Need crop insurance scheme to act as safety net due to climate change: CSE

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India needs an “effective, inclusive and universal” crop insurance scheme to act as a safety net for farmers as frequency of extreme weather events due to climate change is likely to increase in the future, a green body said on Friday.

Noting that the new crop insurance policy is a step in the right direction but needs improvements, Centre for Science and Environment (CSE) said that insurance unit is still not at individual farmer level which is a major problem in compensating losses of the individual farmers.
The Union Cabinet chaired by Prime Minister Narendra Modi recently approved the new crop insurance scheme — Pradhan Mantri Fasal Bima Yojna (PMFBY). CSE said that the new scheme will replace two schemes – National Agricultural Insurance Scheme (NAIS) and the modified NAIS (MNAIS).

“Frequency of extreme weather events and slow onset events such as droughts are likely to increase in the future due to climate change. India needs an effective, inclusive and universal insurance scheme to act as a safety net for farmers. PMFBY is a step in the right direction, but it requires some key changes to improve its effectiveness,” said Chandra Bhushan, Deputy Director General, CSE.

The green body said the insurance unit still is based on the administrative unit such as block, mandal, nyay panchayat, and others.

“With such a large Insurance Unit (IU), loss estimation at the individual farm levels is never accurate. This means that some farmers will continue to get less money compared to their losses and some more. This has been a major concern voiced by farmer representatives and activists for a long time. As use of technology improves, changes should be made to make one farm as one insurance unit to make the scheme realistic in terms of gauging the losses and subsequent payouts,” CSE said.

Holding that PMFBY remains silent about the direct linkage between insurance companies and farmers, CSE said that this leads to poor service delivery from the insurance companies and advocated for direct linkages.

CSE further said that the “monopolistic hold” of one insurance company in an area will continue and farmers will still not have a choice to pick one insurance company over another. “It is important that competition is encouraged among insurance companies so as to provide better services,” it said.

In the new scheme, there is no mention about developing an agriculture intelligence information system which is a platform to collect farm-level data on all parameters and this system will help estimate crop loss smoothly, accurately, quickly and in a more transparent manner, it said.

“Farmers in general do not have confidence in crop insurance schemes. Their wariness is to a great extent, rooted in past experiences when they did not receive the insurance payout because of administrative issues, including incomplete or absent paperwork or identification, ineligibility due to changed circumstances or guidelines not followed.

“Operational guidelines of this new scheme need to be improved and implemented well to make it farmer-friendly in the real sense,” said Sunita Narain said, CSE Director General.

The green body said there were good points in the scheme, including the farmer’s share of the premium being reduced to 2% and 1.5 percent for all kharif and rabi crops, respectively, while for horticultural, commercial and annual crops it will be at five% which will make the insurance affordable to a large number of farmers.
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“By keeping a uniform premium for the farmers and the balance premium amount being shouldered by the state and central governments (on a 50:50 basis), the target of insurance coverage for 50 percent farmers in three years seems relatively realistic. However, a lot will depend on the state governments and the Union government to make their part of the payments on time. Delays in payments on the part of the governments will delay payouts to the farmers making the scheme ineffective,” it said.

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