A survey conducted in three states of south India has found 43 per cent of farmers to have crop insurance. However, half of the surveyed farmers with bank crop loans were not aware if they had crop insurance. Most of these farmers were not sure of the premium paid, sum assured or the process of claiming crop insurance.

Simply put, surveyed farmers were found to be unaware of the payments to be made to avail crop insurance while their debt continued to compound because of crop loans. It is to be noted that 65 per cent of farmers in the survey were found to have an education level below 10th standard.

These findings of the survey were recently released on April 19 in a report titled 'Small Farmers Big Opportunities: Understanding small holder farmers' by The Nudge Institute, a Karnataka-based action institute that aims to work towards poverty-free India.

As part of the survey, 107 farmers in Karnataka, Andhra Pradesh, and Telangana were interviewed between November 2021 and February 2022.

84 per cent surveyed farmers in debt

Incidence of loans was found to be high with 84 per cent surveyed farmers in debt. Of these, 67 per cent were crop loans from banks. Only 16 per cent were repaying their loans – many are "evergreening" while others were only paying interest or not paying anything at all. This is because they feel they will get a loan waiver from the government, reads the survey report.

The Nudge Institute study found that a farmer, on average, has Rs 240,000 of loan in a financial year, taken for farming, household expenses, purchase of household assets, marriage, health care expenses, and small business.

The biggest concern farmers have is the impact of climate: 70 per cent of them have experienced significant crop damage at least once in the past three years. Unseasonal rains such as delayed rains post sowing or rains during flowering stage and the harvesting stage — all of this leads to crop damage and poor yields. More problematic was excess rains last year than less rains.

Farmers manage to deal with crop damage mostly by doing extra labour work and taking loans.

The Indian government provides crop insurance in order to cover the losses suffered by farmers due to reduction in crop yield due to cyclonic rains and losses due to unseasonal rainfall in India.

Interestingly, the Nudge Institute study found that only one in three (34 per cent) farmers had received compensation (partial or full) from crop insurance.

Meanwhile, another recent study titled Farm Loan Waivers in India: Assessing Impact and Looking Ahead found that four in ten distressed surveyed farmers did not receive any farm loan waiver benefits in Punjab, Maharashtra, and Uttar Pradesh, which together comprise 27 per cent of the total Indian agricultural landholdings.

Farm loan waivers are customised schemes announced by state governments to help the distressed farmers during crop loss as a result of natural calamity such as drought and floods or poor monsoon and farmers are unable to repay loans.