Farmers committing suicide is not unusual in India. It happens almost every eason. Unseasonal rains and strong winds that lashed the entire north- western region recently could be the latest trigger for the extreme step by farmers at margin. At least seven farmers have already committed suicide, and one farmer has suffered an instant heart attack on seeing his flattened wheat crop, in Uttar Pradesh.
Ministry of Agriculture has estimated damage to standing crops in 50 lakh hectares in Punjab, Haryana, UP, J&K, Himachal Pradesh, Madhya Pradesh, Rajasthan and Maharashtra. The situation in Vidharbha in Maharashtra is worse from economic point of view, as the current distress came at a time when the rabi season was expected to offset the losses suffered on account of a shortfall in monsoon rains in the kharif season. That hope now stands dashed. About 20 per cent of the standing wheat crop and 30 per cent of mustard crop has been damaged, as per the Directorate of Wheat Research in Karnal.
The unpredictable weather pattern and failing crops have underscored the need of effective crop insurance scheme for farmers. Even though the issue has been discussed for over three decades now, the successive governments have failed to work out a crop insurance system for farmers, especially small and marginal farmers who cannot pay the monthly premium.
Although a number of schemes were introduced on crop insurance, including for weather-related crop insurance, all suffered from the basic fault, the insurance is done on an area basis where the average of a village or a taluka is what determines the losses suffered. If 10 acres of a village is lashed by hail and the crop is completely damaged, the farmer will still not be able to get adequately compensated for his loss. The reason is simple: the average of the village does not reflect the severe damage few farmers were inflicted with. Also, the insurance schemes have been prepared keeping drought in mind. But farmers need to be adequately covered to offset damages from all extreme weather patterns.
Insurance companies say they have not been able to come out with proper crop insurance schemes for the simple reason that the risk is too unpredictable; there is no historical data available on which any risk assessment model could be built. And they don’t want to take up any risk which they cannot measure. Since farmers are unorganised, the attempt to address the problem is also missing. Since the Narendra Modi dispensation has opened up for 49 per cent FDI in insurance, is it possible to make it compulsory for those companies entering the insurance sector in India to provide certain fraction of their coverage to the farming sector? The country has a huge section of population involved in agriculture and there must be a mechanism to insure their livelihood. That would be not only serve economic purpose, but also be a humane social intervention to afford poor farmers a decent life.
The budget is out and the provisions have kicked in from April 1st. As government takes steps to boost growth, we take a look at what is the state of the economy. Even though the confidence in the economy is returning, weak spots are visible, for example in poor industrial growth.