3% for all eligible entities under the scheme. The interest subvention will not allow loans sanctioned for acquiring land, working capital, old machinery, and vehicles for personal use. However, new machinery acquired to set up the animal husbandry farm is eligible for interest subvention. 

The lending rate of interest will be fixed by the scheduled banks but cannot exceed 2% plus the market rate of interest, which is evident from the repo rate set by the Reserve Bank of India (RBI) for the eligible entities. 

More About AHIDF Scheme

• The Animal Husbandry and Dairying Department will pay the interest waived off to the respective lending schedule bank fully in advance for 1st year of the project. However, it will be based on the request made by the bank. 
• From the 2nd year onwards, interest waived off will be released based on the non-NPA(Non-Perfomaing Assets) borrowers who can claim in advance. So, if the person hasnt repaid the loan amount in any of the years, they will not be able to get the interest waived off.
• The amount of ₹15000 crores of AHIDF will be disbursed by the scheduled banks.  They wil; lend to those eligible within 3 years, starting from 2020-21 and onward.
• The maximum repayment period is of 8 years, inclusive of a suspension of 2 years on the principal amount. This means that borrowers need to pay only interest in those 2 years. Thus, the banks must ensure that the maximum repayment period must not exceed 10 years from the disbursement date. However, at their choice, the banks may reduce the repayment period depending on the size, nature, type of investment, the period involved, etc. 
• Further, Subject to the guidelines framed about AHIDF by the ministry, the banks are free to set up the routine and operational procedures. It includes those relating to the process of repayment, penal interest, security involved, and the extent of finance. 
• The banks will fix the interest rates as per the regulatory guidelines framed by the Reserve Bank Of India (RBI). They will take into account the cost of the respective project and the risk involved. 
• The banks may further grant additional loans to those eligible in response to an agreed escalation claim.

Also read: Comparing Business Loan Interest Rates – How to Identify and Apply for the Best Business Loan

Loan Disbursement for Delayed Sanctions

Suppose the eligible entity fails to ground the project for 12 months or the loan amount is left idle for more than six months from the date of sanction. In that case, the project will be considered a non-starter, and the loan sanction will lapse immediately. However, the banks may take a final call on the circumstances of the individual case. The bank may consider the project as a non-starter only on valid grounds where a previous notice of being heard must be served to the borrower before taking any action.

As a matter of general caution, the bank may consider not allowing fresh loan disbursement if the borrower has defaulted in repayment of previously approved loans. Such a practice will hamper the reimbursement of NPAs from the department.

Loans obtained under AHIDF are not available for the acquisition of land. Also, the beneficiary must receive land at his own cost, if required under the project, before proposing loan reimbursement. Such land may be acquired through a lease agreement having a minimum duration of 30 years. In case the lease agreement is required, obtain a No Objection Certificate (NOC) from the competent authority for the mortgage.

Detailed Project Report (DRP)

A Detailed Project Report (DRP) is required to get the loan sanctioned. It must include the proposal for establishing a quality management unit for milk, meat, and animal feed, a packaging unit, and product promotion. The project report shall also include the future market generation, employment opportunities, procurement of raw materials, and other information related to the project. The complex projects, especially for infrastructure related to meat and dairy processing and the establishment of animal feed plants, should be prepared based on :

1. Identification of suitable site
2. Necessary engineering and socio-economic investigations and surveys
3. Planning and designing of the facilities 
4. Model studies wherever required

The beneficiary may also reach the State Animal Husbandry Department for technical assistance in the project preparation. 

The beneficiary will be required to submit the project on the portal of the Small Industries Development Bank of India (SIDBI). After approval of the project, the bank will disburse the loan amount in due time without delay. National Bank For Agriculture and Rural Development (NABARD) currently offers a credit guarantee for the loan amount.

Also read: All About E-commerce Business Loan In India – How To Apply, Step-By-Step Guide

Conclusion:

The scheme is developed to organise animal husbandry farms’ milk and meat processing sector. The reduced interest rate makes an attractive proposition since there is already an extensive domestic and international market for the business. Additionally, the AHIDF scheme will help farmers with a additional source of income, while also supporting the growth of the animal husbandry sector. 

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