For more than a decade now, while India has been shining in urban areas, the rural part of the country has been blighted with tales of penury, overnight misfortunes and failed crops leading to untimely deaths of farmers who could not carry the burden of loss, debt and a dark future on their shoulders. While the government has launched a plethora of schemes to benefit the farmers, crop insurance is one aspect which is yet to attain full momentum in rural India.
In India, agriculture is highly impacted by the perils of climate change and natural phenomena like droughts, weak or robust monsoon and also floods. Reports suggest that low penetration of insurance in the agriculture sector –one in every five hectares- is an added problem alongwith the fact that high premium rates and low sum assured have made things difficult for farmers. With the rise of farmers suicides in the last decade and a truant monsoon year after year, the farming community in India needs to be insured so that their families and their future is no longer controlled by either fragmented or inadequate infrastructure or natural disasters.
So how does crop insurance work? Firstly to make a claim a farmer has to furnish the land record and photo id proof to file for a crop insurance policy. A premium is calculated based on several factors like location, yield data, type of crop being insured, historical data of yield, calamity years in the specified area and the indemnity level of yield crop. Crop insurance essentially covers any shortfall in the crop yield which may be caused by natural phenomena. This includes pests, crop diseases, fire, floods, drought, dry spell, landslide, cyclone, hailstorm, tornado, hurricane among others.
In fact, if there is any kind of loss owing to factors like prevented sowing or any PLA planting risk because of rain deficit or adverse seasonal conditions. This type of policy also covers varied post harvest losses.
In the past, the government has launched many crop insurance schemes. Earlier the Conprehnesive Insurance Scheme was a voluntary one where the actual yield in any areas covered by the scheme fell short of the guaranteed yield, the farmers were entitled to an indemnity on compensation to the extent of the shortfall in yield. But this scheme was removed in 1997 after Gujarat staked a major portion of the total claim amount. This scheme was followed by an experimental crop insurance schemein 1997-98, which gave cover to non-loanee small farmers and marginal farmers growing certain specific crops in earmarked districts. But this too was scrapped.
The third scheme, Farm Income Insurance Scheme (FIIS) was launched during the period 2003-04.FIIS targeted yield and price of crops via a single insurance policy so that the insured farmer could get a guaranteed income.
The other scheme launched by the government National Agriculture Insurance Scheme covers food crops (cereals and pulses), oilseeds, horticultural and commercial crops and also covers all farmers, both loanees and non-loanees. A subsidy of 50% of the premium charged is given to such small and marginal farmers - the subsidy is shared equally between the Government of India and individual state governments. The subsidy is supposed to be phased out over a period of 5 years.
The latest scheme from the government is the Pradhan Mantri Fasal Bima Yojana, which is expected to be a big boost for farmers. Here, the government has simplified many things and also reduced the premium payable by farmers. According to the Yojana the premium ranges from 2% to 5% for crops. The gap between the actuarial premiums and the rates payable by farmers would be fully met by the government. According to reports, the government subsidy is also not subject to an upward limit.
As a part of its commitment to ensure that the consumers and stakeholders get the best possible exposure to the products in the insurance sector, Insuringindia.com is fully committed to reach out to this vast rural majority and touch lives. At insuringindia.com we have a panel of experts who are exclusively available to address issues and concerns on all insurance products in the market. For us, crop insurance is as important as any other sought after insurance like health or life insurance. It is our endeavour and prime goal that our consumers make an informed choice based on all the information we provide.