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A balance-sheet of the key schemes for the farm sector under the Modi govt

As the Narendra Modi government enters its last leg, the crisis in the farm sector has been one of the most prominent challenges that the government faced during the last five years.

In the remaining few months before the 2019 general elections, the government is again looking to announce a series of measures to boost the rural sector. These could include a blanket loan waiver or relief from credit cycle in some form.

But let's look back at how some of the initiatives the government took the past four years have fared.

In most cases, on-ground implementation of the schemes seems to have suffered for a variety of reasons. 

For the purpose of analysis, we have taken five major farm-oriented programmes of the current NDA government, starting with the flagship, Pradhan Mantri Fasal Bima Yojana (PMFBY), or Prime Minister’s Crop Insurance Scheme

PRADHAN MANTRI FASAL BIMA YOJANA:

This is among the biggest programme undertaken by the Modi government. Announced in 2016, it involves subsuming all other crop insurance products except one, which is an area-yield based, where farmers are charged uniform low premium rates of 2 per cent for all Kharif crops, 1.5 percent for all Rabi crops and 5 per cent for commercial and horticulture crops.

The difference between the premium paid by the farmer and the actuarial fair premium (APR) is subsidised by the government (shared by central and state governments on 50:50 basis).

Annually, the Central government spends almost Rs 150 billion as its share of premium for the scheme, which is among the highest allocation for a single programme in agriculture.

Under PMFBY, over 57 million hectares of gross cropped area were covered during 2016-17, for a sum insured of Rs 2,050 billion with a premium volume of Rs 215 billion ($3.3 billion).

This dropped to 47.52 million hectares of gross cropped area in 2017-18 for a sum insured amount of Rs 1,916.34 billion and a premium volume of Rs 243.51 billion.

However, ground reports, research papers and studies have pointed towards several flaws in the first two years of the programme, with some even alleging that the scheme gave undue profits to private insurance companies.

In April 2018, an official committee on doubling farmers’ income also substantiated some of the criticisms and pointed out that low coverage of non-loanee farmers and delay or non-payment of claims have bogged down the scheme in the first two years of its operations.

The panel also found that actuarial premiums in drought-prone and rainfed areas were as high as 25 per cent due to relatively lesser number of bidders. Insurance is most needed in such areas.

It said that unless these issued are addressed on time, it would be challenging to reach government’s official target of covering 50 per cent of the Gross Cropped Area (GCA) under insurance by 2019.

The government thereafter, undertook a massive exercise to rework the scheme’s guidelines to ensure that farmers are paid the compensation on time and state government’s release their share of premium on time. It decided to impose a flat 12 per cent interest on insurance companies for delay in settling claims beyond two months and a similar interest on state governments for delay in releasing their share of subsidy beyond three months.

Delayed settlement of claims under PMFBY has been found to be a major drawback of a scheme which was started with much fanfare a few years back. Two big reason for that were the reluctance on part of the state governments to release their share of premium subsidy and procedural delays by insurers.

Officials said that as against the mandatory two months, the government found that the average time taken in settlement of claims under PMFBY has been around 5-6 months.

ELECTRONIC NATIONAL AGRICULTURE MARKET (E-NAM):

Launched with much fanfare, e-NAM was meant to be an electronic platform through which all mandis would be gradually linked to enable better price discovery for farmers. In the first phase, the Centre planned to integrate 585 markets through the national electronic platform by March 31, 2018.

Till December 2017, around 470 markets were integrated with e-NAM and the process of integrating the remaining is still on. Until a few months back, a total of 16.7 million tonnes of farm goods, valued at Rs 422.65 billion, were traded through the platform.

The idea was to gradually scale up e-NaM to almost 1,000 mandis in the second phase and then to all the mandis across the country. The idea of a fair, transparent trading platform for farmers and traders alike is noble, but in the absence of strong intra-mandi and inter-mandi linkages, the platform is turning out to be a website to just buy and sell produce electronically.

A high-powered panel by NITI Aayog member Ramesh Chand, in a report released in April 2018, found that in many mandis where e-NaM was operational, traders were simply feeding data of trading done manually into the electronic platform much after the auction was over. This clearly violated the fundamental premise of e-NaM and raised big questions on trading being done and data fed into the system.

“In such APMCs strictly speaking, online auction of commodities on eNAM platform is not taking place and the data of manual trading is being recorded into the system after the auction is done offline,” the panel said listing out the operational limitations and challenges of e-NaM.

The panel also found out that many APMCs didn't have an operational assaying lab for grading the commodities prior to auctuioning them online, while a few were pushing out commodities with large arrivals volumes from the e-auction due to time constraints. There was also significant variation in the arrival data of AGMARKNET and eNAM, as AGMARKNET data records actual transactions while eNAM records the data captured at the arrival gate of the APMC.

Clearly, there were chinks in e-NaM which the panel tried pointing out. With states reluctant to allow inter-tradebility among mandis and moving towards intra-state trading and freer movement of goods, concepts like e-NaM will not create the right atmosphere and will, at best, remain portals to record trading done physically.

SOIL HEALTH CARDS

Another big project of the Modi government for revitalizing the agriculture sector was Soil Health Cards (SHCs). The cards, whose distribution started during the UPA regime, picked up pace under the current government and was made more widespread by a separate budget allocation.

Through the Soil Health Card (SHCs) dashboard, the Centre has distributed over 106.6 million of SHCs in the first phase and over 26 million in the second, covering a majority of the country's 140 million farmer families. The card, which would act a ready source of information for the farmers to judge his soil quality, could foster judicious use of fertilisers and plant chemicals, leading to higher productivity.

According to preliminary studies conducted by the National Productivity Council (NPC) in 2016 at the request of the ministry of agriculture, almost 84 per cent of the farmers found the cards beneficial in reducing cultivation costs and improving cro productivity when essential nutrients were applied to them based on the SHCs.

In some cases, there was also an 8-10 per cent drop in fertiliser use. 

But that seems to just one part of the story.

A March 2018 paper by the International Food Policy Research Institute (IFPRI) said that many farmers found the information mentioned in SHCs too technical and more relevant for scientists than for them.

They also lacked relatable visuals and contained too much text in small print, making it difficult to pick out relevant information. Moreover, farmers weren’t aware of all the nutrients and micronutrients listed on the cards.

The paper was published based on focused group discussions with over 100 farmers in Bihar and Odisha.

Its main objective was to determine whether they were able to understand the soil health cards, trust them to provide accurate information, and change their practices based on the cards’ recommendations.

The paper said the information given in the cards not only lacked clarity for farmers, but there was also a trust deficit on the recommendations, as soil samples weren’t specific to their fields, but were, instead collected from single samples in grid squares of 2.5 hectares for irrigated areas and 10 hectares for rainfed areas.

Moreover, experts said unless fertiliser continues to be subsidised and skewed in favour of urea, having cards that inform farmers about soil content would be of no use.

PRADHAN MANTRI KRISHI SINCHAYEE YOJANA

Modi launched the PMKSY in 2015 with the aim of completing 99 pending irrigation projects by December 2019.

The total expenditure was estimated to be around Rs 776 billion, of which almost Rs 300 billion had to be for command area development, that is, creating last-mile facilities such as field channels and drains. In the absence of proper development of command areas, completing irrigation projects serves no purpose.

What's more, a report show that so far in 74 of the 99 irrigation projects, there has absolutely been no progress in command area development. Unless, this gets completed, even if all the projects are completed on time, no purpose will be served. Even in the 99 projects, there seems to a big lag.

PM-ASHAA scheme for higher MSP to the farmer:

In September this year, the Centre announced the much-awaited procurement mechanism for non-wheat and rice crops at the increased Minimum Support Price (MSP), with an allocation of over Rs 150 billion to be spread over the next two financial year. Of this, Rs 62 billion will be spent in 2018-19. That apart, procurement agencies like Nafed will get an additional bank guarantee of over Rs 160 billion over and above the existing one of Rs 290 billion.

Called the Pradhan Mantri Annadaata Aay Sanrakshan Abhiyan (PM-AASHA), loosely translated as Prime Minister’s Farmers Income Guarantee Campaign, the scheme will consist of three combinations of the existing Price Support Scheme (PSS), Price Deficiency Payment Scheme (PDPS), which is modelled on the lines of Madhya Pradesh’s Bhawantar Bhugtan Yojana or similar such experiments, and private procurement and stockiest scheme on a pilot basis. States will free to choose the combination of any of the three schemes, but no two schemes can run concurrently for the same crop.

However, on-ground reports say that till date, not even 10 per cent of market arrivals of kharif oilseeds and pulses have been procured and there hasn't been any upward movement in prices of any crop -- all of them continue to rule below MSP. The scheme too has fallen flat. 

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