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LATEST NEWS UPDATES | Whether It's Health or Crops, India Isn't Doing Social Insurance Right -Satya N Mohanty

Whether It's Health or Crops, India Isn't Doing Social Insurance Right -Satya N Mohanty

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published Published on May 25, 2018   modified Modified on May 25, 2018
-TheWire.in

The Modi government is pushing insurance schemes in both health and agriculture. But are they really making a difference?

How successful, effective and equitable is insurance as a state policy? Does it address what it is meant to address in the first place, be it in health or agriculture? How does it handle systemic risk, which is essentially uninsurable? Does it also present a lost opportunity for improving the delivery of the existing system, which in turn would have mitigated or reduced the risk?

Here the attempt will be to analyse social insurance taken by the state, both for agricultural and health cover.

Agriculture


The Pradhan Mantri Fasal Bima Yojna (PMFBY) gives insurance cover to farmers against calamities and crop loss, with an enhanced sum insured to cover the cost of cultivation. The premium paid by the farmer is 2% of the cost insured for kharif, 1.5% for rabi and 5% for horticultural and commercial crops, the rest being subsidised by the Central and state governments in equal proportion.

State governments notify crops for the PMFBY for different areas. It is mandatory for the farmers who take crop loans and is also open for non-loanee farmers. In 2016-17, the overall area covered by the scheme increased by 6.5% to 57.2 million hectares, but the number of farmers went up by 20.4% to 57.2 million, and the sum insured increased by 74% – from Rs 1.15 lakh crore to Rs 2.01 lakh crore. The premium paid increased by nearly 300% to Rs 21,882 crore, of which Rs 4,327.4 crore was the premium paid by farmers. For 2017-18, the gross cropped area under insurance has come down to around 47.5 million hectares, a drop from 30% of gross cropped area in 2016-17 to 24%. The target gross cropped area to be covered is 40%. We are basically back to where we were before the scheme started.

These low numbers, despite the government’s push for insurance, high premium subsidy and higher insurance cover, are a major concern.

In 2016-17, the number of non-loanee farmers was 1.37 crore, against 4.35 crore loanee farmers. But in, reality if we normalise the Maharashtra figures (where in view of a court order, all farmers are being shown as non-loanee farmers), their figure will be less than 10% of total area. Hence, PMFBY is really covering the mandated category of crop loanees, that too mostly irrigated crops.

Catastrophic insurance is most meaningful for small and marginal farmers, and particularly for farmers operating in dry land areas. While NABARD’s crop loan figures show a high percentage of small and marginal farmers, this doesn’t necessarily mean that it is going to the most needy. Suppose 25 acres of land is shown against five adults in a family – this becomes five small farmers, even though the family holding is large. We have a paradox on hand – the farmers who require benefits the most, who are small and marginal farmers with dry cultivable land, are mostly left out, while benefits go to bigger farmers in irrigated areas. Since the premium that the farmer pays is very low and sometimes the state takes up the co-payment obligation, the reason for low penetration needs to be studied to find out whether it is because of the exclusions of tenants and sharecroppers, or because of the crop loan architecture which excludes small and marginal dry land farmers

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TheWire.in, 24 May, 2018, https://thewire.in/political-economy/social-insurance-health-agriculture
 

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