Unseasonal rain has damaged the Rabi crop and farmers want compensation. This is in line with tradition. The tradition must change. Proper insurance must play a bigger role in mitigating risk of this kind. India cannot prosper as a nation if its agriculture remains a low-productivity sink of underemployment and poverty that is at the mercy of the gods of the skies and the lords of the realm. Farming must become a profitable, commercially viable activity, in which the pooling of risk across space and time is recognised as a cost as legitimate as the cost of fertiliser, but will not burden the consumer because of high levels of productivity overall.
Pricing of crop insurance covers should be based on actuarial costs, and products made available to individual farmers. Also, insurance companies will sell crop insurance only when they see opportunity for a positive actuarial outcome, overtime and profit. Political interference must end and insurers allowed to run their business on commercial lines. Farmers, as buyers, must recover the insurance cost from consumers through higher productivity.
Politicians should focus their energies on building rural infrastructure and on removing the barriers to farmers optimising their income.India has tried many crop insurance schemes, but all of them have run up against the problem of identifying the exact loss for individual farmers. So, areas were assessed rather than individual farms. The advent of drones that carry sophisticated remote sensing equipment opens up new possibilities in monitoring and assessment of specific, localised damage. This would, in turn, allow farmers to dump patronage and opt for commercial insurance and higher productivity. In farming too, the government should play enabler, not patron saint.
