Enhancing Access to Crop Insurance for the Unreached

Report: Ravindra A, WASSAN, RRA Network Event Update | March 8, 2017

Workshop by Sajjata Sangh 7th March 2017, Ahmedabad.

A state level workshop on the subject was organized on 7th March, 2017 in Ahmedabad by Sajjata Sangh, a state level network of civil society organizations in Gujarat and Development Support Center.The focus of the workshop was on Prime Ministers’ Fasal Bhima Yojana (PMFBY) and the need to include ‘non-loanee’ farmers in the insurance scheme.

PMFBY is a flagship program of the NDA Government. Started in 2016, the budget for the program was increased substantially during the year 2017-18 to Rs.13,240 crores. The scheme offers highly subsidized premium at 2% for Kharif crops to cover 40% of the cropped area. A quick study commissioned by Sajjata Sangh brought out that the scheme has mostly covered farmers who have taken loan from banks as it is tied to loans. The quick study by Mr. Bhimsi Ahir brought out that those who are out of the formal institutional credit are excluded from getting the benefits of the insurance scheme. This was further reinforced by the observations of the Principle Secretary, Agriculture and the Joint Director, Agriculture, in charge of the program at the state level.

Consultations brought out the need to find ways of reaching out to farmers and get more of the ‘non-loanee’ farmers to apply. Systematic bottlenecks such as producing a formal tenancy agreement, complicate inclusion of tenants into the program. The transaction costs of inclusion of non-loanee farmers are high and must be provided for within the scheme or by the insurance companies. Exploring ways of making the Farmer Producers Organisations (FPOs) or SHG federations as channel agents for insurance, sharing about 4% of the premium for their support functions, would help not only in making the program more inclusive but also reduce the burden on Insurance Companies in reaching out to the farmers. Questions of extending insurance to mixed-crop systems, most prevalent in the rainfed areas still remain.

Crop insurance must not be seen as the only strategy to mitigate risk in rainfed areas; particularly in the context of climate change. It must be an integral package of interventions / a comprehensive approach to secure livelihoods of farmers dealing with risk mitigation in rainfed areas dealing with residual risk. PMFBY will be more effective if it is not a stand-alone intervention, is another conclusion emerging from the workshop.

Further deliberations, brought out the need to take this forward within the RRA Network involving more organizations across different states in such a policy-action dialogue for a more inclusive and comprehensive PMFBY. There is also a need to understand the nuances of the scheme in its operation and variants of it across the states.

Thanks to Shri. Sachin Oza, Director of DSC Foundation.