KEY POINTS
- Premiums for horticulture crops have been cut from 25% to 5%.
- Premiums for Kharif crop are down from 15% to 2%.
- Premiums for Rabi crop have been reduced from 15% to 1.5%.
- The government's expected subsidy bill is approximately Rs7000cr, to be split evenly between the center and states.
- The scheme aims to cover 50% of farmers.
- The government's cap on maximum premium contributions has been removed.
- Private insurance firms are now allowed to participate.
ANALYSIS
- The scheme is seen as a positive step towards supporting farmers.
- The significant reduction in premiums is a huge relief for farmers.
- Experts view it as a significant improvement over previous crop insurance schemes.
- Unlike the previous scheme which only covered 50% of crop losses, the new scheme covers 100% of losses.
- The scheme sets the same premium for the same crop across the country, taking into account local conditions such as hailstorms. It covers both pre and post-harvest losses.
- The scheme covers a majority of farmers and takes local conditions into consideration.
- The government’s cap on premium contributions has been removed.
- The introduction of private insurance firms can lead to competition and potentially lower prices in the future.
LIMITATIONS AND CHALLENGES
- Some farming community experts believe the scheme may face implementation challenges.
- The authority still lies with the patwari to decide the extent of loss, leading to potential discretion and subjectivity.
- The scheme does not cover farmers involved in cold storage, such as those dealing with potatoes.
- The scheme cannot be a game changer as it only addresses insurance aspects.
- The scheme mandates the use of technology to assess losses, potentially excluding 83% of poor and marginalized farmers who may not be able to afford it.
- The involvement of private players is being questioned due to potential government support or subsidies to private companies.
- The scheme is weather-based and does not cover price risk due to other factors.
- The use of technology is unclear, and there is a lack of awareness among the farming community about its use.
CONCLUSION
- Despite potential issues, technology is crucial and beneficial. For instance, the Kilimosalama scheme in Kenya uses a combination of satellite data and smartphones to determine crop loss. The government can provide detailed guidelines and monitor implementation to reduce subjectivity. More consensus is needed on the participation of private insurance firms, and the government must ensure that it does not harm the farming community. Awareness campaigns about the scheme and the use of technology are necessary at the grassroots level.
ADDITIONAL RESOURCES:
Business Standard: Improved Crop Insurance
Deccan Herald: Crop Insurance May Bring Cheers
POTENTIAL MAINS QUESTIONS:
1) Is the new crop insurance scheme a game changer? Discuss your arguments and provide suggestions to overcome any potential challenges.
