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.

FrontLine - - HERITAGE -

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

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