Amidst reports of distraught farmers committing suicide due to enhanced debt burden in wake of untimely rains in Northern and Central India, Prime Minister Narendra Modi has announced higher compensation- increasing both the amount of compensation (increased by 50%) and relaxing the criteria for claiming compensation (crop damage percentage reduced from 50% to 33%). The aim is to relieve distress of affected farmers. Untimely rains have destroyed 16% of the rabi crop, as per the initial estimates by RBI monetary policy review.
Recognizing the fact that current compensation parameters were not enough to help the farmers, Mr Modi said that the government was stepping in to help them to whatever extent possible.
Unseasonal rains in recent weeks have damaged more than 10 million hectares (24.7 million acres) of crops in Northern India and cash crops worth an estimated 1000 crore INR in Maharashtra. Given the high dependence on rain fed agriculture, insufficient penetration of rural credit, low investment in rural economy, small land holdings and volatile agricultural prices, farmers remain vulnerable to steep debt burdens which often push them to take extreme steps. Many farmers have committed suicide in recent weeks, and there is a seething anger among farming community towards the government for not ensuring their wellbeing. Farmers constitute a significant proportion of the electorate and their discontent may not auger well for political ambitions of the ruling party.
The Prime Minister said the government will increase the compensation given to farmer by 50 percent. The compensation depends on crops variety and the state where it is being grown. Mr Modi had also asked Indian Banks to restructure their loans policy for farmers and rural businesses, and told insurance companies to ensure speedy settlements to improve their conditions.
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