The Infrastructure Development Finance Company Ltd (IDFC) has drafted a unique business strategy, called deferred purchase model (DPM), with a view to boost agriculture infrastructure in the country.
The move is also aimed at involving the private sector to complement initiatives of the government. The institution has identified food and agri-business infrastructure business as having immense growth potential.
The model's highlight is that it will be based on the principle of public-private partnership and the government will not be required to make any upfront investment. Instead, private investors will be invited to set up projects through competitive bidding.
Projects under the DPM will be built, operated and maintained by private investors for a specified period after which the government will buy back the project on an instalment basis. The Centre can later privatise the same all over again through a roll-over, partial or full divestment.
IDFC feels the model can be used to channelise funds from private sector for establishing cold chain networks, commodity exchanges/auction systems, hi-technology warehouses, integrated transportation/logistics, dedicated agri ports/ terminals and value-added centres.
The model is designed to address problems of poor harvesting techniques and an inadequate post-harvest infrastructure that results in wastage of much of the raw produce.
It has suggested that in order to acquire completed projects a dedicated fund should be created.
Corpus for such a fund should be created out of the specified revenues streams of state governments and from the developmental subsidies of the central government.
Further the institution, as per the Centre for Monitoring Indian Economy's latest report, has indicated that some of the select revenue streams of the states that can flow into this fund include agricultural income, the profits of the agriculture produce marketing committees, other taxes levied by the states, apart from Centre contributions.
The fund could also be credit rated, if necessary, and the rating would permit states to leverage the fund several times, thereby improving their ability to draw more funds into the sector.
