Crop Insurance Scheme – Why We Need It?

“Jai Jawan, Jai Kisaan” – Lal Bahadur Shastri

These words are now a joke in modern India, especially for farmers hit by uncertainty.

Two prime risks that have continuously haunted modern agriculture in India for decades – uncomforting weather and steep rise in base prices due to inflation.

  1. While farmers do not get much out of the high pricing scheme since they are ripped off in the wholesale market, the weather makes them cry even more when sudden vagaries of nature hit them during crop cutting season or the ‘harvest period’.
  2. So many farmers lose their crops to droughts, flash floods, incessant rains and hailstorms that the number is shocking as well as staggering! Almost all of them need crop insurance, but currently in India only 20% of them are covered under this scheme.

Why Is Crop Insurance Still So Nascent In India?

  • Insurance is a timeless tool that helps to cover risks that can cause significant losses to a person’s property, no matter how frequently or infrequently they may occur.
  • Indians are top-notch skeptics when it comes to paying premiums or investing money in a place they are unsure of. Lack of proper education, especially to rural farmers is what is leading to an alarming rate of farmer deaths due to one reason – no crop insurance!
  • What the Indian government is failing to make them understand is that the cover that an insurance scheme provides them with is substantial to protect them from catastrophic losses, year after year.
  • Farming is also a type of business that comes with a risk which needs to be safeguarded; it can only be covered by insurance.
  • Most Indian farmers have this notion that such catastrophes will not harm them. Rarely do they notice that when it hits, it wipes out an entire State’s agricultural produce! It’s a psyche that is coming down from generations!
  • This mentality makes them forego insurance coverage. A similar pattern is also seen with life insurance, health insurance, and accidental insurance as well.

Why Is Crop Insurance Necessary?

Simply put, insurance protects you. While it may be true that most farmers are unable to pay even the lowest premium for an insurance policy of their choice, plans are being promulgated that can help bypass this error to make crop insurance mandatory.

  • Crop insurance has myriads of benefits. It helps farmers forego the tensions of everyday risks and uncertainty of output. Even if their field does not yield, insurance will reimburse them their losses.
  • In cases of natural catastrophes, immense safeguards are in place to prevent farmers from losing hope. The cover helps them manage financial losses with ease.

Almost 70% of Indians are dependent on agriculture; this is why crop insurance is currently the most important kind of insurance!

Some safeguards are being planned by insurance companies to induce State governments to pay a farmer’s premiums on a pro-rata basis to help them overcome poverty especially in times of a loss.

  • If crop insurance is not applied for, crop and livestock will dwindle, rates will go up and the country’s food security will go into shambles!
  • Not only will the country hit a dead spot with food shortages, the short-run plan will be marred by steep inflation rendering the lower-middle class and middle-class people clueless on how to earn their livelihood.
  • BPL families will be hit the worst! After all, most of their expenditure will be wasted on utilities. What will they be left to eat with?

Government Planning

The Indian Government has been oblivious to crop insurance for over a decade until an alarming rate of farmer suicides started being featured in the mass media.

Most farmers killed themselves due to two factors – wasted crop (a crop that was destroyed before it could be harvested) and indebtedness (owing rent to farmland owners and property honchos).

In many parts of Uttar Pradesh, Karnataka, Rajasthanand Maharashtra, farmer suicides are now a regular affair because of untimely rains, forest fires and hailstorms.

Even if newer and expensive technologies are being adopted to counter climatic change, they cannot protect an entire field full of food! Insurance cover is of prime importance since it helps manage input costs since they will be recovered with remunerative prices in case the harvest is successful. In case it is not, the cover will take care of losses.

  • The erstwhile UPA government failed to provide any substantial impetus to these schemes due to lack of incentive and being embroiled in scams.
  • The current Modi government is trying its best to be one step ahead of the UPA by trying to introduce a revolutionary market-based farmer income scheme that will be combined with a weather-based crop insurance cover.
  • These new schemes aim to replace the ad-hoc grants that are rewarded to the dead farmers’ kin on humanitarian grounds.
  • These schemes will not only reimburse families of people who gave their life for an occupation they loved, it will also prevent further farmer suicides by giving impetus to the agricultural industry by promoting a tension-free environment amongst each farmer’s minds.
  • Awareness creation is of prime importance at the village level since TV ads and print ads do not permeate the immensely rural households.
  • Also, these covers need to be attractively priced so that a substantial farmers can afford them and help their fellow-farmers understand the nitty-gritties of insurance.

Why Every Farmer Needs Crop Insurance Right Now!

  • Simply put, thanks to global warming, the vagaries of nature are hitting the country too frequently which has put the State governments in a mess since they are now unable to offer humanitarian protection to each and every farmer.
  • This is why you see those ‘sympathy reimbursement cheques’ turning out to be fake or bounced. States are asking for grants from the Center but the nasty politics simply puts a stop to the grants.
  • Since 70% of Indian farmers are engaged in rain-fed agriculture and farming, they need to save themselves from the wrath of delayed or sudden monsoons which are followed by drought.
  • The past five decades have seen more crop losses in India than the entire last century! Over population has also marred the farmers’ since they are simply unable to cope up with the demand especially when drought hits.
  • According to analytics by the satellites of the US National Aeronautics and Space Administration, north and central India are suffering from extreme drought each year – that is more than any other country in the world!
  • Market prices are uncontrolled since over 7 decades and the Centre or the States have failed to keep them in check. Intervention is needed and is needed now!
  • Farmers need to realise a simple thing first – what is more important? Giving up their lives or to act smart?

A Sad Farmer’s Point-Of-View

Farmer-centric issues are treated as a joke in India. Their woes are treated a vote bank and their profession is often considered as a social welfare program.

That is not the case at all! Any government can tackle these issues if it gives up its struggle of clinging to power. But sadly, the below lines speak the opposite:

Take the example of Telangana (the newly formed State of India), 250 farmers ended their lives in August-Nov 2014 within a span of four months!

  • On an average, at least two poor farmers committed suicide each day in the State during the Kharif season’s onset which normally takes place by the end of early November.
  • Why did they end their lives? A flash-flood due to incessant rains wiped out their paddy fields. They tried to salvage some crops but failed – everything had rotted and died till they could re-enter their fields.
  • The government’s response? The Telangana Rashtra Saimiti – TRS (ruling party of the State at that time) politburo did not take the situation seriously when the first 40 farmers had committed suicide. For them, it was ‘just 40’.
  • The ugly game of politics ensued and the opposition party, the Telugu Desam Party began the blame-game and blamed the TRS for not helping to waive of farmer loans as promised in their election manifesto.
  • In the end, nothing happened, most of the families grieving for their dead breadwinner of the family did not receive a substantial compensation from the government and were forced to work for other landlords – so much for agricultural independence!
  • TRS also ignored the provisions of GO number 421 (an Economic Support and Rehabilitation package) made in 2004 which stipulated that the drought\flood affected State is responsible for providing financial relief to the families of farmers who commit suicide. An ex-gratia of minimum Rs. 1 lakh is promised in the law plus there is a complete rehabilitation package for the grieving family of the dead farmer. Also, all expenditures that the family incurs will be fulfilled by the Chief Minister’s Relief Fund.

Sadly, more farmers lost their lives and the figure touched the 350 mark! That is the price farmers pay for not opting for crop insurance. They should learn by now that governments are a gimmick and voting for them does not prove worthwhile in times of need.

Every farmer has this simple question – If a rural job guarantee scheme can be introduced with trillions of rupees in the exchequer, why cannot universal crop insurance by provided to the most hardworking Indian farmer?

Crop insurance is essential and beneficial because political parties will always engage in dirty politics even if it means hogging the limelight over the death of a hapless farmer.

All that is needed to be done is to ensure that these traditional investment insurance products guarantee payments on time and that the rate of increase in the premium be kept to a bare minimum.

Also type of subsistence farmer must be given the protection of insurance free of cost – he\she simply cannot afford to pay any kind of premiums. Richer farmers who grow cash crops should pay market rates and their taxes should also be higher.

If that 20% crop insurance subscription figure reaches 90% in about 5 years that is when we can truly claim that farmers are economically independent in India – all thanks to crop insurance.