The Gist of Kurukshetra: November + December - 2015


The Gist of Kurukshetra: November + December 2015


Crop Insurance Schemes for Farmers Need for focused Attention

In the context of annual feature of drought and flood in one or the other parts of the country, cllmate change and sustainable food security agricultural insurance has been a sine qua non. Despite farmer’s access to yield-sustaining agricultural technology and institutional credit unpredictability in crop output stems from pestilence, price volatility in markets and natural disasters. In India, about 90 percent of the variation in production is caused by changes in rainfall patterns. Agricultural Insurance Company of India implements crop insurance scheme to protect farmers from agricultural variability, mainly weather-induced. The scheme based on ‘Area Approach’ is implemented in 25 states and two union territories. The scheme is offered to all farmers, loanee and non-loanee, irrespective of their size of holding.

National Crop Insurance Programme (NCIP): The NCIP launched in 2013 has unit area of insurance reduced to the village/village panchayat level. It helps farmers to compensate losses in crop yield, maintain credit flow and adopt latest agricultural technology.

It has three components.

(A) Modified National Agricultural Insurance Scheme (MNAIS).
(B) Weather Based Crop insurance Scheme (WBCIS).
(C) Coconut Palm Insurance Scheme (CPIS).

Modified National Agriculture Insurance Scheme:

Based on the recommendations of the Joint Group constituted in 2004, to suggest improvements in the existing crop insurance scheme, a pilot project on MNAIS was implemented in 50 districts from 2010-11 Rabi season.

The major improvements of MNAIS over NAIS include:-

  • Reduction in unit area of Insurance to village/village panchayat.
  • Charging actuarial premium rates for insuring crops.
  • Involving private insurance companies.
  • Increasing subsidy in premium up to 75 percent.
  • More realistic calculation of threshold yield (average yield of last 7 years excluding up to two years of declared natural calamity).
  • Minimum indemnity level of 70 percent instead of 60 percent in NAIS.
  • Payment up to 25 percent of likely claims in advance to provide immediate relief to farmers during adverse season.
  • Individual assessment of claims in case of specified localized calamity like the hailstorm or landslide.
  • Uniform norms for both loanee and non loanee farmers.

It covers three types of crops.

(A) Food crops which include cereals, millets and pulses.
(B) Oilseeds
(C) Annual Commercial/ Horticultural crops. The state government notifies specified crops for which data on yield are available for adequate number of years.

Broadly, the scheme covers three stages of crop production. They are as follows:-

[A] Stage 1: Planting or sowing. Whether the crop was prevented from planting/sowing due to deficit rainfalls and adverse seasonal conditions.
[B] Stage 2: Covering standing crops which got damaged due to unoreventable risks such as drought, flood, infestation of pests, landslides, wildfire, storms, cyclones etc.
[C] Stage 3: The time period of two weeks after harvesting, when the crops are allowed to dry in field but get damaged/ destroyed because of cyclonic rains, hailstorms etc.

Premium is calculated on actuarial basis implying that there is higher premium for riskier crops. When a farmer pays actuarial premium to insure crops, the entire liability of claim is on insurer. Insurance companies have to define the premium rates for notified crops in accordance with the prescribed standard actuarial methodology of the IRDA. Government has, however, put a cap on maximum premium to be collected, viz. [a] 11 percent for Kharif sea-son [b] 9 per cent for Rabi food crops [c] 13 percent for annual commercial crops and horticultural crops.

The subsidy is as follows:

  • If premium is less than 2 per cent of sum assured - No subsidy provided
  • If Premium is between 2-5 percent, subsidy provided is 40 per cent
  • If premium is between 5-10 percent, subsidy provided is 50 per cent
  • If premium is between 10-15 percent, subsidy provided is 60 percent
  • If premium is above 15 per cent, subsidy provided is 75 percent

Weather Based Crop Insurance Scheme: For bringing more farmers under crop insurance and overcoming the shortcomings, particularly claim- amount and delaying settlement of claims under NAIS, a pilot project on WBCIS was implemented in 20 States in 2007-08 and now it is implemented as full-fledged component of NCIP from Rabi 2013-14 season. WBCIS intends to provide insurance protection to the farmers against adverse weather incidence, such as deficient/excess rainfall, high or low temperature, humidity etc., which can impact crop production. WBCIS envisages charging actuarial rates of premium.

Often weather conditions vary within a taluka/ sub-district making it difficult to assess insurance claims and estimate crop yields. Taking the public- private-partnerships funding model to help farmers. Maharashtra government has proposed a network of 2025 automatic weather stations in the state. Each weather station would record, weather parameters like air temperature, relative humidity wind speed and direction, rainfall and solar radiation etc. Analysis of weather data would help settle insurance claims, advice farmers on crop patterns, develop pest and disease forewarning models and rainfall forecast. Andhra Pradesh and Tamil Nadu have established state-wide weather stations to assist farmers and settle insurance claims. Malawi has demonstrated successful experiment on weather-based crop insurance.

Coconut Palm Insurance Scheme: There is a separate insurance scheme for coconut palm growers because of reasons viz. coconut is cultivated under rain-fed conditions and is susceptible to biotic and abiotic stresses. Although it is a perennial crop its cultivation is subjected to risks because of climatic changes. natural disasters, pests and diseases etc. Palm trees are characterized by periodic system of crop setting and outcomes and hence resemble seasonal annual crops. CPIS which was implemented as pilot project from 2009-10, in the selected areas of Andhra Pradesh, Goa, Karnataka, Kerala, Maharashtra, Odisha, Tamil Nadu and West Bengalis is now Implemented by the Coconut Development Board [COB] as a full-fledged scheme in all coconut growing states.

Despite of the launch of various crop insurance schemes, it seems very limited purpose has been served. The coverage in terms of area, number of farmers and value of agricultural output is very small, payment of indemnity based on area approach miss affected farmers outside the compensated area, and schemes are not financially sustainable. Some micro-finance institutes [MFI] offer micro-insurance to protect life, health and assets of low-income households in urban areas, but not in rural areas. Though micro-insurance has the potential to lift poor out of poverty and improve quality of human life it has yet to make a determined penetration in rural areas on the expected scale on par with microcredit.

Following are the aspects that need focused attention.

  • There should be concern and commitment to ensure that the scheme penetrates widely and covers large number of farmers. A massive campaign is necessary to create awareness among farmers, convince them about the utility of the schemes and the procedure for settlement of claims. A road map should be prepared to ensure that progressively all farmers are covered in a period of five years.
  • Insurance products must be farmer-friendly and they need to be designed in consultation with them taking account of the current experiences. Research studies need to be intensified to understand as to why the schemes have not been reaching to the intended beneficiaries despite subsidizing them.
  • Farmers should be encouraged to share their experiences among them.
  • Public and private companies must devote more resources [money, manpower and time] to design the insurance products best suited to farmers according to the distinct agro-ecological regions rather than one-size-fits -all.
  • India can share its experiences and learn from several other developing and developed countries to improve the agricultural insurance products and marketing techniques among farmers.

Pradhan Mantri Krishi Sinchayee Yojana (PMKSY)

The Cabinet Committee on Economic Affairs (CCEA), chaired by the Prime Minister Shri Narendra Modi, has given its approval to a new scheme the “Pradhan Mantri Krishi Sinchayee Yojana” (PMKSY). It will have an outlay of Rs. 50,000 crore over a period of five years(2015-16 to 2019-20). The allocation for the current financial year is Rs. 5300 crore. The major objective of the PMKSY is to achieve convergence of investments in irrigation at the held level, expand cultivable area under assured irrigation (Har Khet ko pani), improve on-farm water use efficiency to reduce wastage of water, enhance the adoption of precision-irrigation and other water saving technologies (More crop per drop), enhance recharge of aquifers and introduce sustainable water conservation practices by exploring the feasibility of reusing treated municipal based water for peri-urban agriculture and attract greater private investment in precision irrigation system. The, programme architecture of PMKSY aims at a ‘decentralized State level planning and execution’ structure, in order to allow States to draw up a District Irrigation Plan (DIP) and a State Irrigation Plan (SIP). DIP will have holistic developmental perspective of the district outlining medium to long term developmental plans integrating three components namely, water sources, distribution network and water use· application of the district to be prepared at two levels - the block and the district. All structures created under the schemes will be geotagged.

In the last one year, the Government of India has taken several farmer friendly initiatives. These, amongst other things, include the following:

  • A new scheme has been introduced to issue a Soil Health Card to every farmer. Soil Health Management in the country is being promoted through setting up of soil and fertilizer testing laboratories. 34 lakh soil samples has been collected and analysis is continuing.
  • A new scheme for promoting organic farming “Pramparagat Krishi Vikas Yojana” has been launched to promote organic farming.
  • A dedicated kisan channel has been started by Doordarshan to address various issues concerning farmers.
  • Government is also encouraging formation of Farmer Producer organizations.
  • Assistance to farmers, as input subsidy, has been increased by 50 percent in case of natural calamities.
  • Norms have been relaxed to provide assistance from previous norm of crop loss of more than 50 percent to 33 percent to farmers afflicted by natural calamities.
  • Minimum Support Price (MSP) for various kharif crops has been increased Bonus of Rs. 200 per quintal has been announced for pulses. Area coverage under pulses has increased over the last year.

Taking it further, today the Cabinet Committee on Economic Affairs, chaired by the Prime Minister has given its approval to two new schemes in agriculture sector. These are the PMKSY and Promotion of National Agriculture Market.

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