Note4students
Mains Paper 3: Agriculture | Issues related to direct & indirect farm subsidies & minimum support prices
From UPSC perspective, the following things are important:
Prelims level: PMFBY
Mains level: Ensuring better implementation of PMFBY through additional provisions.
News
Falling Enrollment in PMFBY
- Data from the agriculture ministry shows that enrolment (during the rain-fed kharif season) rose from 30.9 million farmers in 2015 to 40.3 million in 2016, an impressive 30% jump.
- However, the enrolment fell to 34.8 million in 2017 and further plunged to 33.3 million in kharif 2018.
What led this?
- Part of the decline was also because fewer farmers accessed fresh credit (due to a spate of farm loan waivers since mid-2017) since enrolment under crop insurance scheme is mandatory for farmers availing crop loans.
I. Insurance procedures
- To begin with, insurance companies are selling the product piggy backing on the banking infrastructure.
- For farmers availing crop loans, banks deduct the premium amount from the loan without even issuing a receipt.
- Farmers are never asked if they want insurance, and the product has became an easy way for banks to insure their loans.
- Further, in the event of any crop damage, farmers are at a loss as to whom to reach out to since most companies have not set up field offices to attend to customer complaints.
II. Assessment
- Delayed assessment of crop loss and settlement of claims took six to nine months to complete led to farmers losing interest.
- Assessment is often delayed due to a paucity of local staff.
- Lack of trained outsourced agencies, scope of corruption during implementation and the non-utilisation of technologies like smart phones and drones to improve reliability of such sampling are some of the reasons.
III. Issue of Premiums
- A reason why insurance companies charge high actuarial premiums is that cut-off dates for enrolment are frequently extended by states, often beyond the forecast and onset dates of the annual monsoon.
- The litmus test of any crop insurance programme is quick assessment of crop damages and payment of claims into farmers’ accounts directly.
IV. Inadequate and delayed claim payment
- Insurance companies, in many cases, did not investigate losses due to a localised calamity and, therefore, did not pay claims.
V. Massive profits for insurance companies
- CSE’s analysis indicates that during kharif 2016, companies made close to Rs 10,000 crore as ‘gross profits’.
VI. Coverage only for loanee farmers
- PMFBY remains a scheme for loanee farmers – farmers who take loans from banks are mandatorily required to take insurance.
- The percentage of non-loanee farmers availing insurance remained less than 5 per cent during kharif 2016 and 2015.
- Like previous crop insurance schemes, PMFBY fails to cover sharecropper and tenant farmers.
VII. Institutional Bottlenecks
- There has been no concerted effort by the state governments and insurance companies to build awareness of farmers on PMFBY.
- Insurance companies have failed to set-up infrastructure for proper implementation of PMFBY.
- There is still no direct linkage between insurance companies and farmers. Insured farmers receive no insurance policy document or receipt.
What needs to be done?
A New Delhi based non-profit Centre for Science and Environment has released series of recommendations to improve implementation of the insurance scheme:
- Coverage of tenant and sharecropper farmers should increase.
- Coverage of all important crops should be covered under crop insurance
- Instead of threshold yield, ‘Potential yield’ should be used for crops
- Damage caused by wild animals, fire, cold waves and frost to crops should also be considered at the individual level.
- Damage caused by unforeseen weather events like hailstorms should also be included in the category of post-harvest losses.
- Farmers must be informed before deducting crop insurance premium. They must be given a proper insurance policy document, with all relevant details.
- Panchayati Raj Institutions and farmers need to be involved at different stages of implementation.
- Sum insured should not be less than scale of finance and/or cost of production.
- Incorporating technology such as remote sensing, drones and online transmission of data.
- All PMFBY related data related to farmers must be available in the public domain and shared openly with farmers.
- Robust scheme monitoring and grievance redressal mechanism should be in place.
Way Forward
- In an era of climate change, a universal, subsidised agriculture insurance is crucial to safeguard the lives and livelihoods of farmers.
- But we need a farmer-friendly, fair and transparent agriculture insurance.
- An agriculture insurance driven by profit-motives will do more harm than good.
- Policymakers should improve the provisions and implementation of PMFBY and make it a truly effective scheme.
With inputs from: Down to Earth