The Asian Development Bank (ADB) has committed $120 million in debt financing to the government of India to improve irrigation and water infrastructure in the state of Odisha.
The financing will be dispersed between seven irrigation modernisation projects affecting more than 100,000 hectares of land.
Fund managers have told Agri Investor that demographic trends including a growing population and rising middle class make India an attractive destination for the agri sector. However price volatility, a difficult finance environment and droughts have battered the country’s agri producers.
“Agriculture is a priority sector for India and especially for Odisha because of its high potential to generate jobs and contribute to inclusive and sustainable economic growth. The project aims to improve deteriorated irrigation infrastructure, operation and maintenance, and water use efficiency that will lead to higher agricultural productivity,” said joint secretary of multilateral institutions at India’s Ministry of Finance, Raj Kumar.
The loan is the second tranche of a $157.5 million ADB financing project. Projects funded under the 20-year loan are scheduled for completion by September 2018.
Earlier this year, the Indian government announced a 2016-2017 budget that included 359.8 billion rupees ($5.4 billion, €4.75 billion) in direct funding for the country’s agriculture sector. The funding is part of a commitment by the government to double incomes for the country’s farmers over the next five years. The plan includes extending irrigation systems to 2.8 million hectares of agricultural land.
Investors in India’s agri sector have described cold chain improvements, agtech and biotech and specialuty agri products as areas with high growth potential.