Prime Minister Narendra Modi plans to provide millions of farmers with income insurance linked to crop prices, officials say, but it may not do much to ease rural distress, with small farmers standing to benefit little and likely to be put off by bureaucracy.
Details of the new insurance plan are still being worked out but federal farm ministry officials say the aim would be to ensure a guaranteed income for farmers by covering not just losses due to weather but also from any slump in produce prices.
Under the new plan – which a farm ministry official said was a priority for Modi – farmers would be paid if their income fell below a guaranteed minimum. That minimum would be set by multiplying the average yield in recent years in a cluster of villages by government-set crop prices.
However, shortfalls would be based not on individual farmers’ yields but on those across a wider area, influenced by the higher yields of rich farmers able to afford better fertiliser and pesticide. So a farmer with a poor crop will only get the same compensation per hectare as others who may have had far higher yields.
Modi has already tried an income-based farm insurance scheme in his home state of Gujarat, with limited success – less than 10 percent of farmers opted into the scheme from 2013 as the method for calculating payouts was skewed against smaller farms.