"(Indian Express) New crop insurance scheme is welcome. Its litmus test: Whether crop damage assessment can be done within two weeks of the extreme weather event and compensation paid a week after that.
• With back-to-back droughts, and unseasonal rain and hail in certain pockets, it became clear that the risks in farming are on the rise, and the existing system of crop insurance was nowhere near meeting the needs of the peasantry.
• The sums insured were low (based on the cost of inputs rather than prospective income), the premiums high (generally ranging between 8-12 per cent in the case of the modified scheme), the assessment of crop damage lacked transparency and didn’t use the latest technologies (this was more a political exercise than scientific assessment) and, finally, compensation took unduly long, even going beyond a year in many cases, and was reported to be ridden with corrupt practices.
• Given this backdrop, the new scheme is surely a step in the right direction and very timely — not only could it save Indian agriculture from the increasing risks of nature, it could help protect the political goodwill of the NDA government, which has been fast dissipating in rural areas.
• While actuarially based premiums generally hover around 10-12 per cent for most kharif crops, the share of farmers has been capped at 2 per cent in the new scheme.
• For rabi crops, the farmer’s share has been fixed at 1.5 per cent — against actuarially based premiums of 8-10 per cent.
• For year-long cash crops and horticulture crops, this has been capped at 5 per cent. What this means is that farmers will get almost 80 per cent subsidy in insurance premiums, which will be borne by the government — presumably by the Centre and the state government, although there is lack of clarity on the proportion that will be shouldered by each.
• The new scheme is estimated to cost the government around Rs 8,000-9,000 crore annually. Given that the government is already shelling out around Rs 5,000 crore annually (average for the last five years) through its clumsy mechanism for disaster relief, the additional cost of the scheme isn’t much. Nevertheless, the scheme could be the harbinger of change, provided that two conditions are satisfied.
• First, crop assessment should be done in a transparent manner and within a specified period of time, and using high technology such as automatic weather stations (AWSs), drones, low earth orbits (Leos) and satellites.
• Second, compensation must be paid to farmers’ accounts directly, within a week of assessment of crop damage.
• To ensure that this idea is not buried under bureaucratic wrangling of various stakeholders, the prime minister’s office must focus on and persevere with the creation of this basic infrastructure. This task must be accorded the same priority as was given to the opening of Jan Dhan accounts. This exercise will involve the ministries of rural development (to clean up land records), agriculture and farmers’ welfare (to digitise plot-wise information), as well as banks (to seed accounts of tillers with their Aadhaar and mobile numbers).
• The bottomline is that crop-damage assessment must be done within, at most, two weeks of the extreme weather event, and compensation to farmers deposited directly into their accounts within a week of the assessment — without their asking or even realising it.
• Nevertheless, at this stage, the government deserves compliments from farmers and farm analysts for focusing on the problems of rising risk in agriculture.
OTHER PRACTICE QUESTIONS