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Topic: Issues related to direct and indirect farm subsidies and minimum support prices.
4. The recent move of the union government to cap the premium on its flagship crop insurance schemes and making enrollment voluntary for these schemes will impact the agriculture sector in various ways. Discuss. (250 words)
Reference: Indian Express
Why this question:
The Centre has decided to restrict its premium subsidy in its flagship crop insurance schemes to 30% for unirrigated areas and 25% for irrigated areas (from the existing unlimited), and to make enrolment of farmers in the Pradhan Mantri Fasal Bima Yojana (PMFBY) and Restructured Weather Based Crop Insurance Scheme (RWBCIS) voluntary from the 2020 Kharif season. Thus the context of the question.
Key demand of the question:
The answer must discuss the impact of the measures taken by the union govt. on capping the premiums and making enrollment voluntary for flagship agri insurance schemes.
Discuss – This is an all-encompassing directive – you have to debate on paper by going through the details of the issues concerned by examining each one of them. You have to give reasons for both for and against arguments.
Structure of the answer:
Briefly explain the present schemes of insurance that are in existence.
The body of the answer must discuss the impact of the move – One of the impacts is that the Centre may stop supporting insurance of certain crops in certain areas where the rate of premium is more than 30%. By capping the subsidy for premium rates up to 30%, the Centre wants to disincentives certain crops in such areas where growing these crops involve high risks in terms of crop insurance premiums. While the average premium rate under PMFBY and RWBCIS at the national level was 12.32% for 2018-19, for some crops in certain districts, the rate of premium has been higher than 30% in recent years. For instance, the rate of premium for Kharif groundnut has reached 49% in Rajkot of Gujarat, and the rate for Rabi paddy crop Ramnathapuram (Tamil Nadu) has reached 42%. After the new changes come into effect, the share of the states is expected to go up in those states in which such crops are cultivated. As of now the schemes are compulsory for all loanee farmers and optional for other farmers. Non-loanee farmers under the crop insurance schemes are much fewer than loanee farmers. If the latter opt out of the schemes, the number of insured farmers will drastically come down.
Conclude with multiple impacts that the move will bear on the agri sector of the country.