Fasal Bima Yojana is Modi's trump card to solve India's agrarian crisis

First meaningful initiative to give financial security to agrarian India 

The large number of farmer suicides in India over crop failure has been the most disturbing, distressing and disheartening trend to emerge from the rural hinterland in the last few years. In a country of our size where farmers toil hard to feed a population of 1.25 billion, it is rather ironical that their deaths were reduced to mere statistics and numbers.

Thus, when the Union Cabinet rolled out a revamped, robust and well thought out crop insurance scheme last week, the NDA government not only took a concrete step to alleviate rural distress that has the potential to transform the village-based economy, it also ensured that farming remains a remunerative and rewarding occupation for millions of farmers in the country.

While the agriculture sector contributes only 17 per cent to India’s overall GDP, farming and allied activities support nearly 60 per cent of the country’s population.

Further, a sizeable chunk of the farming land still depends on the vagaries of the south-west monsoon. This has meant that two successive years of poor rainfall in 2014 and 2015 have only resulted in more miseries for our farmers.

Revamping old crop insurance scheme to suit poor farmers 

In this backdrop, the Pradhan Mantri Fasal Bima Yojana is an extremely farmer-friendly scheme that has eliminated all complexities in order to meaningfully address crop losses faced by farmers. For one, the premium to be paid by the farmers is extremely low when compared to the insurance plans sponsored by the previous government.

There will be a uniform premium of only two per cent to be paid by the farmers for all kharif crops compared to 2.5-3.5 per cent earlier, and 1.5 per cent for all rabi crops. The premium for commercial and horticultural crops is now only five per cent while earlier, it was calculated on actuarial basis and was often very high after accounting for all risk factors.

Importantly, the balance premium will be paid by the government to provide the full insured amount to the farmers against crop loss on account of natural calamities. Thus, the flagship crop insurance scheme has done away with the cap on the premium to be paid by the government that earlier resulted in low claims being paid to the farmers.

Another key feature is that the insurance scheme will provide localised risk coverage and has added a number of natural calamities.

For instance, given that last year, unseasonal rains during March and April had destroyed crops during the harvest season in several states, the insurance plan will now provide coverage for post-harvest losses caused owing to rain and hailstorm across India.

Earlier, this was applicable only to cyclone-prone regions. Further, the insurance scheme also makes provision for compensation if farmers have to skip sowing owing to natural calamities like floods, unseasonal rains, hailstorm and cyclones.

Challenges 

At the same time, there are a few challenges. The present Modified National Agriculture Insurance Scheme covers only 37 million or 27 per cent of India’s farming households. Given that the premium under the Pradhan Mantri Fasal Bima Yojana is extremely reasonable, the government is already aiming to raise the cover under the scheme to 50 per cent of the farming households.

If this target is achieved, it will ensure that poverty, hunger and death that strike our farmers with alarming regularity see a massive decline in the next few years. The government is already looking to harness technology in an effective manner so that there is no inordinate delay in payment of claims to the farmers.

With over 200 million new bank accounts – with a bulk of them in rural areas – already opened under the Pradhan Mantri Jan Dhan Yojana, claims will now be directly transferred to the farmer’s bank account and will thus put a curb on leakages.

The politics 

By all accounts, Pradhan Mantri Fasal Bima Yojana is the proverbial game changer, not just for the farmers but also the BJP-led National Democratic Alliance (NDA). If implemented and communicated well, it will surely end up boosting the political stock of the ruling dispensation.

The comprehensive crop insurance plan will also allow the BJP to blunt the Opposition’s constant tirade that the party is only pro-rich with scant regard for the poor, the marginalised and the farmers. The master communicator and strategist that Prime Minister Narendra Modi is, he is likely to reach out to the farmers directly and also ask the party workers to fan out to villages and semi-rural areas to popularise this new insurance policy.

Given that a spate of state elections is due in the next two years including the politically crucial Uttar Pradesh, the party could definitely hope to reap gains at the polling booths. A large section of farmers belong to the numerically strong, geographically spread out, and politically savvy OBC community and the new crop insurance plan gives the BJP a much needed leverage to strike the right chord with the voters.

The NDA government has already launched a number of schemes like the MUDRA Bank that provides loans of Rs 50,000 to Rs 10 lakh to support entrepreneurship at the micro level, and the Skill India programme to train the youth for gainful employment.

The simplified crop insurance plan adds to the list of schemes and policies that aim to make life better for the average Indian. It is time farming became “safal” with Fasal Bima Yojana.