Punjab farmers need a crop insurance cover

THE recent widespread and severe devastation caused by record-breaking floods in Punjab has once again accentuated the need for a comprehensive and sustainable crop insurance (CI) cover to adequately compensate for the damage caused to the poor peasantry, which has suffered multiple losses under challenging circumstances.

The kharif crops in about 4.3 lakh acres that were nearing the ripening stage have been badly affected. The farmers had already borne most of the input cost when the floods struck and there was no chance of sowing them again.

The Punjab government has announced an arbitrary compensation of Rs 20,000 per acre for those suffering more than 75 per cent loss. It is, however, yet to be clarified whether the limit of five acres is applicable, as was the case in 2023.

Every time, the announcement of such compensations is projected as a favour extended to the farmers; not as their right. That is so because they have no protection by way of insurance. The reduced margins of profit due to a massive increase in the cost of cultivation discourage farmers or farmers' organisations from independently opting for crop insurance. Thus, it is imperative that the government supports CI.

In a bid to primarily save themselves from financial liability, the successive state governments have neither implemented the flagship Pradhan Mantri Fasal Bima Yojana (PMFBY) 2016 nor formulated its own crop insurance scheme for the state. The PMFBY was rejected because it assesses risk after grouping of irrigated and rain-fed areas, which results in higher premium and is to the disadvantage of the predominantly irrigated cropping areas in Punjab. Also, the condition of incurring a minimum of 40 per cent loss for initiating a claim is considered a very high threshold level. Further, the sum insured is not based on the full value of the crop; the limited amount calculated thereafter turns out to be too meagre and unviable.

Taking a village as a unit for making assessment rather than an individual insured field has also not gone well with the stakeholders in Punjab. In addition, the high premium for commercial and horticultural crops was another reason for the unacceptability of the Central scheme.

The present Punjab government has failed to take any decision on the implementation of the Central or its own scheme. This despite clear recommendations by the Agricultural Policy Formulation Committee constituted in 2023 to the state to launch its own farmer friendly scheme by generating a dedicated CI fund to support it.

Under the PMFBY — which covers risk from natural disasters during the entire crop cycle — the farmers pay 2% of the premium for kharif, 1.5% for rabi and 5% for annual commercial and horticultural crops. The remaining premium is paid by the Central and state governments. Initially, it was made compulsory for all farmers availing themselves of loans. But the 2020 amendments made it optional, along with introducing flexibility in calculating the sum insured, defining a timeline for the release of the premium and mandating multi-year contracts with insurers. Even then, the scheme has not gained popularity among farmers.

In 2016, as many as 27 states and UTs had implemented the scheme. This number reduced to 21 in 2024-25. Thus, while 5.7 crore farmers were insured in 2016-2017, their number reduced to 4.19 crore in 2024-25. A similar shrinking trend was seen in area coverage under the scheme.

The disenchantment of the participating farmers stems from very low, frequently delayed or never-paid compensation, which is usually calculated by computing the claim on the cultivation cost, not the market rates.

Pending subsidies from states is the major reason cited by the Centre for this grotesque situation. The states that have opted out or those that make delayed contributions say that it is a huge financial burden on them due to high premium rates, which many times exceed one-fourth of the state's agriculture budget of the year.

The procedure of crop cutting experiments (CCEs) for assessing crop loss has been widely criticised for its inherent inaccuracies and unreliability. Even the operational guidelines mention that the "disputes on quality of yield data is a challenge in effective implementation of the scheme." It is untrustworthy as the CCE process is not digitised or geo-coded and is carried out without data and photographic evidences.

Studies have highlighted that the guidelines have not been observed in letter and spirit and malpractices happen at different levels. Huge numbers of CCEs are needed to be carried out within the limited harvesting time, requiring a large number of trained and dedicated working hands; their insufficiency breed malpractices and inefficiency.

The accuracy of loss assessment is crucial for the success of any CI scheme. For that, there is a need to upscale and introduce digital interventions and artificial intelligence technologies.

Integrating AI, GIS and satellite-based tools like YES-TECH (Yield Estimation System Based on Technology) and CROPIC (Collection of Real-Time Observations and Photo of Crops) can replace unreliable manual assessments, bringing transparency, precision and timely claim settlements.

The time-consuming manual management of CCEs should be replaced with AI techniques to collect data quickly for yield estimation. It would also solve the problem of shortage of human resources. Integration of AI would also leverage the existing technology, reducing reliance on manual processes and minimising errors and, ultimately, ensuring timely and transparent claim settlements to the farmers.

Some lessons emerge from the recent floods. The extremely inadequate support extended to the flood-hit farmers negates the state government's notion of why it should pay the subsidy premium for any CI scheme when it can manage the situation through disbursement of cash or some compensation as and when required. The floods present it with an opportunity to formulate a viable and attractive CI scheme. Punjab may set an example by making it premium-free for small and marginal farmers.

SS Chahal  is ex-VC, Maharana Pratap University of Agriculture and Technology, Udaipur.