New support scheme for water-stressed districts as crop insurance becomes voluntary

Changes to PM Fasal Bima Yojana leave famers without effective support for crop losses in time of climate emergency  

By Richard Mahapatra
Published: Thursday 20 February 2020
Pradhan Mantri Fasal Bima Yojana made voluntary for farmers. Source: Wikimedia Commons

Union Cabinet chaired by Prime Minister Narendra Modi on February 19, 2020 made some structural changes to the country’s two nodal crop insurance schemes — the Pradhan Mantri Fasal Bima Yojana (PMFBY) and the Restructured Weather Based Crop Insurance Scheme (RWBCIS).

However, another announcement that missed the attention is the proposal for a new farmers assistance programme for the water-stressed districts of the country. The decision alone points to how the changes in PMFBY and RWBCIS would impact the farmers facing heavy crop damages due to erratic and unseasonal weather events, attributed to climate change.

The Union Cabinet has decided to make participation in the PMFBY voluntary for farmers. Earlier, the loanee farmers — 58 per cent of the total farmers — would compulsorily be brought under this scheme. While non-loanee farmers had the option to join it, they would mostly opt out of the scheme.

Of late, there have been widespread protests by farmers across the country over non-payment or delayed clearance of claim benefits. In fact, many crop insurance companies had decided to opt out citing huge surge in claims.

As farmers did not get timely claim settlement, the government in September 2018 changed guidelines to ensure insurance companies and state governments pay 12 per cent interest for payments made after the deadline.

However, making participation voluntary is one way of lifting the security net of farmers. The loanee farmers, though protesting against delayed claim settlement, had an insurance against crop damages.

With changes to the scheme, it is not yet clear how many farmers would join it. Many would be discouraged to go for insurance given their past bitter experience. Also, the premiums might be a deterrent for several farmers already facing a declining farm income.

In another major decision, the Cabinet has reduced the Union government share in premium subsidy for PMFBY to 30 per cent and 25 per cent respectively for unirrigated and irrigated crops from 50 per cent for major states. This means that the states will have to bear extra burden on premiums. As such, many states have been unable to bear their share of premiums.

Arguably, the government is aware of the ramifications of its decisions on PMFBY. At the press conference where the announcement was made, it emerged clearly that the government was bracing for a negative impact on thousands of farmers. The decision to “formulate” another scheme for water- stressed districts and for districts that host India’s poorest farmers may be an outcome of the changes.

 The Cabinet said:

As the scheme is being made voluntary for all farmers to provide financial support and effective risk mitigation tools through crop insurance, especially to 151 highly water-stressed districts, a separate scheme in this regard would also be prepared.

But a major question remains: the time taken for scheme’s implementation.

The proposed Union Budget for 2020-21 is under parliamentary approval. May be, it is added to this one for the required financial allocation.



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