MUSINGS

Covering Crops

In a recent interview, the Finance Minister P Chidambaram was quizzed by the press on the plight of the 60 million Indians who have invested in the bourses, owing to the volatility in the markets. The Finance Minister replied that he was relatively more concerned with the well-being of the 600 million farming community than the stock market investors.

The Government of India announced in the Union Budget for the year 2008-09 a $15 bn (Rs. 60,000 cr) package for waiving loans of 30 million debt-strapped small and marginal farmers and a one-time settlement of dues for 10 million farmers. The package implementation was successfully completed by June 30, 2008.

The waiver is an acknowledgment of the plight of the farmers in the country which drives some of them to the extreme step of committing suicide. It is therefore not surprising that the National Commission on Farmers Report reveals that 40% of Indian farmers would like to leave farming, given the opportunity.

India feeds near 20% of the world’s population on a meager 2.5% of land resource and also is one of the largest exporters of various food grains and agricultural products. Most of the industries in the country are agro-based and agriculture obviously is the largest private sector occupation. A little aberration in this sector has a multiplier effect on the Indian economy.

Ad hoc solutions cannot be an answer. The need of the hour is a holistic solution to the agrarian problems. The input prices are going north thanks to the larger corporate interests in agriculture and the resultant usage of costlier seeds, fertilizers, pesticides, etc. Low-cost inputs coupled with better rates for the farmers produce can reduce their woes to a great extent.

Innovations are on in the non-life insurance area. The farmers in India are heavily dependent on the weather. With decreasing ground water resources, there is increased dependence on the rain gods. Crop insurance as a risk management tool definitely has the potential to provide financial security to the farmer.

The National Agricultural Insurance Scheme (NAIS) of Agriculture Insurance Company of India Limited (AIC) has been revamped. The climatic vicissitudes have prompted AIC to start a weather-based crop insurance scheme on a pilot basis in a few states, as an alternative to the NAIS. Innovative products like Varsha Bima, Coffee Insurance, Mango Insurance, etc., have been developed and introduced in the agricultural sector.

AIC is primarily committed to provide succor to the farmers through insurance products and other support services. They are chiefly committed to develop new affordable products for the farming community to meet their diversified needs. The new products are supplementing the coverage already available for more than 65 crops under NAIS.

AIC has set before itself an ambitious target of covering the entire eligible crop loans. The immediate goal is to cover more than half of the crop credit targeted for disbursement by all the banks in the country in two years time. They are also embarking upon a publicity drive to bring maximum number of non-loanee farmers into the fold of crop insurance.
Fingers crossed; let us hope the new weather-based crop insurance scheme may well be the panacea for the woes of the Indian farmer.

- T S Rama Krishna Rao