Farm loan waivers lead to fewer crop insurance policies -Prabhudatta Mishra & Prasanta Sahu

-Financial Express

Implementation of farm loan waivers by various state governments has led to a sharp decline in both the number of insurance policies and the farm area insured under the Pradhan Mantri Fasal Bima Yojana (PMFBY). According to data gathered by FE, during kharif 2018 (the harvesting of the crop is on), the number of insured loanee farmers under PMFBY was just over 2 crore, compared with 3 crore such farmers insured during kharif 2016. The drop of over 1 crore in the loanee farmers’ count between the summer crops of 2016 and 2018 was despite the non-loanee farmers under PMFBY cover being around 1 crore during both the seasons.

The shrinking of the PMFBY cover could mean that more farmers are vulnerable to disasters/crop damage. Already, Maharashtra, Karnataka, and Andhra Pradesh, which implemented farm loan waivers, have sought drought relief for farmers from the Centre. While pruning their capital expenditure, six states have implemented farm loan waivers of a total of Rs.1.26 lakh crore between 2017 and 2018. After Maharashtra implemented loan waivers of Rs.34,000 crore, PMFBY coverage of the state’s loanee farmers, for whom crop insurance is meant to be mandatory, fell 58% to 16 lakh in kharif 2018 from 38 lakh in 2016. Similar reductions in coverage of loanee farmers were seen in Karnataka (down 43%), Rajasthan (38%) and UP (22%).

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Financial Express, 21 November, 2018,

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