PM Narendra Modi announces easier norms for crop-loss dues to farmers

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New Delhi | Published: April 9, 2015 4:20:00 AM

Asks insurers to proactively honour claims, banks to restructure farm loans

Prime Minister Narendra Modi on Wednesday announced liberal norms for compensating farmers for their crop losses on account of unseasonal rains and instructed insurance companies to proactively honour their claims and banks to restructure farm loans.

Speaking at the launch of the Pradhan Mantri Mudra (Micro Units Development Refinance Agency) Yojana, Modi said both the eligibility criteria and quantum of relief to farmers under the state disaster relief fund (SDRF) have been made more generous. The 14th Finance Commission granted R55,097 crore to states for disaster management.

Unseasonal rains in the last few weeks have led to destruction of crops, such as wheat, mustard and barley, in more than 10 million hectare across 14 states, including Haryana, Punjab, Rajasthan, Madhya Pradesh, UP and Maharashtra.

“Until now, farmers made it to the list of beneficiaries (of disaster relief) only if more than 50% of their crops had been destroyed. State chief ministers have also demanded that this norm be revised. As per the new norms, even if only 33% of the crop is lost, the farmer will benefit. It is, however, going to be a burden (on the exchequer),” said Modi. The compensation is given in the form of input subsidy.

Modi said the quantum of relief has also been increased by 50%. “Those who received R100 compensation earlier will now get R150,” he said.

“We have instructed insurance companies to be proactive in helping farmers affected by crop losses,” he said. RBI governor Raghuram Rajan, who was present on the occasion, later told reporters that banks have been directed to restructure loans of the farmers in distress.

Agriculture ministry officials told FE that all state governments have been asked to render immediate assistance to farmers from the SDRF, a fund in which three-fourth of the contribution comes from the Centre and the rest from states. The Centre released R5,270 crore to states in 2014-15 as its contribution.

As per the latest data released by agriculture ministry, the area damaged due to untimely rains and hailstorm has been reduced to 8.5 million hectare. This is a substantial drop in contrast to an earlier report of crop loss in 11.3 million hectare.

The SDRF assistance is given as input subsidy at the rate of R4,500 per hectare for rain-fed areas, R9,000 per hectare for irrigated areas and R12,000 per hectare for perennial crops. Some states give higher assistance from their own resources.

“In case there is any short fall of funds in the states’ kitty under the SDRF, the Centre will chip in with extra funds from the National Disaster Response Fund,” said an official.

Due to unseasonal rains, wheat crop of around 6.2 million hectare, out of a total sown area of 30.6 million hectare, has been damaged.

According to agriculture minister Radha Mohan Singh, the wheat output is likely to decline by 4-5% in the ongoing rabi season. India had produced 95.85 mt of wheat in 2013-14.

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