Modi woos rural India with new crop insurance scheme

Indian PM is seeking rural votes after impact of unseasonal rains and two years of drought dented his popularity

NEW DELHI: The cabinet has cleared the launch of the country's first major crop damage insurance scheme from the next fiscal year, a move that would further strain government finances but help Indian Prime Minister Narendra Modi to woo rural voters ahead of key elections.

Stung by criticism of ignoring the concerns of rural India where over two-thirds of the country's 1.25 billion people live, the government on Wednesday fielded as many as three cabinet ministers to underline the importance of the scheme whose budget will more than double in three years.

Modi is trying to placate rural voters after the impact of unseasonal rains and two straight years of drought on agriculture dented his popularity and contributed to a humiliating loss for the ruling Bharatiya Janata Party (BJP) in elections late last year in the largely rural state of Bihar.

Further elections are due in the states of West Bengal, Kerala, Tamil Nadu and Assam this year. "It is a historic day," Modi tweeted after the scheme was announced by the ministers of agriculture, home and parliamentary affairs. "I believe the prime minister's crop insurance scheme, inspired by the well-being of farmers, will bring about a huge change in the lives of farmers."

Several debt-laden farmers committed suicide last year, and agriculture minister Radha Mohan Singh has said that delays in clearing payouts for crop losses were the "biggest reason for destroying farm families".

The government would now ensure faster settlements by increasing the use of technology, including smartphones to capture crop data. It would also reduce premiums to be paid by farmers to 2 per cent for summer-sown crops and 1.5 per cent for winter crops.

The current premium share for farmers can go as high as 40 per cent, which is one of the main reasons that only about a tenth of India's estimated 263 million cultivators opt for crop insurance.

New Delhi will more than double the budget for the crop insurance scheme to 77.50 billion rupees ($1.16 billion) in the fiscal year beginning April 2018.