Farmers are indebted to both institutional and non-institutional sources of credit. However, borrowing from non-institutional sources is the major reason for debt-related farmers’ distress which is one of the reported reasons for farmers’ suicide in the country. In order to reduce the dependence of farmers on private money lenders for meeting their credit needs and for providing relief to the indebted farmers, Government has already taken several measures which include the following:
Financial Institutions (Commercial Banks, Cooperative Banks and Regional Rural Banks) have been directed to provide short term crop loans and medium/ long term loan to farmers for various agricultural activities. Short term crop loan of upto Rs.3.00 lakh is provided to farmers at an interest rate of 7% per annum. Farmers, who promptly repay their crop loans as per the repayment schedule fixed by the banks, get the benefit of interest subvention of 3%. Thus, the effective interest rate for the short term crop loan is 4% per annum.
The limit of collateral free farm loan has been increased from Rs.50000 to Rs.100000.
Kisan Credit Card (KCC) Scheme, which enables the farmers to purchase agricultural inputs such as seeds, fertilizers, pesticides, etc. and to draw cash to satisfy their consumption needs. The KCC Scheme has since been simplified and converted into ATM enabled debit card (Rupay KCC- RKCC).
Reserve Bank of India has allowed State Level Bankers’ Committee/ District Level Consultative Committees/ Banks to take a view on rescheduling of loans if the crop loss is 33% or more. Banks have been advised to allow maximum period of repayment of upto 2 years (including the moratorium period of 1 year) if the crop loss is between 33% and 50%. If the crop loss is 50% or more, the restructured period for repayment is extended to a maximum of 5 years (including the moratorium period of 1 year).
To provide financial support to the farmers in the event of failure of crops as a result of natural calamities, Government is implementing crop insurance schemes since 1985. At present, two Crop Insurance Schemes namely, National Agricultural Insurance Scheme (NAIS) and National Crop Insurance Schemes (NCIP) with three component schemes namely, Modified National Agricultural Insurance Scheme (MNAIS), Weather Based Crop Insurance Scheme (WBCIS) & Coconut Palm Insurance Scheme (CPIS) are under implementation in the country.
Under the crop insurance schemes, claims are paid to the insured farmers under any of the notified crop insurance scheme in the area notified by the State Government. Admissible claims are worked out and paid as per the provisions of the respective schemes. As an incentive to the farmers, premium subsidy @ 10% to small and marginal farmers under NAIS, upto 75% under MNAIS, upto 50% under WBCIS and upto 75% under CPIS is provided to all participating farmers and the financial liabilities under the aforesaid schemes are equally shared by the Central Government and the concerned State Government.
These crop insurance schemes have recently been reviewed in consultation with various stakeholders including States/ UTs and a new scheme namely, Pradhan Mantri Fasal Bima Yojana (PMFBY) has been approved for implementation from Kharif 2016 season along with pilot Unified Package Insurance Scheme (UPIS) and the restructured Weather Based Crop Insurance Scheme (WBCIS). Under the PMFBY, a uniform maximum premium of only 2% will be paid by farmers for all Kharif crops and 1.5% for all Rabi crops. In case of annual commercial and horticultural crops, the maximum premium to be paid by farmers will be only 5%. The premium rates to be paid by farmers are very low and balance premium will be paid by the Government to provide full insured amount to the farmers against crop loss on account of natural calamities. There is no upper limit on Government subsidy. Earlier, there was a provision of capping the premium rate which resulted in low claims being paid to farmers. This capping was done to limit Government outgo on the premium subsidy. This capping has now been removed and farmers will get claim against full sum insured without any reduction. The use of technology will be encouraged to a great extent. Smart phones will be used to capture and upload data of crop cutting experiments to reduce the delays in claim payment to farmers. Remote sensing will be used to rationalize the number of crop cutting experiments.
This information was given by the Minister of State for Agriculture & Farmers Welfare Sh. Mohanbhai Kalyanjibhai Kundaria in Rajya Sabha.