India’s crop insurance program fanfare fades with shrinking coverage area

crop insurance program - farm

The Narendra Modi government’s scheme was highly popular when it first launched but is getting smaller.

India’s crop insurance program first launched two years ago. At that time, it was tremendously celebrated and highly popular. That said, this year it has experienced negative growth. The reason is that its coverage area has dropped to 24 percent of the gross cropped area (GCA) from 2017 to 2018.

This is considerably smaller than the 2016 to 2017 year when it had been 30 percent of the GCA.

The target for the crop insurance program’s coverage was 40 percent. The shrinking coverage size means a considerable challenge for the program as a whole. At the same time, the number of farmers with the crop insurance coverage in both the kharif and rabi seasons has fallen by 14 percent this year alone.

During the 2017 to 2018 year, 47.5 million hectares (about 117 million acres) of farmland were insured by the Pradhan Mantri Fasal Bima Yojani (PMFBY). This, according to IANS data. That figure converts to about 24 percent of the total GCA land, which is estimated to be about 198.4 million hectares.

After the PMFBY crop insurance program was launched in February 2016, coverage skyrocketed.

It grew to reach 30 percent of the land in 2016 to 2017 from having been only 23 percent under the older farm insurance programs. If the current program’s coverage had grown by the government’s predicted rate, it would have reached 40 percent during the 2017 to 2018 year. Instead, the coverage area has fallen to 24 percent instead.

Modi’s government has been aiming for a final coverage target of 98 million hectares of the GCA. That would represent a coverage rate of 50 percent. The goal had been to reach that target during the 2018 to 2019 year. That said, with the current negative growth rate and the amount allocated to the program in the government’s budget, it appears more than a little unlikely.

Under Modi’s crop insurance program, farmers are required to pay only 2 percent of the total premium for the kharif crop. Growers need only pay 1.5 percent of the total premium for the rabi crop. Horticulture farmers must pay 5 percent of their insurance premium.

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