Crop Insurance
Importance of Crop Insurance
- Prevention of Exploitation: in the hands of moneylenders.
- Coverage of risks: Such small savings have less impact on disposable income but a huge impact in reducing future risks.
- Reduce vulnerability to poverty: Old-age, a small accident or a disease has the potential to push the whole family into poverty. Social security reduces that vulnerability.
- Reduced out-of-pocket expenditure in case of loss.
- Security net.
- Allows investment in novel technologies.
- Financial inclusion – + other benefits
- Data collection.
- Improved credit off-take.
The existing two schemes had some inherent drawbacks:
- National Agricultural Insurance Scheme(NAIS)
- Modified NAIS
PMFBY:
PM Fasal Bima Yojana aims to reduce the premium rates to be paid by the farmers so as to enable more farmers to avail insurance cover against crop loss on account of natural calamities. It further aims to Increase the insurance coverage in India to 50% of the total crop area of 194.40 million hectares from about 25-27%.
- Expenditure: to be around ₹9,500Cr.
- However, till now only 6.11 Crore farmers insured till now under this scheme.
- Compulsory for loanee farmers.
Farmers’ premium under PMFBY:
- For food-grains &oilseeds: Uniform premium of
- 2% for all Kharif crops and
- 5% for all rabi crops.
- For annual commercial(+cotton) & horticultural crops, a premium of 5%.
- There will NOT be a cap on government Subsidy and reduction of the sum insured:
- The remaining share of the premium, as in previous schemes, will continue to be borne equally by the Centre and the respective state governments.
- Earlier, there was a provision for capping the premium rate which resulted in low claims being paid to farmers. It was done to limit government outgo on the premium subsidy.
Use of technology:
- Smart phones will be used to capture and upload data on crop cutting to reduce the delays in claim payments to farmers.
- Remote sensing will be used to reduce the number of crop-cutting experiments.
- It will also provide farm-level assessment for localised calamities including hailstorms, unseasonal rains, landslides and inundation. It was a long-standing demand of farmers.
Criticism of PMFBY:
- It is more profitable to the private crop insurers than the farmers. Reliance, ICICI, HDFC & IFFCO among others, have registered huge profits since the launch of the scheme.
- Andhra Pradesh, Bihar, West Bengal, Jharkhand, Gujarat and Telangana left the PMFBY from rabi season 2019-20 because:
- It stated that the scheme is not voluntary;
- The states are not given options to choose the risks covered;
- It is not universal;
- The cut-off date for enrolment is not flexible;
- The states do not have the option to use their own database of E-crop, as Andhra Pradesh uses an application to collect information about crops.
- Premium rates are high in areas such as Bihar which have high rates of claims.
- It is losing ground: More than 84 lakh farmers, which is around 15% of the total farmers insured in the first year of the Scheme in 2016-17, withdrew themselves from the scheme in 2017-18, a reply to an RTI application has revealed.
Revenue insurance scheme for Plantation crops(RISPC), 2016:
- It is an improved form of the Price Stabilization Fund (PSF) Scheme, 2003 which was closed in 2013.
- It was launched to protect growers of plantation crops from twin risks of yield loss due to pest attacks, adverse weather parameters and income loss caused by fall in domestic and international prices.
- It shall cover tea, coffee, rubber, cardamom and tobacco plantations and shall be implemented by the commodity boards.
It will be implemented on a pilot basis for two years i.e. till 2018 in eight districts in West Bengal, Kerala, Andhra Pradesh, Assam, Karnataka, Sikkim and Tamil Nadu. Based on the performance of the scheme in the pilot project, it will be considered for extension to other districts.
