Crop insurance

Smooth crop procurement is considered a measure of the administrative prowess of the party in power in Punjab. This year, the unseasonal March-end rainfall before the rabi harvest has resulted in a flurry of activity in government corridors. Enhanced compensation, fast-track crop loss assessment and early payment have been announced. Farmer unions have sought a better deal. A relaxation in the quality specifications is among the key demands. Chief Minister Bhagwant Mann has spoken of introducing crop insurance, alleging that the Centre’s scheme remains confined to paper. Low adoption of this risk-coping policy instrument is a reality throughout the country despite decades of sustained efforts. The response continues to be lacklustre. Lack of awareness and interest are cited as the primary reasons. According to the National Sample Survey Office, in 2019, roughly 10 per cent of all farmers had crop insurance.

Beset with issues of lack of transparency and non-payment or delayed payment of claims, crop insurance was given a fresh lease of life under the Pradhan Mantri Fasal Bima Yojana from kharif 2016. The aim was to expand its coverage of farmers and farm areas. The implementation challenges are manifold, including the methods used for determining crop loss and the absence of advanced technology. Gujarat has joined the list of states that have opted out, citing financial constraints. Some have rolled out their own versions. Punjab, too, had earlier opposed the scheme. Since a vast majority of the farmers are small and marginal, the high premium and trust deficit hinder insurance penetration. Low financial literacy has pushed back expansion plans.

Climatic shocks are expected to increase in frequency and severity, underlining the need for timely weather alerts. One sector directly affected is agriculture. Crop insurance can be an antidote to the inherent risks, but suffers from asymmetries that require government intervention to achieve scale and sustainability. Some tweaks have been carried out, but the task to simplify the scheme must continue so that the crop insurance hesitancy and structural friction are removed.

Join Whatsapp Channel of The Tribune for latest updates.