Trust, transparency and technology – Opinion news

Trust is the foundation of any relationship, be it in family, friends, workplace fraternity or between farmers and policymakers. But building trust requires transparency in actions. Without trust and transparency, any action by either party can be misinterpreted, leading to a breakdown in relations and policies. I am speaking in the context of agricultural policies and the trust deficit that has grown between some segments of the farming community and agricultural policymakers.

If agriculture in India To put the agriculture sector on a fast and sustainable path, first of all, Agriculture Minister Shivraj Singh Chouhan must overcome the trust deficit with farmers. The best way to do this is to form two agricultural councils, one with representatives of farmers from each state, say two per state — one owner cultivator and one tenant farmer. Let us call it the Farmers’ Council. The second council will consist of agriculture ministers from each state, somewhat on the lines of the Goods and Services Council. Tax Council. Both the councils should meet at least twice a year, at the beginning of the kharif and rabi conferences that the Centre holds annually. This will go a long way in reaching a consensus on some important reforms in the agriculture sector, which is crying out for change.

Secondly, climate change is already knocking at the door and agriculture will be significantly impacted unless we take some bold steps. The Indian Council of Agricultural Research (ICAR) claims to have produced over 2,000 climate-resilient seed varieties for different crops. If that is the case, how does one explain the decline in agricultural GDP growth in FY24 to just 1.4%, compared to a high of 4.7% in the previous year? It was the impact of El Niño in 2023. This means that either we are still far behind in creating climate-resilient agriculture or our seed innovations have not made it from scientists’ labs to farmers’ fields. In terms of the upcoming Union Budget, this also means that ICAR’s funding needs to increase significantly, say from less than `10,000 crore today to around `15,000 crore. The marginal returns in investing The stakes for climate-resilient agriculture and promoting climate-smart agriculture are very high. The latter requires reviving agricultural extension work in a way that promotes farming practices that can withstand extreme heat waves or bursts of rain, etc. The additional funding from ICAR should be focused exclusively on creating climate-resilient and climate-smart agriculture. But this will not happen overnight. In the short term, we need to fix the crop insurance scheme, called Pradhan Mantri Fasal Bima Yojana (PMFBY).

PMFBY was initiated in 2016 after consecutive droughts in 2014-15 and 2015-16. The agricultural GDP collapsed and suddenly the farming community was in deep stress. PMFBY was a bold step in the right direction. But the success of any such scheme depends on how efficiently it is implemented. It started with a big bang and good promise. In all, 26 states and 16 insurance companies came forward to join this scheme. But the scheme was somewhat premature as the groundwork was not done and the infusion of technology The scheme was scarce. Automatic weather stations were not stationary, continuous monitoring of plots was not done through high-tech low earth orbits, algorithms for crop losses were not designed properly, and so on. In short, the scheme was open to further human manipulation. No wonder many of our states, with the help of some leaders, took undue advantage. There were several cases of corruption. As a result, after a good start, the adoption graph of the scheme, instead of going up, started going down. Reinsurers, who are the real risk takers in the crop insurance business, were not happy as there was not enough transparency on crop losses and claims made. In 2021-22, there were only 20 states and 10 insurers willing to participate in PMFBY. There were fears that the scheme might fail. But there was no better alternative to compensate farmers in case of crop failure. It was at this time that a major push for technology reboot was made. In the last two years, there seems to have been a turnaround in PMFBY. The number of states and insurers participating in the scheme has returned to 24 and 15, respectively. Improvements in the technology-based yield estimation system and the Climate Information Network and Data System have raised hopes and reduced human intervention. While it is not yet perfect, it has a record enrollment of farmers, around 40 million.

Interestingly, for the first time, non-loaned farmers who opted for this scheme accounted for 55% of the total farmers insured. The area covered under PMFBY in 2023-24 was around 61 million hectares, which was approximately 40% of the gross cultivated area of ​​the states that opted for PMFBY. This has raised hopes that the infusion of technology has earned some confidence from insurers, reinsurers as well as farmers. But the litmus test for the success of crop insurance depends on premium rates. They peaked at 17% in 2021-22 but have since come down sharply to around 10% in 2023-24, according to provisional figures. This is a commendable revival of the scheme at the all-India level. But there is no time for complacency.

A state-wise table presents some interesting results: the actuarial premium was just 3.4% in Andhra Pradesh, 5.7% in Uttar Pradesh and 7.5% in Madhya Pradesh. But many other states attracted much higher premiums — Chhattisgarh (14.8%), Haryana (11.7%), Karnataka (19.2%), Maharashtra (13.5%), Odisha (13.1%), Rajasthan (9.7%), Tamil Nadu (12.0%) and so on. There is a need to study the reasons and bring the all-India premiums below 7%. Chouhan can do this, provided he fixes the system based on technology with as little human manipulation as possible. Can he deliver that?

Ashok Gulati, Distinguished Professor, ICRIER
Opinions are personal

Source