<p>Make new entrants provide 40 per cent risk coverage to the farming sector on a household basis.<br /><br />Unseasonal rains and strong winds that lashed the entire north-western region have done immense damage to the standing crops. The Union Ministry of Agriculture has estimated damage to standing crops in 50 lakh hectares in Punjab, Haryana, Uttar Pradesh, Jammu & Kashmir, Himachal Pradesh, Madhya Pradesh, Rajasthan and Maharashtra. Coming after an extended season of dry monsoon, the freak weather has played havoc with farm fortunes.<br /><br />Reports of at least four farmers committing suicide, and one farmer who suffered an instant heart attack on seeing his flattened wheat crop, have come from Uttar Pradesh. In Punjab, Haryana and as far as Vidarbha in Maharashtra, the situation is no better. Especially coming at a time when the standing crops gave an impression that the rabi season would perhaps offset the losses suffered on account of a shortfall in monsoon rains in the kharif season. But that is why agriculture continues to be unpredictable and a highly risky proposition.<br /><br />Punjab Chief Minister Parkash Singh Badal has sought a relief of Rs 700 crore for the damaged crop in at least 7 lakh hectares.<br /><br />“Current amount does not even justify the money spent by a farmer on the seeds he sows per acre, let alone other input costs,” he wrote to the Minister of Agriculture.<br /><br />And that brings me to an issue that continues to be discussed for over three decades now, but for all practical purposes remains at the pilot stage. I am talking of the need for effective crop insurance scheme for farmers. Successive governments have failed to work out a crop insurance model for farmers, especially small and marginal farmers who cannot pay the monthly premium, to save them from the tyranny of a hostile weather. I have always wondered why the governments have failed over the years to implement a fool-proof system of insuring every acre of cultivable land.<br /><br />Weather-related insurance<br />As far as I know, there are a number of schemes introduced on crop insurance, including for weather-related crop insurance. But all these suffer from the basic fault – the insurance is done on an area basis where the average of a village or a taluk is what determines the losses suffered. If 10 acres of a village is lashed by hail and the crop is completely damaged, the farmer will still not be able to get adequately compensated for his loss. The reason is simple: the average of the village does not reflect the severe damage few farmers were inflicted with.<br /><br />This is the reason why Punjab has rejected the draft crop insurance scheme that the Ministry of Agriculture has come up with. The latest draft suggests an indemnity of 70 per cent for the sake of insurance compensation. Considering that the natural disasters do not operate on the basis of a village, and there are times when one portion of a village lands gets affected while the rest remains undamaged, the new insurance policy will be no different than what was existing all these years. Moreover, a premium of 10 per cent of the total crop value is too high. It needs to be replaced with a fixed premium on per acre basis.<br /><br />Evaluating loss<br />I have never understood why this cannot be corrected. At a time when technology is being used to determine and evaluate crop sowing and crop harvest, why can't the same technology be used for measuring the losses each farm household suffers? After all, if you are living in a city and your house catches fire, the insurance company is not going to determine the loss based on the average of the colony. It is always the individual loss that is insured for, and not an average of the colony or ward in a municipality.<br /><br />Insurance companies have been reluctant to do so for the simple reason that it is too much work. They don't want to add on to their operational costs. And knowing that farmers are unorganised and are nowhere on the economic radar screen of the country, they have so far managed to stay out. This is grossly unfair. If only the government had made it obligatory for the private insurance company to at least devote 40 per cent of their turnover to agriculture, ensuring that the policy is farmer-centric, many farmers who took to the suicide route could have survived.<br /><br />I have a suggestion. Since the Narendra Modi's government has opened up for 49 per cent FDI in insurance, why not make it mandatory for those companies entering the insurance sector in India to provide at least 40 per cent coverage to the farming sector on a household basis. Unless the government shows that it means business, no foreign company would be interested in going rural. But if they are keen to have a chunk of the Indian market, India should also know how to make them operate in a manner that it benefits the uncovered masses. That is what sovereignty is all about. </p>
<p>Make new entrants provide 40 per cent risk coverage to the farming sector on a household basis.<br /><br />Unseasonal rains and strong winds that lashed the entire north-western region have done immense damage to the standing crops. The Union Ministry of Agriculture has estimated damage to standing crops in 50 lakh hectares in Punjab, Haryana, Uttar Pradesh, Jammu & Kashmir, Himachal Pradesh, Madhya Pradesh, Rajasthan and Maharashtra. Coming after an extended season of dry monsoon, the freak weather has played havoc with farm fortunes.<br /><br />Reports of at least four farmers committing suicide, and one farmer who suffered an instant heart attack on seeing his flattened wheat crop, have come from Uttar Pradesh. In Punjab, Haryana and as far as Vidarbha in Maharashtra, the situation is no better. Especially coming at a time when the standing crops gave an impression that the rabi season would perhaps offset the losses suffered on account of a shortfall in monsoon rains in the kharif season. But that is why agriculture continues to be unpredictable and a highly risky proposition.<br /><br />Punjab Chief Minister Parkash Singh Badal has sought a relief of Rs 700 crore for the damaged crop in at least 7 lakh hectares.<br /><br />“Current amount does not even justify the money spent by a farmer on the seeds he sows per acre, let alone other input costs,” he wrote to the Minister of Agriculture.<br /><br />And that brings me to an issue that continues to be discussed for over three decades now, but for all practical purposes remains at the pilot stage. I am talking of the need for effective crop insurance scheme for farmers. Successive governments have failed to work out a crop insurance model for farmers, especially small and marginal farmers who cannot pay the monthly premium, to save them from the tyranny of a hostile weather. I have always wondered why the governments have failed over the years to implement a fool-proof system of insuring every acre of cultivable land.<br /><br />Weather-related insurance<br />As far as I know, there are a number of schemes introduced on crop insurance, including for weather-related crop insurance. But all these suffer from the basic fault – the insurance is done on an area basis where the average of a village or a taluk is what determines the losses suffered. If 10 acres of a village is lashed by hail and the crop is completely damaged, the farmer will still not be able to get adequately compensated for his loss. The reason is simple: the average of the village does not reflect the severe damage few farmers were inflicted with.<br /><br />This is the reason why Punjab has rejected the draft crop insurance scheme that the Ministry of Agriculture has come up with. The latest draft suggests an indemnity of 70 per cent for the sake of insurance compensation. Considering that the natural disasters do not operate on the basis of a village, and there are times when one portion of a village lands gets affected while the rest remains undamaged, the new insurance policy will be no different than what was existing all these years. Moreover, a premium of 10 per cent of the total crop value is too high. It needs to be replaced with a fixed premium on per acre basis.<br /><br />Evaluating loss<br />I have never understood why this cannot be corrected. At a time when technology is being used to determine and evaluate crop sowing and crop harvest, why can't the same technology be used for measuring the losses each farm household suffers? After all, if you are living in a city and your house catches fire, the insurance company is not going to determine the loss based on the average of the colony. It is always the individual loss that is insured for, and not an average of the colony or ward in a municipality.<br /><br />Insurance companies have been reluctant to do so for the simple reason that it is too much work. They don't want to add on to their operational costs. And knowing that farmers are unorganised and are nowhere on the economic radar screen of the country, they have so far managed to stay out. This is grossly unfair. If only the government had made it obligatory for the private insurance company to at least devote 40 per cent of their turnover to agriculture, ensuring that the policy is farmer-centric, many farmers who took to the suicide route could have survived.<br /><br />I have a suggestion. Since the Narendra Modi's government has opened up for 49 per cent FDI in insurance, why not make it mandatory for those companies entering the insurance sector in India to provide at least 40 per cent coverage to the farming sector on a household basis. Unless the government shows that it means business, no foreign company would be interested in going rural. But if they are keen to have a chunk of the Indian market, India should also know how to make them operate in a manner that it benefits the uncovered masses. That is what sovereignty is all about. </p>
