Krishi Udan Scheme (2020)

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Policy Update
Nomula Pranay Goud

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Introduction:

Krishi UDAN is a scheme started by the Ministry of Civil Aviation together with the Ministry of agriculture and farmers welfare which aims at empowering agricultural value chain through enhancement of the transport of agri-produce with due reception through airways.

The scheme was launched in August 2020 and later upgraded to Krishi UDAN 2.0 in October 2021 with the objective to boost the export of the perishable agricultural products like fruits, vegetables, fish, and meat by bringing air transport linkages between areas of production or tribal regions and large consumption or export grounds, to enable healthier and cheaper transportation of agri-produce, particularly in North-Eastern, hilly and tribal areas, increasing the income of the farmers through limiting losses and giving them access to bigger markets.

Functions: 

1. Implementation of Air Transport of Agri-Produce: Allows for increased speed in circulation of perishable farm items such as fruits and vegetables, fish, meat and dairy by air. Minimizes the transit time and wastage esp. to the long distance or export markets.

2. Linking Farmers to Large Markets: Facilitates in order farmers in remote, hilly, tribal and northeast areas to access national and international markets. Connects the areas of production with consumption, or the export region.

3. Minimization of Post- Harvest Losses: Offers fast track logistics services to reduce spoilage and spoilage of perishable products. Promotes building up of cold storage and cargo handling facilities at airports.

4. Farmer Incomes: It increases the level of earnings of farmers by providing access to superior markets and providing some loss reduction. Aids the agenda of the government Doubling Farmers Income.

 5. Promoting Agri-Exports: Helps to increase agricultural exports of India due to the faster transport to foreign airports and seaports. Assists in achieving the export quality standards because there are less transit times.

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Image Credits: https://www.moneycontrol.com/news/mcminis/what-is-krishi-udan-2-0-7652191.html

Performance: 

1.Perishable Cargo Processed: The scheme also enabled the air transportation of 108,479 metric tonnes of perishable goods (domestic and international at AAI airports, up from 84,042 metric tonnes in the previous year FY 2020-21).

2.Increase in Airport Coverage: Focusing on only around 25 airports in hilly, North-Eastern, and tribal areas, Krishi UDAN 2.0 has now been enlarged to 58 airports across the country increasing the reach of agri-produce.

3.Kisan Rail Synergy: Under convergence with Krishi UDAN, Kisan Rail has made 2,359 trips on 167 routes and carried almost 790,000 tonnes of agri-consignments.

4.Increased export capability: It helped in exporting perishable commodities like mangoes (Varanasi, Lucknow), cherries (Kashmir) and fish (Northeast) to global markets also.

5.Regional Connectivity: North East India (Assam, Manipur) and tribal belt (Jharkhand, Odisha): The improved air connectivity of the air cargo.

6.Financial: There is a 50-75 percent freight subsidy on qualifying routes available to airlines.

Impact : 

1. Better Access to the Market by Farmers: Finally, the farmers, particularly remote, tribal and North-Eastern regions have been able to access the urban and export markets in a better manner. Facilitated the transport of perishable commodities such as pineapple (Meghalaya), litchi (Bihar), fish  (Assam), mango (Andhra Pradesh) etc.

2. Less wastage of perishables: The use of faster means of air transport has drastically minimized post harvest losses on perishable commodities.Shelf-life of goods is improved with fast turnaround time and improved management of cold-chain.

3. Increase to Agri-Exports: Facilitated the interest of the government to expand their agri-exports as it could transport high-quality produce within a mere time frame. Assisted FPOs and exporters to reach foreign markets in better ways.

4. Fostering of Perishable Crops Agriculture: In the presence of air transport, the farmers are turning more towards growing high value perishable crops such as strawberries, exotic vegetables, flowers, etc.

5. The Building of Infrastructure has been initiated: Cargo terminals, cold storages and logistics hubs have been developed in some of the airports. Krishi UDAN 2.0 is gearing more airports to accommodate agri-cargo.

6. Advertisement of Agri-Logistics Ecosystem: Unified stakeholders, such as airlines, FPOs, logistic firms as well as airport authorities in order to create a stronger agri-logistic chain.

Emerging Issues:

1. Air Cargo is very expensive, Air transport is costly as opposed to road or rail, which is too expensive to small and marginal farmers. Subsidization or encouragement of transport will not be available which diminishes the accessibility of the scheme.

2. Inadequate Infrastructure: Most airports do not have cold storage, warehouses and cargo handling services more so in the remote areas. The inefficiency of transportation causes the inability to satisfy first-mile and last-mile connectivity.

3. Low Knowledge among Farmers: Lack of awareness by farmers and FPOs concerning the way to utilize the scheme. A lot of people do not realize the logistic process, documentation, and export process.

4. Weak PSI: Induced lack of engagement of the private logistics and cargo companies operating in rural or tribal regions. The low profitability and risk inhibit the investment (by the private sector) into air cargo infrastructure.

5. Seasonality and nonseasonal cargo flow: There is usually inconsistent air freight in agricultural produce because the same is seasonal. This has an impact on the economic sustainability of dedicated agricultural flights or cargo services.

6. Regulatory, Operational Delays: Paper work, duty requirements and airport formalities are delayed. The absence of a single-window clearance system of agri-exports is a drawback to smooth operations.

7. Environmental Concerns: Carbon emissions could be enhanced by the rise in air transport in relation to agriculture.

Way forward :

1. Strengthening Infrastructure: Build more cold storage and temperature controlled cargo facilities in the airports. Enhance first-mile and last mile access by roads, rail and inland logistics.

2. Increasing the Practice of the Private Sector: Promote PPP models to invite investment in air cargo handling, warehousing and shipping. Use startups and agri-logistics companies to cover tech-based solutions.

3. Expanding Coverage: Add additional airports in poorly served and remote areas.

Find other commodities that would use air transport (floriculture, organic products, medicinal plants etc.)

4. Digital Integration: Monitor agri-cargo movement in real time, demand-supply in match and transparent fares using digital modes.

Combine Krishi UDAN and e-NAM (National Agricultural Market) and other digital agri-portals.

5. Training and Detection of Skills: Make awareness programs relating to benefits of air cargo and procedures to farmers, FPOs and cooperatives. Train on packaging of perishable produce, grading, and handling of such produce to be transported in the air.

6. Policy and Fiscal Succor: Create incentives/subsidies to handle, pack and transport cargo to lower the costs to the farmers. Make the process of exportation of agri-produce easier that is transported under the scheme.

References: 

About the Contributor: Nomula Pranay Goud, Master’s student in International Relations at Manipal University Jaipur, and a Research intern at Impact and Policy Research Institute (IMPRI).

Acknowledgement: The author sincerely thanks Ms. Aasthaba Jadeja and the IMPRI team for their valuable support.

Disclaimer: 

All views expressed in the article belong solely to the author and not necessarily to the organisation.

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