Will universal insurance help Maha's farmers this El Nino year? | Mumbai news - Hindustan Times
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Will universal insurance help Maha's farmers this El Nino year?

Jun 17, 2023 05:38 PM IST

The Maharashtra govt recently announced two 10,000 cr agrarian schemes. As the country braces for monsoon in an El Nino year, are the farmers shielded enough?

The Eknath Shinde-led government in the 2023-24 state budget headlined two big agrarian announcements that got approved in the cabinet last month: a new financial scheme, Namo Shetkari Mahasanman Yojana (NSMY), ensuring 6,000 cash handout to farmers and Re 1 crop insurance scheme that slashed farmers' share of the premium for the Centre’s Pradhan Mantri Bima Fasal Yojana (PMBFY) to a token one rupee.

While cash assistance helps, experts have pointed out this assistance does not address the agrarian crisis.(HT PHOTO) PREMIUM
While cash assistance helps, experts have pointed out this assistance does not address the agrarian crisis.(HT PHOTO)

Together, these schemes will cost the state exchequer about 10,000 crore annually and account for nearly one third of the state agriculture department’s budget this year. The state’s move is seen as a bid to woo farmers ahead of the 2024 poll year and more specifically the Zilla Parishad polls later this year. But, to what extent are these schemes beneficial to farmers to address the ongoing agrarian crisis ?

Cash assistance offers relief but does not address agrarian crisis

The NSMY takes its cue from the PM Kisan Sanman Nidhi Yojana (PMKSNY) that offers 6,000 a year as minimum income support to farmers. With the state pitching in another 6,000, eligible farmers in Maharashtra will now get a cash handout of 12,000 a year. The state will spend 6,958 crore on this scheme that is estimated to have one crore beneficiaries. Other states including Telangana, Andhra Pradesh, Madhya Pradesh have offered similar relief in addition to the PMKSNY before Maharashtra.

While cash assistance helps, experts have pointed out this assistance does not address the agrarian crisis. “Farmers will benefit if they are assured minimum support price for crops by adding 50 per cent profit on C2 cost (comprehensive cost including capital and land rent value) recommended in 2010 by the M S Swaminathan commission,’’ said Vijay Jawandia, farmer leader from Vidarbha region.

Jawandia said the cash handout is an easy way of skirting around the promises made to double farmers income when the BJP first came to power and still win votes. “To protect farm incomes, the state could have intervened and offered additional MSP to that granted by the centre or the state could have increased input subsidies 10,000 per acre for kharif or rabi crop to reduce the increasing input costs of farmers,’’ he said.

However, farmers, especially those with small land holdings, are not complaining.

“For us, it’s an additional 1,000 per month. It can come handy for our food, medical, and other domestic expenses, for which we are constantly falling short,’’ said Nirmala Satwe, who does subsistence farming on her two-acre land and works as a farm labourer in Mahad.

What universal insurance needs

By offering insurance cover for just Re 1 under PMBFY, the state government has promised near-universal insurance by paying the existing share of farmers' premium under the scheme.

However, at 1.5 % to 2 % for regular crops, most of the existing premium is not a big burden and often amounts to a couple of hundred rupees for every hectare insured depending on the crop. The state however hopes that slashing off the premium will significantly increase the uptake of the scheme. The state will spend an estimated 3,312 crore on this Re 1 crop insurance.

“This Re 1 crop insurance is not just a tagline. The idea is to ensure that farmers, who may not opt for the scheme for a premium of a couple of hundreds, will now sign up. When more farmers sign in the scheme will in turn become more viable,’’ said a senior official in the finance department, who did not want to be named.

PMBFY is an area crop insurance scheme that is aimed at protecting farmers from crop failure and thereby stabilising their incomes. Farmers' claims are processed based on damages ascertained at a block level. If the average yield for a season for a block is lower than a threshold yield, then all the claims made by farmers in that area are considered.

Farmer leaders and rural practitioners, point to design and implementation flaws in PMBFY as the main reason why slashing of premiums is unlikely to accrue much benefit to farmers.

“Right now this Re 1 crop insurance premium is lip service. If the premium is just Re 1 why put the onus on farmers to apply? Farmers have to put together their latest document of land record signed by the talathi (village accountant), give the intention of the type of crop and area and Aadhaar card details for the application. In our experience farmers have spent around 400 rupees, 2 to 4 days, to pay a premium and apply. The transaction costs of such farmers has to come down,’’ said Ashwini Kulkarni, president of Pragati Abhiyan, a state-based organisation that works with poor and marginalised communities and farmers in rural areas. Many farmers need to travel long distances to taluka headquarters to access the PMBFY portal or reach customer service centres to apply online in the absence of poor connectivity especially during monsoons.

Kulkarni highlighted several other shortcomings in the scheme including in faulty crop-cutting experiments, the absence of insurance companies' offices at block levels due to short tenure of their contracts, delays in issuing notifications every season specifying crops, premiums, procedures etc.

“For the claims to be made hundreds of crop cutting experiments have to be carried out within a fortnight at the block level to ascertain damages. The agriculture department does not have the wherewithal in terms of resources and manpower to carry this out in a fair and objective manner even with 30 per cent of it being done using technology,’’ she added. CCEs have to be conducted at the Gram Panchayat level for each crop included in the crop insurance notification issued at the beginning of the season. The delays in preparing CCE reports ultimately leads to delays in providing farmers timely claim pay outs, defeating the purpose of the insurance.

Both Kulkarni and Jawandia pointed to the absence of insurance company offices at the block level, the lack of insurance agents stemming from short-term contracts awarded to insurance companies as a hurdle in farmers' follow up on complaints and claims. “I would welcome the Re 1 crop insurance if it is truly made universal so that a talathi or krushi sevak (agricultural service) does applications for all farmers and similarly the onus of ascertaining loss is not on individual farmers in any way,’’ he said.

At an estimated 10,000 crore a year, these two schemes not only burn a hole in the state exchequer but also corner significant fiscal space in the agriculture budget. While the cash assistance is a social security measure for farmers, it may not dramatically improve the precarity of farm livelihoods. The universal crop insurance is a necessity given the visible and dire climate change impact on agriculture but for it to be really beneficial, agriculture department needs to be empowered and weak links in the design of the scheme need to be addressed.

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