For the harried Indian farmer, crop insurance has long been an empty slogan. This should not have been the case with agriculture getting riskier as the weather turns more and more unpredictable. The reality is that barely 2 crore or little more than 16 percent farmers have any kind of crop insurance cover. Primarily tural calamities are covered, but not local-level calamities like hailstorms and landslides. Most farmers find premium costs high. Credit-linked insurance schemes make it mandatory for farmers to take out a policy if they want to avail of loans. So the insurance premium is viewed as an additiol cost to the loan taken; its purpose is to safeguard the bank in case the farmer defaults. When the farmer actually suffers a crop loss, his problems begin. The terms and conditions of crop-insurance schemes are such that it is virtually impossible for farmers to get their claims settled. They will first have to report their losses within 48 hours or they may receive no compensation at all. Then the loss will have to be assessed by the village official concerned, who is supposed to make a visual estimate by going to the field. But he rarely does so, rather he is more likely to demand a bribe. Then the state government will have to conduct field experiments, and the processed data will have to be forwarded to the insurance company. Then the claims are calculated and paid into the beneficiary’s account. Needless to say, it is a cumbrous and lengthy process which may require around seven months, by which time the agricultural season is over.
Even if the farmer filly gets the money — it is usually not when he needs it the most, it does not compensate fully the losses he suffered, and it is not worth the trouble he had to undergo. To add to all these shortcomings, crop insurance cover has been closed to tent farmers, who number much more than owner farmers. The reason is that tent farmers do not have papers to show for the land they farm, so they don’t qualify for bank loans and thereby insurance policies. If some of these weaknesses in crop insurance are removed, it will go some way to lighten the distress in the country’s farm sector. The recent launch of two crop insurance schemes ‘Pradhan Mantri Fasal Bima Yoja (PMFBY)’ and ‘Unified Package Insurance Scheme’ is therefore a step in the right direction. These will replace the existing two schemes ‘tiol Agricultural Insurance Scheme (IS)’ and ‘Modified tiol Agricultural Insurance Scheme (MIS)’. The Weather-based Crop Insurance Scheme rolled out in 12 states in 2013 will be continued though its premium rates will be ratiolized to be at par with PMFBY. Having allocated Rs 5,500 crore in the Union budget this year for crop insurance, Fince minister Arun Jaitley while launching the schemes termed these as ‘game changers’. To be pushed in mission mode from April 1 next on the start of the kharif season, the new schemes are offering ‘better coverage for lower premiums with the government picking up the tab’. There will be no upper limit on the government’s subsidy, so that even if the balance premium is 90 percent, it will be borne by the government.
Aiming to cover 50 percent of the farmers in the country, mostly those dependent on rain-fed agriculture, the schemes are coming with farmers’ premium fixed at 2 percent for kharif food-grains and oilseeds, 1.5 percent for rabi crops and 5 percent on commercial/horticultural crops. Farmers producing a tency certificate or any other document permitted by state government, can be covered under the schemes. In the event of crop failure or destruction, the farmers would be paid more; local-level calamities, inclement weather and post-harvest losses due to cyclonic and unseasol rains will be covered; there will be no capping of premium rates so as to ensure that farmers get a higher claim against the full sum insured. The Fince minister believes that since a large number of farmers are being sought to be covered, it would be possible for the new schemes ‘to cover much larger risks at a very low premium’. It remains to be seen though how far the Central government succeeds in mobilizing the entire banking, insurance and fincial sector to ensure that the new crop insurance schemes really get off the ground. The procedure for farmers settling insurance claims must be made easier and speedier, while delays must be pelized — both of which have been promised. The government has also mooted use of simple technologies like smart-phones, drones and remote sensing satellites for making quick estimates of crop losses. While this will help weed out corruption to some extent, accurate damage assessment on the ground is a must if the new schemes are to be workable.