Another dressedup Central scheme
An assessment of the Modi government’s modified crop insurance scheme suggests that more than farmers it is the insurance companies that have benefited because of a huge increase in gross premiums and a significant fall in claims paid.
AMONG the pro-farmer policies that the National Democratic Alliance (NDA) government claims to have initiated, the one that is often flagged is the modified crop insurance scheme titled Pradhan Mantri Fasal Bima Yojana (PMFBY). Effective as of kharif season 2016, this scheme is supplemented with the Restructured Weather Based Crop Insurance Scheme (RWBCIS). In the former, crop loss is computed by comparing actual yield in a season, calculated on the basis of crop cutting experiments by State government agencies, with an indicator of expected or “threshold” yield, while in the latter it is computed using leading weather indicators. Together, the schemes promise enhanced and more reliable crop insurance for a much larger number of farmers, significantly higher coverage in terms of acreage and with no cap on the value insured.
If farmers in an agricultural sector that is still monsoon-dependent are insured against a collapse in yield for reasons varying from inadequate moisture to a pest attack, their earnings are partially insured. If, in addition, they are guaranteed remunerative prices for their produce through a scheme that offers to procure surplus output at reasonable minimum support prices (MSPS), their earnings are likely to stabilise at acceptable levels. That was what the government promised to do when it was forced to announce that as of kharif 2018 the MSP would be set at 1.5 times the sum of paid-out costs and the imputed value of family labour used. However, doubts have been expressed whether the government is serious about backing its MSP promise with adequate allocations and a strengthened procurement mechanism. Although it is early days as yet, there is reason to be sceptical about the promise to insure farmers against yield decline as well.
Under the PMFBY, farmers are required to contribute only 2 per cent of the total premium in the case of kharif crops, 1.5 per cent in the case of rabi crops and 5 per cent in the case of horticulture crops. The Centre and States share the remaining premium burden equally. Unlike in the past when there was a cap on premiums resulting in the downscaling of insured values, there is now no cap. The unit for the cover is the village/village panchayat for major crops and the individual farm for losses due to hailstorms, landslides and inundation and post-harvest losses, which facilitates a more realistic assessment of loss. This scheme came with the promise of increasing coverage to farmers cultivating 40 per cent of gross cropped area in 2017-18 and 50 per cent in 2018-19. In addition, by adopting better