Farm credit and crop insurance

Assam's economy is an agrarian economy and therefore farm household economy plays a critical role in the overall economy of the state. Agriculture credit is essential for meeting the investment requirements of farmers while crop insurance helps build their resilience against crop loss due to flood and erosion. Official data on farm credit to holders of Kisan Credit Card (KCC) and insurance coverage under Pradhan Mantri Fasal Bima Yojana (PMFBY) show that majority of the farm households in the state have not been able to derive benefits from KCC and PMFBY. The State Focus Paper on Assam of the National Bank for Agriculture and Rural Development (NABARD) for 2021-22 lays bare the hard realities in the state agriculture sector. The flow of credit under crop loans was only Rs 2072.35 crore in Assam during 2019-20. Considering the 27.4 lakh farm holdings in the State, the average bank credit per farm holding in the State worked out to meagre Rs 7563, the report states. State Level Bankers Committee for North Eastern States data shows that total loan accounts having KCC loans outstanding as of June 30, 2020, was 11.01 lakh. The cumulative number of KCCs issued in the state is around 31 lakh which means nearly 20 lakh KCCs are inoperative in the state and farmers holding these cards have not availed any farm credit for agriculture or allied activities. The NABARD report highlighted that the share of Commercial Banks and Regional Rural Banks was around 78.8% and 20.7% respectively but the share of Cooperatives was only about 0.50%. The NABARD report flagged the issue of small and marginal holdings increasing in the state and brought to light that due to an increase in the number of marginal holdings average size of holdings reduced from 1.47 hectares in 1970-71 to 1.09 in 2015-16 when the national average is 1.16 hectare. About 86% of farmers in Assam have small and marginal holdings and together they account for about half of the farmland. Unless hassle-free credit is delivered to these small and marginal farmers they cannot increase farm production or go for sustainable multi-cropping to replace less remunerative mono-cropping. Even though the Central Government and the Reserve Bank of India have accorded high priority to issuing RuPay cards to KCC holders to ensure smooth credit delivery, only 6.30 lakh RuPay cards have been issued in the states against 31 lakh KCC holders. Another advantage of KCC is that it is also issued to landless tenant farmers, oral lessees or sharecroppers. Apart from about six lakh landless farmers in the state many marginal farmers practice share-cropping or undertake cultivation on the larger plot as oral lessees to maximize production but very few of them have been benefited from KCC. Failure of the Agriculture Department and the banks to ensure credit to such farmers compel them to continue subsistence farming which retards growth in the agriculture sector. The NABAD report also reveals that the coverage under PMFBY is "very low" in the State. "As against 10.03 lakh crop loan outstanding accounts as on 31 March 2020, only about 16,678 and 3,033 farmers were covered during Kharif and Rabi in the financial year 2019-20. The coverage is abysmal and needs immediate corrections considering the welfare of the farmers," adds the report. Even though all farmers including the sharecroppers and tenant farmers growing notified crops in the notified areas are eligible for crop insurance coverage under PMFBY such poor coverage speak volume about the failure of all key stakeholders in the State government and banking sector. The fact that the Assam Government had declared that the premium burden of the crop will be shared by the Government and a token amount of Rupee 1/ is to be contributed by the farmers for land up to one hectare only indicates a serious gap in implementation. The policy announcement of the State government was huge as it takes away the burden of premium paid by the farmers. This calls for an urgent review of PMFBY implementation in the state to identify the gaps and take result-oriented measures to rectify those. Agriculture and Horticulture departments need to undertake a massive awareness campaign on KCC and PMFBY benefits so that farmers are encouraged to approach the banks to activate their cards and seek credits. Panchayats can play a proactive role in the awareness campaign and facilitating bank linkage of the farmers under their jurisdictions. The problem of crop failure is likely to aggravate due to global warming and climate change impact and crop insurance coverage for every farm household must be prioritised to prevent the rural farm economy from collapsing. Apart from farm credit and crop insurance ensuring Minimum Support Price for notified farm produce is equally important to augment the income of farm households. The state economy cannot be expected to improve without significant growth in the agriculture sector.