Insuring crops: Urgent need for insurance & compensation fund

The Financial Stability Report of the Reserve Bank of India (RBI) has favoured expansion of agricultural insurancecoverage in the country. But it has, at the same time, cautioned that - being inherently riskier and costlier than other types of insurance - crop insurance schemes, unless carefully designed, are prone to turn unviable. This warning seems well-founded given that none of the dozen-odd insurance schemes tried out in the country since the early 1970s has proved successful. These schemes, run with government support by public and private companies, sought to cover various kinds of hazards, including production risk and income risk due to price movements. Attempts have also been made to link insurance cover to loans taken by the farmers. Though such a linkage protects the interests of the banks by ensuring their loan repayment at the time of adversity, it leaves farmers high and dry as it does not compensate for their losses due to lower output. The financial institutions, too, are not keen to seek compulsory insurance cover for all loan takers because of the pressure of meeting their priority sector lending targets and the farmers' disinclination to pay the premium because of meagre indemnity. According to a government study, the Centre and the states incurred losses amounting to over Rs 2,600 crore in 2012-13 to provide insurance coverage for merely around five per cent of the total value of crop output Stock Market Trading Tips

Unsurprisingly, therefore, the extent of coverage under the crop insurance programme has remained dismally low. The RBI's report says only four per cent of the farmers reported having crop insurance cover and only 19 per cent ever used any. The reasons for this were candidly conceded by Agriculture Minister Radha Mohan Singh in the national conference on crop insurance held recently in Bhopal. These include, among others, delayed settlement of claims due partly to belated availability of output loss assessment data through crop cutting experiments; lower level of indemnity; non-coverage of risks of inability of sowing for a variety of reasons and post-harvest losses; and the states' inability to pay their share of financial liabilities Himanshu Tiwari Astrologer

Nearly 45 years experience of running agricultural insurance programmes has also made it amply clear that no single crop insurance instrument can work in all regions and for all types of farming ventures. The companies dealing with farm insurance would, therefore, have to evolve region-specific and crop-specific insurance products taking into account the local risk factors and the farmers' capacity to pay the premium. Such instruments, moreover, would have to be acceptable to the Central and state governments which have to bear the heavy subsidy burden Indian stock market astrology prediction

Given the practical glitches in implementing so many diverse insurance products, some experts have now begun to advocate creation of some kind of an agricultural calamity compensation fund for reimbursing full or part of the crop losses to the farmers due to weather-induced and other factors. The corpus of the fund can be built by contributions from both the Centre and the states. The existence of such a fund would obviate the need for announcing special compensation packages  whenever a calamity strikes any particular area Sensex Astrology