Despite many challenges in the agriculture sector, less than 20 percent of farmers have crop insurance

MUMBAI: As lakhs of farmers in Uttar Pradesh, Punjab, Haryana, Madhya Pradesh and other states face unseasonal rains and torrential rains, a recent study by private weather forecasting agency Skymet and industry body Assocham reveals that less than 20 per cent of the farmers in the country's total farming population have crop insurance, leaving most farmers to face the uncertainty of the weather.

According to government estimates, there are about 13 crore farmer families in India. At the all-India level, only 19 per cent of farmers reported having insured their crops. A whopping 81 per cent were found to be unaware of the practice of crop insurance. Among those without insurance, 46 per cent were aware but not interested, while 24 per cent said the facility was not available to them, studies show. Only 11 per cent felt they were not able to pay the insurance premium.

According to the joint report, about 32 million farmers across India are enrolled in various crop insurance schemes. However, design issues, particularly relating to delays in settlement of claims, have left farmers uncovered despite significant government subsidies.

The rule states that insurance claims of farmers are to be settled within 45 days of risk assessment, but even after six months the claims are not settled. To address the problems, the government is running the Revised National Agricultural Insurance Scheme, a market-based scheme with private sector participation.

Compared to the existing scheme, the new programme is designed to offer more timely settlement of claims, less distortion in the allocation of government subsidies and cross-subsidies among farmer groups, and lower basis risk.

Private companies have developed weather-based crop insurance products. These weather-based insurance products are advantageous compared to yield-based insurance products in terms of claim settlement time and transparency in claim settlement.