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(Photo: AFP)
(Photo: AFP)

Crop insurance schemes need  better planning

Even with the launch of the Pradhan Mantri Fasal Bima Yojana , small farmers lack access to crop insurance, finds a new study

Mumbai: Crop failure is a common story for farmers across India and the government tries to help farmers reduce this risk through crop insurance. New research, however, suggests that these crop insurance schemes may not be that effective.

In a study published in the Economic and Political Weekly, Meenakshi Rajeev and Pranav Nagendran assess India’s crop insurance schemes by analysing data from the 2012-13 Situation Assessment Survey and examining the performance of the Pradhan Mantri Fasal Bima Yojana (PMFBY).

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 farmers most vulnerable to crop losses.

More than 66% of farm households were not aware of the crop insurance schemes and 21% were not happy with the terms and conditions.

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 farmers, said the authors. In 2016-17, coverage in terms of cultivated land increased to 29% from 23% in 2013-14. The scheme, however, remains behind its own target of 50% coverage and, in 2017-18, it even dipped to 26%.

Globally, India is a major laggard. In China, 69% of gross cropped area is insured while in the US, the share is 89%. One of the major bottlenecks in accessing PMFBY is that farmers lack documents and land records to avail insurance. Also, compensation is often delayed, inadequate, and even denied. All these result in farmers facing a severe fund shortage to start their next cycle of crops. As droughts 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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