Prime Minister Narendra Modi in his Mann ki Baat has urged farmers to avail of crop insurance. Crop insurance is not new, but farmers are either not aware of it or bad experiences in settling claims prevent them from paying premium. Unlike assets insurance, loss resulting from crop failure is merely based on the assessment by the person concerned. This is where the farmers feel let down and cheated, as claims payment is delayed or only a meagre amount is paid.
The Deposit Insurance and Credit Guarantee Corporation (DICGC), an RBI subsidiary, used to reimburse priority sector loan losses of banks and deposit insurance. The loan failure claims of up to 75 per cent dues were settled. But over time, banks lodged so many claims that DICGC could not meet them as it was short of funds and capital. RBI stopped credit insurance and has continued deposit insurance, but this too is just Rs 1 lakh per depositor, per bank. This limit was set decades ago and it has to be raised to at least Rs 10 lakh. Else, there should be no limit at all, as here the deposit loss amount is certain and the very purpose of insurance is to get 100 per cent cover from any loss. Farmers get water and electricity at very concessional rates and still do not pay bills. The government pays for losses suffered by farmers due to crop failure. Then, why not provide free crop insurance to all farmers irrespective of the size of landholding?
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The Deposit Insurance and Credit Guarantee Corporation (DICGC), an RBI subsidiary, used to reimburse priority sector loan losses of banks and deposit insurance. The loan failure claims of up to 75 per cent dues were settled. But over time, banks lodged so many claims that DICGC could not meet them as it was short of funds and capital. RBI stopped credit insurance and has continued deposit insurance, but this too is just Rs 1 lakh per depositor, per bank. This limit was set decades ago and it has to be raised to at least Rs 10 lakh. Else, there should be no limit at all, as here the deposit loss amount is certain and the very purpose of insurance is to get 100 per cent cover from any loss. Farmers get water and electricity at very concessional rates and still do not pay bills. The government pays for losses suffered by farmers due to crop failure. Then, why not provide free crop insurance to all farmers irrespective of the size of landholding?
Sudhir Keshav Bhave Mumbai
Letters can be mailed, faxed or e-mailed to:
The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
New Delhi 110 002
Fax: (011) 23720201
E-mail: letters@bsmail.in
All letters must have a postal address and telephone number