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Crop insurance 2.0: More of the same old wine

Charu Kartikeya | Updated on: 14 February 2017, 5:26 IST

The scheme

  • The Centre last week revised the crop insurance scheme for farmers
  • The govt thinks the new scheme is path-breaking
  • But analysts have found several holes in the revised scheme

More in the story

  • A comparison of the new scheme and existing provisions
  • The gaps analysts have found
  • Why crop insurance is not enough?

Nearly a year after suffering sweeping backlash due to protests over its amendments to the land acquisition law, the NDA government is attempting to win back the hearts of the farming community.

The Union Cabinet approved a new crop insurance scheme on January 13.

According to the government, the 'Pradhan Mantri Fasal Bima Yojana' is "a path-breaking scheme for farmers' welfare". But is it really so?

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So far, the government has announced only broad features of the scheme, which will be implemented in the Kharif season, beginning April.

The biggest worry for India's farmers remain the lack of proper pricing. However, crop damage and faulty insurance schemes have also been a concern. The new scheme proposes small steps to correct that.

Here's how this new crop insurance scheme tries to better the existing one:

charu farmers table
Sounds good?

The National Commission on Farmers (NCF), also known as the Swaminathan Commission, had recommended in 2006 that crop insurance should be expanded to cover the entire country and all crops with reduced premiums. Obviously, the recommendation is yet to be accepted.

It had also recommended considering the village as the unit for assessment of crop damage and not the block. That check-box has also not been ticked.

Agrarian crisis is like an octopus; fighting it needs a multi-pronged strategy

Analysts have welcomed the intention behind the scheme, but with several red flags.

The success of the scheme will be measured by the number of farmers voluntarily opting for it, said Ajay Vir Jakhar, chairman of Bharat Krishak Samaj. While it was a good step, details are awaited, he pointed out on Twitter.

Few new solutions

Like NCF, economist Amir Ullah Khan also thinks that crop insurance has failed by relying on group failure - crop damage at the block level.

What happens now is that a farmer becomes eligible for insurance claim only if a crop fails for the whole area (gram panchayat/mandal/hobli/circle/phirka/block/taluka) in which he lives. This problem has not been addressed in the new scheme.

Khan also pointed out that the scheme talks about direct transfer of funds into the bank accounts of the farmers. But less than 20% of the country's farmers have bank accounts.

Also read- On their watch: the state & scientists are to blame for Punjab's farm crisis

"How long will we treat the same problem with the same solution?" an unimpressed Khan asked. The only new thing in the scheme was subsidisation of premium but plenty of problems persisted, he said.

His biggest problem with the scheme was that while the government claimed this was a big gift for farmers, on the ground the farmers suffer more from price fluctuations than crop failure. Nothing has been done to tackle that problem.

Will only insurance firms gain?

Agricultural analyst Devinder Sharma said while the intent behind this scheme was good, several challenges remain. To begin with, the differentiation in premium rates for Rabi and Kharif crops should have been done away with and a flat 1.5% rate for all crops should have been announced.

According to Sharma, a bigger question left unanswered was how to assess crop loss. "The block-level assessment principle is faulty", he said, wondering why was the government reluctant to force companies to go for individual assessment?

Also, though the use of technology was good, a photo taken with a mobile phone wasn't enough to assess the extent of crop damage, Sharma said. "Even drones can not. It has to be measured physically."

'The existing system, where the revenue official assesses the damage, has become irrelevant'

Further, Sharma noted, if a farmer is a loanee, premium is automatically deducted from his account while there is no guarantee when will he receive the compensation. In most cases, the insurance company pockets 90% profit and this is only likely to increase.

In the United States, firms selling agri-insurance make $1.5 on every dollar in premium. Are we too heading towards such a scenario where insurance firms will make good money while farmers will continue to struggle, Sharma asked.

Risk prevention more important

GV Ramanjaneyulu, executive director of Secunderabad-based Centre for Sustainable Agriculture, agreed that bringing down the premium burden on farmers and attempting to bring down the delay in receipt of compensation were good steps. However, he noted several lacunae as well.

First, farm insurance has not been made universal: all crops and all areas have not been brought under the scheme's purview.

Read more- Drought, death & destroyed crops: just how much more can Marathwada take

Second, no step has been taken to ensure that the actual farmers are identified, especially a tenant farmer. Tenancy is not documented and therefore there is no written mechanism to identify a tenant farmer. "How will such a farmer claim compensation?" he asked.

Ramanjaneyulu also noted that risky cropping patterns are being promoted these days: a classic example of which is cotton farming in water-scarce areas such as Maharashtra. With such clear risks, no amount of insurance schemes will be able to help farmers until risk reduction and risk prevention is made the priority.

Damage assessment still challenging

He also subscribe to the view that the village, not the block, should be the unit of assessment for crop damage.

Bharatiya Kisan Sangh, the farmers' body of Rahstriya Swayamsevak Sangh and Bharatiya Janata Party's ideological cousin, welcomed the lowering of the premium and the passing of a share of the burden onto the insurance company. The outfit did have some grievances though, which it presented diplomatically.

General Secretary Prabhakar Kelkar told Catch that despite the use of technology, assessment of crop loss would still be a challenging task - that's where most of the corruption was. "The existing system, where the patwari (revenue official) assesses the damage, has become irrelevant and we have been demanding that the assessment be done in the presence of panchayat members or respected elders of a village," he said.

'How will tenant farmers claim compensation? Tenancy is not documented'

"We have also been demanding that a helpline be established and its number be well-publicised. Farmers would call for guidance regarding crop loss and compensation."

Kelkar also supported the need for the universalisation of crop insurance, saying "ek fasal, ek khet, ek vyakti" (One crop, one field, one individual) is an old slogan of theirs. "After all, its called crop insurance and not field insurance."

Kelkar too agreed that less than 35-40% farmers have access to banking services and more will have to be connected to banks quickly. He also admitted that the biggest problem for farmers was getting a price comfortably above the input cost.

Problems remain

Agrarian crisis is an octopus with many tentacles. Fighting it needs a multi-pronged strategy and in that respect, this new scheme is welcome.

But its arrival and the accompanying pomp and show also make one fear that the government is attempting an eyewash.

Having admitted before the Supreme Court that it can not provide 50% profit over the cost of production to farmers, as promised in the BJP's manifesto, is Modi sarkar taking the farmers for a ride?

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First published: 18 January 2016, 6:23 IST
Charu Kartikeya @CharuKeya

Assistant Editor at Catch, Charu enjoys covering politics and uncovering politicians. Of nine years in journalism, he spent six happily covering Parliament and parliamentarians at Lok Sabha TV and the other three as news anchor at Doordarshan News. A Royal Enfield enthusiast, he dreams of having enough time to roar away towards Ladakh, but for the moment the only miles he's covering are the 20-km stretch between home and work.