When i saw this news one aspect was very well highlighted by media that farmers will get ensured for income from their farm land. Hence i am not going to deal with that aspect here. Instead i wish to bring readers attention to few other aspects of this scheme. These aspect will play a long term cleanup of agriculture sector and help in bringing efficiency.
When a farmer has to go for insurance, expected income from his land will be calculated in order to ensure the insurance benefit. Shall he under estimate his income or over estimate? Whatever it is but farmer income will be documented, although not taxable. This will bring white money in the system. Since farmer income is not taxable till now, there is no incentive for farmer to declare it. But this will open the window for him to declare close to actual.
Second aspect will the land ownership and land size. When insurance policy will be written, farmer has to declare the ownership of land and also land size. I can see this will result in attempt to clear the land title by most of the the people who are fighting in court. Also we will see digital records of farmers within a decade. I don’t have the data about the number of land disputes pending in court but it is clear that is makes one of the largest section of pending cases.
Other aspect will be farmer loan which has to be written off due to bad crop. This loss was borne by the banks till now. Since farmer is getting crop insurance, soon the should be linked with farmer loan. Also bank should charge less interest because insurance is reducing the risk for bank asset.
With these side benefits ultimately success will depend on how many private players joins in this market and penetration to the real mass.
One such attempt of introduce affordable housing loan changed the industry and it It took almost two decades by housing industry to come in current state. Now even a 30 year old earning Indian can dream of having his own house. It was not possible till 50 years of age in 1990’s. There is still lot of scope to cleanup housing industry but believe me even today it is much better then it used be to 20 years back.