Crop insurance, a boon for farmers

The new crop insurance scheme, called Pradhan Mantri Fazal Bima Yojna, has some advantages which earlier insurance schemes did not have. Though insurance is vital for farmers in a country where agriculture is prone to many risks arising from adverse weather and other factors, it has not gained much currency and acceptance. The reasons are many. Many plans did not address the specific conditions which vary from place to place. Premiums were high. Farmers were not aware of insurance schemes. Implementation was poor. Assessments of claims were faulty. It was difficult to receive compensation and the procedure was bureaucratic and even marked by corruption. The new plan is designed to address these problems. It merges all existing farm-related insurance schemes and gives cover for most risks related to production. It covers all crops, though only small and marginal farmers are covered in the initial phase. If implemented well, it can reduce the lack of security and safety connected with agriculture.

The new plan is cheaper than the old insurance schemes. The premium to be paid by farmers is restricted to 2 per cent for kharif crops and 1.5 per cent for rabi crops. The Centre and the states will equally share the estimated expenditure. There is coverage of localised risk and post-harvest loss. The mandatory use of technology might help in
better and more efficient data collection and faster claim settlement. Drones, using remote sensing equipment and mobile phones, are to be used for crop assessment, and this can ensure assessment of individual farms and not just localities, as is being done now. This can also reduce frauds and lead to faster settlement of claims. Quick settlement is important because most farmers are unable to invest in the next crop if one crop fails.

Out of over 26 crore individual farmers in the country, just over 20 per cent have availed some kind of insurance. The main challenge is to extend the cover to all or most farmers. This calls for effective and wide dissemination of the message of insurance, simplifying the procedures and building trust among the farmers through best practices. The scheme is also expected to encourage farmers to diversify into crops other than paddy and wheat which are preferred because they are considered safe. But there is a view that the scheme is more useful for farmers in states usually affected by drought or floods than those in the main agricultural states of Punjab and Haryana. This needs to be looked into. Removing or minimising the risk from agriculture is a priority social and economic need for rural India.