Active Stocks
Tue Mar 19 2024 14:51:11
  1. Tata Consultancy Services share price
  2. 3,984.95 -3.86%
  1. Tata Steel share price
  2. 149.50 -0.07%
  1. Bharti Airtel share price
  2. 1,231.40 0.52%
  1. Power Grid Corporation Of India share price
  2. 260.20 -1.81%
  1. ITC share price
  2. 409.95 -1.78%
Business News/ Industry / Agriculture/  States pitch in heavily for Narendra Modi’s crop insurance scheme
BackBack

States pitch in heavily for Narendra Modi’s crop insurance scheme

Ten drought-hit states alone allocate Rs6,717 crore for the Pradhan Mantri Fasal Bima Yojana, shows an analysis of state budgets

An analysis of state budgets presented in March shows a significant rise in funding for crop insurance schemes, following a push from the Centre. Photo: MintPremium
An analysis of state budgets presented in March shows a significant rise in funding for crop insurance schemes, following a push from the Centre. Photo: Mint

New Delhi: After two back-to-back droughts and spells of unseasonal rains which damaged crops across the country, state governments have woken up to the importance of de-risking agriculture. An analysis of state budgets presented in March shows a significant rise in funding for crop insurance schemes, following a push from the Centre.

A major boost to crop insurance came via the Union budget, which nearly doubled funding from 2,995 crore in 2015-16 (revised estimates) to 5,501 crore in 2016-17.

The revamped Pradhan Mantri Fasal Bima Yojana (PMFBY), which comes into effect from April, forms the centrepiece of the Narendra Modi-led National Democratic Alliance (NDA) government’s efforts to address the array of risks associated with farming in a country where the June-September monsoon accounts for 80% of annual rainfall and irrigates half the farmland.

Launched in February by the prime minister, the scheme lowered premiums to be paid by farmers, covered crop losses fully and promised faster payouts by harnessing drones for assessment of crop damage. Also, farmers could file a claim if they were unable to sow their crop or the crop suffered damage, say, by freak rains after harvesting.

Expenses for the scheme are to be shared equally between the centre and states and following the centre’s emphasis on PMFBY, states too have pitched in heavily.

Just the 10 states which declared a drought last year have together budgeted 6,717 crore for crop insurance in 2016-17, surpassing the centre’s allocation for the year. Drought-hit Maharashtra leads the pack with a budget of 1,855 crore (see first 10 states listed in the accompanying table).

Further, the amount budgeted by these 10 drought-hit states—Andhra Pradesh, Telangana, Madhya Pradesh, Chhattisgarh, Rajasthan, Maharashtra, Karnataka, Uttar Pradesh, Odisha and Jharkhand—is 82% higher than what they spent during the previous year (2015-16).

The state budgets also show that all drought-hit states, except those that were already spending significantly towards crop insurance like Madhya Pradesh and Gujarat, have increased funding manifold.

While Maharashtra more than doubled funds for PMFBY—from 725 crore in 2015-16 (revised estimates) to 1,855 crore in 2016-17—Karnataka and Odisha increased allocations more than six-fold and ten-fold, respectively.

Even Haryana, where 90% of the crop area is irrigated, has allocated 300 crore in its budget for 2016-17, a first for the state which budgeted a paltry 8 lakh for crop insurance in 2015-16. But then Haryana had its fair share of trouble due to the white fly pest damaging the cotton crop last kharif season and unseasonal rains damaging the wheat crop just ahead of harvest last year.

What we are currently witnessing is an idea getting traction and priority due to the political capital deployed behind it, said a former bureaucrat with the agriculture ministry, who did not want to be named.

“Prime Minister Modi comes from the state of Gujarat where risks to farming are high and he gave crop insurance the required push," the former official said, adding, “During the (previous) United Progressive Alliance regime, officials rarely met to review (existing insurance) schemes. Now states also see a reason to take the benefit of the additional resources put by the centre."

In 2014-15, under the previous yield-based (National Agriculture Insurance Scheme and Modified National Agriculture Insurance Scheme) and weather-based crop insurance schemes, about 37 million or 27% of farming households were covered.

With PMFBY, the centre’s goal is to increase coverage to 50% within the next three years.

“It’s a healthy sign that states have put in more money but implementation of the scheme will be a challenge," said Ashok Gulati, agriculture chair professor at Indian Council for Research on International Economic Relations, Delhi, and an advisor to the centre on the new crop insurance scheme.

“The government needs to deploy infrastructure like automated weather stations, rain gauges and supplement it with drones and low-earth orbits. This will help in quick assessment of damage," Gulati said, adding, “we need to move from a patwari (local revenue official) dependent system of assessment to one that is faster and science-based.

“Simultaneously governments need to move fast on digitising land records and linking bank accounts of farmers with the Aadhaar number to ensure faster and leakage free payouts."

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Industry News, Banking News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 30 Mar 2016, 02:36 PM IST
Next Story footLogo
Recommended For You
Agriculture Stocks
₹197.253.24%
₹658.55-1.79%
₹63.67-9.14%
₹1,613.9-1.91%
Switch to the Mint app for fast and personalized news - Get App