Crop Insurance… pluses and minuses

Crop Insurance… pluses and minuses

Government should think over to take the responsibility of sharing a part of premium for crop and agriculture insurance to make it a simple and regular feature…

Among various professions, the maximum uncertainty is in agriculture.  This is the only profession which faces number of  minuses but less pluses, due to rains, hailstorms, drought, floods, diseases related to crops, ups and downs in prices in the international market etc.

On the other hand, agriculture is also the only profession, where less insurance provisions are adopted.

Since long, the debates on crop insurance and related to agriculture production had been going on but crop insurance could not been adopted throughout the country.  There are more than 50insurance companies in the country in addition to Life Insurance Corporation of India (LIC), out of which 24 deals with the life insurance and 28 other than life insurance.   Only few of them are extending the services for agricultural activities.

In the past, the government have been make efforts, in addition to private companies, foreign insurance companies should also be encouraged for agriculture insurance but there have been  no concrete results so far.  There had also been a move to pass a Bill for the involvement of insurance companies from 26 per cent to 49 per cent but due to no satisfactory conclusions in view of various agriculture related problems, the agriculture insurance remained an unimportant issue.

In India, the animals are covered underinsurance only at the time of taking a loan being one of the conditions of the institution giving the loan.  In such case, the insurance premium is not continued after the repayment of loan amount. Likewise, the machinery is also insured at the time of its purchase and is not repeated. There are number of reasons for not introduction of agriculture insurance.

At present, there are 74 per cent farmers communities in our country having less than 2.5 acres and 82 per cent farmers with less than 5 acres holding.  They go in for the crop which could easily be sold in the market.  Though there be hardly any provisions for insurance of such crop and even if it is there, the farmers feel the premium as a burden.  Even in other agriculture allied professions, they don’t take any interest.  More-over, neither the government nor the insurance companies have encouraged for agriculture insurance.  There is a glaring example when in 1985 the crop insurance was first introduced and in the 5 years’ scheme – 1985-1990 – the total claims were disbursed for Rs.618 crore whereas the amount collected on account in the shape of premium was Rs.90 crore only.  In such circumstances, no insurance company would like to come forward for agriculture insurance.

In fact, like the developed countries, the governments are making efforts to keep secured the farmers with the insurance facilities since 1948 but the main hindrance is the big gap between the agriculture system of India and developing countries.  In the developing countries, the agriculture is a business and is at a large scale and is under the planning of the government and separate boards have been constituted for the different crops.  The farmers are entered into contract with the boards for the particular crop and the insurance cover is the responsibility of the concerned board. The technical experts of board also help the farmers in the marketing of their crop.

Whereas, it is totally adverse in India as compared to the other developed countries. It is not a profession rather it is a livelihood.  Only cash crops –wheat and paddy are taken and crop diversification has totally failed because of non-marketing arrangements at the government level.  Farmers share is no where kept in the event of increase in prices in the market and in the event of natural calamity, the loss is of farmer and not the businessman.  The insurance premium is considered as a burden in these circumstances.

The reasons for not introducing the agriculture insurance by the companies stated are the calculation of loss.  In certain blocks or areas, the loss is on the higher side whereas it is too less in other areas. While on the part of farmers, ignorance or having no awareness, higher premiums, non availability of insurance  due to uncertainty in crop yields etc.

Keeping in view the agriculture related problems, the National Agriculture Insurance Plan was started in 1999-2000 in which all loaner and non-loaner were included and later on certain crops were added including the annual business crops, fruits and vegetables with a provision that village Panchayat will be basis to determine the losses but no fruitful results were seen and no concrete steps have been initiated so far.  Instead of leaving it to the private companies, what I feel is that the government patronage in this regard is more important.

Frankly speaking, after going through the pluses and minus of crop and agriculture insurance, it could be concluded that there is a need to give a serious thought on the social issues keeping aside the interests of 60 percent farmers community of premium amount and claim of losses.

If the compensation on account of loss of crop due to natural calamity could be disbursed within 24 hours in the account of the farmer by making assessment by the expert committee through satellite, why not in India?

Like compensation on account of floods, natural calamities, are announced by the government itself, the government should think over to take the responsibility of sharing a part of premium for crop and agriculture insurance to make it a simple and regular feature instead of giving subsidy.

With these arrangements, the farmers will be saved from natural losses; there will also be positive results in agriculture production with the involvement of government.