Why crop insurance needs to be better designed
1 min read . Updated: 10 Jul 2019, 12:31 PM ISTEven with the launch of the Pradhan Mantri Fasal Bima Yojana, India’s small and marginal farmers lack access to crop insurance finds new study
Mumbai: Crop failure is a common story for farmers across India. And the government tries to help farmers mitigate against this risk through crop insurance, New research though suggests that these crop insurance schemes may not be that effective.
In the study, published in the Economic and Political Weekly, Meenakshi Rajeev and Pranav Nagendran assess India’s crop insurance schemes by analyzing data from the 2012-13 Situation Assessment Survey and examining the performance of the Pradhan Mantri Fasal Bima Yojana (PMFBY) introduced in 2016.
They show that, between 1985 and 2012-13, the reach of India’s crop insurance schemes has been modest. Only 7% of farm households were insured for one crop in 2012-13, a mere rise of 3% from 2002-03. Much of the failure lies in the design of these schemes which leave out the most vulnerable, small and marginal farmers affected the most by crop losses. Over 66% of the farm households were not aware of the crop insurance scheme and 21% were not happy with the terms and conditions of these schemes.
According to the authors, the PMFBY has made some progress in addressing these issues by reducing insurance premiums and expanding the insurance coverage to include more crops and risk factors faced by cultivators. In 2016-17, coverage in terms of cultivated land increased to 29% from 23% in 2013-14. However, the scheme remains behind its own target of 50% coverage and, in 2017-18, coverage even dipped to 26%. Globally, India is a major laggard. In China, 69% of gross cropped area is insured while in the United States, the share is 89%. One of the major bottlenecks in accessing PMFBY is that farmers lack documents and land records to avail insurance. In addition, compensations are often delayed, inadequate and even denied. All of this results in farmers facing a dire lack of funds to start their next cycle of cultivation. As droughts and extreme weather conditions become more frequent with climate change, these concerns need to be addressed.
Also read: Crop Insurance in India: Where Do We Stand?
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