Daily News Mail - News of 04/04/2015

Rain-hit areas to get NREGS boost

• The Union government will increase the number of work days under the Mahatma Gandhi National Rural Employment Guarantee Scheme from 100 to 150 in places where the recent unseasonal rain and hailstorms have affected crops. The relief package will include cash compensation.
• In addition, Prime Minister Narendra Modi has sought recommendations from NITI Aayog on how insurance can be used to protect farmers from losses arising out of crop damage, Arvind Panagariya, Vice-Chairman of the organisation, said.
• Union Food Minister Ram Vilas Paswan has proposed enhanced wheat allocations to the affected families under the public distribution system. 
• Cash compensation would be paid out from the State Disaster Relief Fund (SDRF) and the National Disaster Relief Fund (NDRF). Both also allow for food compensation in case of crop damage. The Centre allocates more funds to the States in case the expenditure is more than the money available in the SDRF.

Protecting the small farmer

• Data from the recently held National Sample Survey Organisation (NSSO) survey show that close to 60% of rural households are dependent on agriculture for their livelihood. More than half of them are at risk of defaulting on their debts with either banks or informal moneylenders. Many reports have pointed towards the debt burden and its resulting vulnerability at the household level as the primary factor for farmer suicides.
• In a recent case of farmer suicide, a rubber farmer from Kerala blamed falling rubber prices and the lack of government support in his suicide note. The unfortunate incident is not an isolated one in India. Many small and marginal farmers are getting low prices for their produce because of increased global production and lower demand for various commodities. 
• Recent reports from the Food and Agriculture Organization (FAO) show the declining food price index in most common commodities such as sugar, cereals and meat. The NSSO report also highlights the increasing input costs in agriculture and the alarming increase in consumption expenditure vis-à-vis income, especially among households with less than two hectares of land holdings.
• While minimum support prices (MSPs), announced by various State governments, have traditionally been the instrument used to fight declining prices, they have scarcely been effective at the farm level. For example, among rice and wheat farmers, more than half the produce is consumed at the household level and the rest mostly sold to traders at much lower prices. Other challenges such as the impact of climate change on agriculture and the World Trade Organization’s anti-MSP stress on reforms underline the need for a reliable mechanism to improve the resilience of small farm holders.

Agricultural insurance in India

• The Comprehensive Crop Insurance Scheme(CCIS) covered 15 states and 2 union territories. Participation in the scheme was voluntary. Around 5 million farmers and between 8-9 million hectares were annually covered by this scheme. If the actual yield in any area covered by the scheme fell short of the guaranteed yield, the farmers were entitled to an indemnity(security or protection against a loss or other financial burden) on compensation to the extent of the shortfall in yield. The General Insurance Corporation of India administered the scheme on behalf of the Ministry of Agriculture, Government of India.A major drawback of the scheme could be seen from the fact that out of all the all-India claims of Rs 1,623 crores, Gujarat alone received Rs. 792 crores for one single crop, groundnut.The scheme was scrapped in 1997.
• The Central Government formulated the Farm Income Insurance Scheme (FIIS) during 2003-04. The two critical components of a farmer’s income are yield and price. FIIS targeted these two components through a single insurance policy so that the insured farmer could get a guaranteed income.The scheme provided income protection to the farmers by insuring production and market risks. The insured farmers were ensured minimum guaranteed income (that is, average yield multiplied by the minimum support price). If the actual income was less than the guaranteed income, the insured would be compensated to the extent of the shortfall by the Agriculture Insurance Company of India. Initially, the scheme would cover only wheat and rice and would be compulsory for farmers availing crop loans. NAIS (explained in the section below) would be withdrawn for the crops covered under FIIS, but would continue to be applicable for other crops.The FIIS was withdrawn in 2004.
• The Government of India experimented with a comprehensive crop insurance scheme which failed. The Government then introduced in 1999-2000, a new scheme titled “National Agricultural Insurance Scheme” (NAIS) or “Rashtriya Krishi Bima Yojana” (RKBY).NAIS envisages coverage of all food crops (cereals and pulses), oilseeds, horticultural and commercial crops. It covers all farmers, both loanees(loanee - a person who receives a loan) and non-loanees, under the scheme.The premium rates vary from 1.5% to 3.5% of sum assured for food crops. In the case of horticultural and commercial crops, actuarial rates are charged. Small and marginal farmers are entitled to a subsidy of 50% of the premium charged- the subsidy is shared equally between the Government of India and the States. The subsidy is to be phased out over a period of 5 years.
• NAIS operates on the basis of:-
• Area approach- defined areas for each notified crop for widespread calamities.
• On individual basis- for localized calamities such as hailstorms, landslides, cyclones and floods.
• Under the scheme, each state is required to reach the level Gram Panchayat as the unit of insurance in a maximum period of 3 years.Agriculture insurance corporation of India is implementing the scheme.

Breakthrough on Iran

• The joint comprehensive plan of action (JCPOA) on Iran’s nuclear programme announced by Iran and the EU 3+3 (the United Kingdom, France, Germany along with China, Russia and the United States) in Lausanne, Switzerland, is a significant breakthrough that will have long-lasting implications globally. 
• The possible reward for Iran’s promised steps, namely ramping down its uranium enrichment capabilities and stockpiles of enriched uranium, reducing the number of centrifuges, allowing for thorough inspections by the International Atomic Energy Agency and giving up nuclear reprocessing is the lifting of the tough sanctions regime against the country. 
• That the 18-month-long negotiations between the various parties finally bore fruit had much to do with the fact that Iran’s current regime is headed by a pragmatist in President Hassan Rouhani who was elected in 2013 on the premise of bringing about an entente(a friendly understanding or informal alliance between states or factions) with the West, among others. 
• The determination of U.S. President Barack Obama to reverse the rigid stance of his more conservative predecessor, George W. Bush, over repairing ties with Iran and bringing about an agreement over the latter’s nuclear programme had also helped. Mr. Obama managed to overcome the stiff opposition to the deal from the right-wing Republican Party in the U.S., which had become politically stronger over the past year.
• Iran has always maintained that its nuclear programme was meant only for peaceful purposes and that as a signatory to the Nuclear Non-Proliferation Treaty, it was entitled to enrichment of uranium for energy generation. But the unrelenting pressure from the West in the past decade, including recurring talk of open hostility from the U.S. and Israel, had led to defiance from the Mahmoud Ahmadinejad-led regime. 
• Iran went on to expand its nuclear programme by furthering enrichment capabilities and building clandestine nuclear facilities. These actions had invited sanctions from not only the U.S. and the EU, but the UN as well, which had hurt Iran economically and also made it difficult for countries such as India to engage in trade with the country. 
• India’s imports from Iran — particularly petroleum products — had been severely curtailed due to the sanctions. The nuclear agreement with Iran should also help ease the long-standing hostile ties between the U.S. and Iran eventually helping to change at least some equations in the conflict-ridden West Asian region. Can Iran’s changed relationship with the U.S. persuade Saudi Arabia and other Arab countries to bring a halt to the Sunni-Shia hostilities that have threatened to destabilise the region? The possibilities following this breakthrough are indeed high.