To take your ideas to Policymakers, Join the Campaign of #PolicyPulse Write to

Will Crop Insurance Ward Off Farmers’ Suicide?

The scheme which would cost Rs 17,600-crore to the national exchequer will be rolled out from the next kharif season, beginning June this year.

Junaid Kathju
Publish Date: Mar 28 2016 5:36PM | Updated Date: Mar 28 2016 5:38PM

Will Crop Insurance Ward Off Farmers’ Suicide?

Prime Minister Narendra Modi’s new crop insurance policy tries to offset collective loss of crops in a village or block instead of treating farmers as individual sufferers in case of loss. This may put some of them at a disadvantage, finds Junaid Kathju


At a time when famers’ suicide in the country has sadly become a daily affair, the ruling Bharatiya Janata Party (BJP) has decided to launch a new crop insurance scheme to provide some succour to the farming community in case of loss of crop because of the reasons beyond their control.


In order to woo rural India, the Union Cabinet has approved the launch of Pradhan Mantri Fasal Bima Yojana (PMFBY) to enable more farmers to avail insurance cover against crop loss on account of natural calamities.


The scheme which would cost Rs 17,600-crore to the national exchequer will be rolled out from the next kharif season, beginning June this year.


Under the new scheme, the premium rates to be paid by the farmers have been brought down substantially. From the exorbitant premium share earlier as high as 15 percent, farmers will have to pay a uniform premium of two percent for all kharif crops and 1.5 percent for all rabi crops. Similarly, the premium will be five percent for horticultural and commercial crops for both the seasons.


The PMFBY scheme also offers a higher claim for the full sum insured unlike the existing schemes. Moreover, there will also be no upper limit on Government subsidy and even if balance premium is 90 percent, it would be borne by the Government. Earlier, there was a provision of capping the premium rate which resulted in low claims being paid to farmers. 


This upgrade by NDA Government to the existing crop insurance scheme such as National Agricultural Insurance Scheme (NAIS) and Modified National Agricultural Insurance Scheme (MNAIS) ensures the biggest ever contribution by Government to Crop Insurance.


According to an earlier report in The Indian Express, out of the gross cropped area of 195.26 million hectares in the country, only 42.82 million hectares or 22 percent was covered under crop insurance in 2014. 


As per the Commission for Agricultural Costs and Prices (CACP), the average Sum Insured (SI) per hectare under the existing national agricultural insurance scheme was just Rs 18,464 (Rs 19,141 in kharif and Rs 16,927 in rabi) in 2013-14. This is too low if one compares it with the gross value of output (GVO) for most crops. 


However, the new scheme will cover yield loss of standing crops, prevented sowing, or planting risk, post-harvest losses and localised risks, including inundation.The scheme is also open to all farmers irrespective of whether they have already taken a loan or not.


There will be one insurance company for the entire State, farm-level assessment of loss for localised risks and post-harvest loss. And private insurance companies, along with the Agriculture Insurance Company of India Ltd, will implement the scheme.


Politics or policy 


Agriculture has been the main occupation for nearly 48.9 percent of the rural population of the country. According to the Economic survey of India 2014-15, agriculture and its allied sectors that contributed for over 51.73 percent the GDP in 1954-1955 have reduce to 13.94 percent in 2013-14.


Despite the Government step and slew of measures and assurances given to farmers by the political parties over the years, the farmers’ plight continues unabated in the better part of the country.


The launch of the new scheme was seen as an attempt by the Narendra Modi’s Government to reach out the farmers whose dejection have of late proved costly to his party in a few states in Assembly and local bodies polls. 


According to figures from the Ministry of Agriculture, over 3,000 farmers had committed suicides in the past 3 years.  The total number of suicides committed by farmers for agrarian hardships in the last three years stands at 3313. The five States — Maharashtra, Telangana, Karnataka, Andhra Pradesh and Kerala — accounted for 3301 of them. 


According to the Government data, as many as 207 districts in nine states have been hit by drought. As much as 90 lakh hectare of land had been affected due to drought and the affected states had sought relief of over Rs 25,000 crore from the Central Government. 


To prove its pro-poor credentials, Prime Minister Narendra Modi elaborated upon the new scheme at length wherein the Centre will provide Rs 8,800 crore annually to make up for almost the entire premium for the crop insured.  


However, the success of such a scheme will depend on the awareness among the farmers. According to media reports, at present the coverage as of now stands at just 23 percent. The Government is aiming to expand it to 50 percent with its new scheme. This is going to be the biggest challenge for the Government.


Biggest drawback


Devinder Sharma, a food and agriculture policy analyst, said even though there is a little improvement in the new crop insurance but it still doesn’t sufficiently address the basic problem that exists in the current schemes.


“The basic problem is unless the crop insurance is for per unit or per farm basis, it has little meaning for farmers. The new scheme compensates farmers on the basis of damage caused to the village not as per the unit of a farmer. It is the biggest drawback,” said Sharma. 


Sharma said that  farmer at best can get compensation for an average crop loss suffered in a block even if his own loss in his crop field is several times higher. “This is primarily the reason why farmers have never been enthused to take a crop insurance package”.


Criticising some media houses for portraying the new insurance scheme as a saviour for farmers, Sharma said only because the Government and some media channels are praising the scheme doesn’t mean that the sufferings of farmers have ended. 


“We all remember that how India Shining proved to be the biggest failure after getting an overwhelming media hype across the country,” he reminded.