Crop Insurance Current Affairs - 2019

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SBI Ecowrap Report recommends Unconditional Cash Transfer to Farmers

The SBI Ecowrap report recommends the government to opt for the unconditional cash transfer to farmers to alleviate agrarian distress rather than Universal Basic Income (UBI) scheme.

Why does the SBI report recommend unconditional cash transfer?

The report has recommended the unconditional cash transfer based on the following reasons:

  • Currently, it is not feasible to implement Rythu Bandhu Scheme at the national level because the land data is yet to be digitized in several states including Jharkhand, Bihar, Gujarat, and Tamil Nadu.
  • Hence the unconditional cash transfer scheme is a best available option as it will be more equitable (on a per farmer basis) with a meaningful impact and once the problems are ironed out in terms of proper tenancy laws, then it can be made conditional.
  • The report mentions that many countries have found that UBI does not address the structural problems and is at best a solution in interregnum.
  • The report estimates various subsidy benefits the farmers are availing and suggests if a farmer is availing one or all the three modes of subsidy/supports (Crop Insurance, Interest Subsidy and Fertilizer Subsidy) then he/she will receive a minimum of Rs 5,335 to maximum Rs 10,162 per annum as cash support.
  • The report predicts that government would be required to provide cash support in the range of Rs 10,000-12,000 per annum to make it completely cash neutral and the annual cost of such a scheme is Rs 1.2 lakh crore per annum.
  • The challenge of providing cash transfer to tenant transfer would be left unaddressed under this scheme.

The study notes that there have been reports saying that the government is planning to provide direct cash support to the farmers in lieu of various farm level subsidies/support.

Union Cabinet approves Pradhan Mantri Fasal Bima Yojana

The Union Cabinet has approved Pradhan Mantri Fasal Bima Yojana, a new crop insurance scheme to boost farming sector in the country.

It is farmers’ welfare scheme that aims to reduce the premium burden on farmers and ensure early settlement of crop assurance claim for the full insured sum.

Highlights of Scheme

  • Uniform premium: Farmers will pay uniform premium of 2 per cent for all Kharif crops and 1.5 percent for all Rabi crops.
  • In case of annual horticultural and commercial crops, farmers will pay 5 per cent premium. These premium rates are very low.
  • Government will pay balance premium to provide full insured amount to the farmers against crop loss on account of natural calamities.
  • Government subsidy: There will be no upper limit subsidy given by Government even if balance premium is 90 percent.
  • Capping the Premium: The provision of capping the premium rate has been removed and farmers will get claim against full sum insured without any reduction.
  • It was removed as it resulted in low claims being paid to farmers and was mainly done to limit Government outgo on the premium subsidy.
  • Use of technology: Government will encourage use of technology especially Smart phones and remote sensing to a great extent.
  • In order to reduce the delays in claim payment to farmers, smart phones will be used to capture and upload data of crop cutting.
  • To reduce the number of crop cutting experiments remote sensing will be used.

Comment

The new Crop Insurance Scheme has been formulated in line with One Nation–One Scheme theme.  It replaces existing two schemes viz. National Agricultural Insurance Scheme (MNAIS) and Modified National Agricultural Insurance Scheme (MNAIS) by removing their inherent drawbacks (shortcomings) and incorporating the best features of all previous schemes.