Alarming number of farmer suicide despite of crop insurance in India

This article tries to bring in to limelight the Indian agricultural scenario along with contrasting positive as well as negative changes that it has undergone in the past few years. Introduction of new and improved technology has created new means to look forward in the area of agriculture. On the other hand, the vagaries of Indian weather, especially monsoon has affected the farming population at large. Despite rigorous insurance policies, the agricultural sector is still under the vengeance of farmer suicides every year and the figures are not diminishing. This article attempts to make a discussion regarding the incidence of farmer suicides in the Indian sub-continent and the causes that lie beneath.

The Indian agriculture sector

Agriculture forms the backbone of the Indian economy contributing a majority to the GDP of India. Along with fisheries and forestry. The agro industry still continues to be one of the largest contributors in to the Indian economy. As per estimates by the Central Statistics Office (CSO), the share of agriculture and allied sectors (including agriculture, livestock, forestry and fishery) was 16.1 per cent of the Gross Value Added (GVA) during 2014–15 at 2011–12 prices.

The Indian agricultural sector has been seen to attract a large number of investments, both foreign and domestic over a period 15 years or more. The time period from the year 2000 to 2015 has seen large inflow of FDI equity in this sector, worth nearly USD 2182 million, according to reports published by the Department of Industrial Policy and Promotion (DIPP).

The state of farming and farmers

India is an agrarian economy with almost 48.9% of the current population depending directly or indirectly on the agricultural sector. The agrarian economy contributed a substantial 50-51% to the Gross Domestic Product (GDP) in the year 1954-55; however, the figures have dropped to a meager 13.94% in 2013-14.

The Indian agricultural sector has undergone various changes in the past 10-15 years. The farmland concept has witnessed large-scale fragmentations in agricultural land with the division of rural joint families and growth of rural population. With large-scale fragmentations, the productivity of the land has decreased manifold. The farm productivity is dependent on the scale of the land on which farming is done. Larger the area of cultivation, higher is the spread of plants to produce higher yield. Hence the yield of the land has gone down by a large extent in the past few years. However, the cost of production has deliberately increased over the years. This trend of rising cost, coupled with declining or steady growth of farm productivity has led to the rise in debt traps leading to the increasing farmer suicides over the years.

According to the data released by the National Crimes Record Bureau (NCRB) in 2014, out of the total suicides in India, nearly 4.3% were farmers (Shown in Table 1). Maharashtra recorded the highest number of farmer deaths which stood at 2568, followed by 898 in the district of Telangana in the same year.

State-wise farmer suicides during 2014 (Source: National Crimes Record Bureau)

State-wise farmer suicides during 2014 (Source: National Crimes Record Bureau)

Crop insurance in India

Agricultural production and farm incomes in India are frequently affected by natural disasters such as drought, floods, cyclone, storm, landslide, earthquake etc. Susceptibility of agriculture to these disasters is compounded by the outbreak of epidemics and man-made disasters such as fire, sale of spurious seeds, fertilizers and pesticides, price crashes, etc. All these events severely affect farmers through loss in production and farm income. But, agricultural insurance is considered an important mechanism to effectively address the risks to output and income resulting from various natural and man-made events. At present, there are two insurance schemes:

  1. The National Agriculture Insurance Scheme (NAIS) and
  2. National Crop Insurance Programme (NCIP).

National Agricultural Insurance Scheme (NAIS)

The Government of India introduced this scheme from Rabi 1999-2000 season to protect the farmers against losses suffered by them due to crop failure on account of natural calamities. The scheme is currently implemented by Agriculture Insurance Company of India (AICIL). The scheme covers all food crops (cereals, millets and pulses) and oil seeds and Annual commercial/ horticultural crops. NAIS is presently being implemented in 24 States and 2 Union Territories except in the States of Punjab & Arunachal Pradesh. Since the inception of the scheme and until up to 31st March, 2011 about 176 million farmers have been insured, covering an area of 269 million hectares for a sum insured value of Rs. 2,21,213 crore against a premium of Rs. 6589 crore. Claims to the tune of about Rs. 22190 crore have been reported so far benefiting nearly 47.6 million farmers representing a claim ratio of 1:3.37.

National Crop Insurance Programme (NCIP)

A new central sector scheme, ‘National Crop Insurance Programme’ (NCIP) has been introduced by merging Modified National Agricultural Insurance Scheme (MNAIS), Weather Based Crop Insurance Scheme (WBCIS) and Coconut Palm Insurance Scheme (CPIS) throughout the country from Rabi 2013-14. NCIP has been introduced to provide:

  • Financial support to the farmers for losses in their crop yield,
  • To help in maintaining flow of agricultural credit,
  • To encourage farmers to adopt progressive farming practices and higher technology in Agriculture and thereby,
  • To help in maintaining production, employment & economic growth.

Continued efforts are made to create awareness about crop insurance schemes by the implementing agencies in coordination with implementing states.

Not enough help offered to the Indian farmer

Though India is an agricultural country, farmer suicides and farm related issues are rampant. This is primarily because agriculture in India is dependent upon the vagaries of weather, particularly monsoon. Rainfall is a major deciding factor for the yield and output of crops every year. Deficiency in rainfall leads to drought; this is again one of the major reasons for farmer deaths across the country. Regions like the Vidharbha district of Maharashtra is extremely drought-prone and one of the highest recorded farmer suicides till date. Apart from drought, re-payment of loans and interests taken for farming also derive mention.

A stunning figure shows that only 19% of the farmers have ever reported of insuring their crops; around 81% of the total farmer population is completely unaware of the practice of crop insurance. Of the ones un-insured, 46% were found to be aware but not interested in such a practice, while 24% said that the facility was not available to them at all. This implies a large ill-distribution and lack of implementation of such an insurance policy that can save the life of thousands of farmers.

If thousands of farmers are killing themselves on their ravaged fields, it’s not just because the weather gods have been brutal; it’s also because the protection from such climatic flippancy, in terms of crop insurance, has failed the farmer when he needed it the most.

References

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Priya Chetty

Partner at Project Guru
Priya is a master in business administration with majors in marketing and finance. She is fluent with data modelling, time series analysis, various regression models, forecasting and interpretation of the data. She has assisted data scientists, corporates, scholars in the field of finance, banking, economics and marketing.

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1 Comments.

  1. I would like to highlight few issues in this article:
    a) The total production of major food grains such as rice, wheat in India continue to increase
    b) Data from Directorate of Economics & Statistics , Department of Agriculture and Co-operation shows that the Yield of major food grains has been continuously increasing so we cannot claim that productivity is rapidly declining
    c) I think the major problem is not in production side but in the market.. the minimum support price offered by the government is not enough for the farmers to cover their cost.. and there is problem of storage and warehousing
    d) also i think the government’s main motive is that more and more people should shift from agriculture sector to other sectors (such as manufacturing and service) .. which is known as the “structural transformation”…

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