India (Commonwealth Union)_ In the first cabinet meeting of the year 2025, the Narendra Modi-led government has announced two significant decisions aimed at bolstering the economic welfare of farmers. These decisions focus on the continuation of crucial support schemes, including crop insurance and fertilizer subsidies, as part of the government’s ongoing commitment to the agricultural sector. Since coming into power over six months ago, the Modi administration has introduced 23 major policy decisions benefitting farmers, marking the highest number of initiatives for any specific demographic segment. This is especially noteworthy against the backdrop of growing farmer protests, which have demanded legal guarantees for the Minimum Support Price (MSP).
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Although the government has refrained from legislating on MSP, it has raised it for several crops, demonstrating responsiveness to farmer concerns. In a time when farmer unrest has been vocal, even threatening to impact the ruling party’s electoral prospects, the BJP-led government appears confident. Recent electoral victories in Haryana and Maharashtra seem to reflect that farmer demands have not significantly affected the party’s popularity, despite protests. Furthermore, Prime Minister Narendra Modi has made it clear that his government is keen to position itself as a compassionate ally of farmers, aware that unresolved grievances could escalate into larger discontent within the farming community. “This cabinet meeting reflects our ongoing dedication to enhancing the prosperity of farmers,” he stated during a briefing.
Extension of crop insurance scheme
The cabinet meeting, chaired by Prime Minister Modi, approved the continuation of two critical programs designed to offer farmers financial security in the face of adversity. Information and Broadcasting Minister Ashwini Vaishnaw outlined the approval of the Pradhan Mantri Fasal Bima Yojana (PMFBY) and the Restructured Weather-Based Crop Insurance Scheme (RWBCIS), which will remain operational through 2025-2026 with an outlay of Rs 69,515 crore, spanning from 2021-2022 to 2025-2026. The overarching goal of the crop insurance schemes is to provide risk coverage for crops affected by natural calamities that are beyond human control.
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The government aims to improve the efficiency and effectiveness of these schemes, ensuring that farmers receive prompt and fair compensation for crop losses. Additionally, a new initiative is being introduced to infuse large-scale technology into the schemes to enhance transparency in claim calculations and settlements. A key component of the government’s strategy is the creation of the Fund for Innovation and Technology (FIAT) with an initial corpus of Rs 824.77 crore. This fund will be utilized to incorporate technological advancements, improving the overall functioning of the insurance mechanisms and ensuring quicker payouts to farmers when disasters strike.
Extension of special fertilizer package
In another important move, the cabinet also approved an extension of the One-Time Special Package on Di-Ammonium Phosphate (DAP) fertilizers, which is designed to ensure affordable access to this essential agricultural input. The subsidy, beyond the existing Nutrient-Based Subsidy (NBS), will be extended at Rs 3,500 per metric ton (MT). This move aims to maintain the availability of DAP fertilizer at affordable prices for the upcoming Kharif and Rabi seasons in 2024-2025.
Furthermore, the government’s commitment to keeping DAP prices stable comes amidst volatile global market conditions and geopolitical uncertainties that have affected the fertilizer market. The decision to extend this subsidy package comes with an estimated financial outlay of Rs 3,850 crore, raising the total financial commitment towards ensuring affordable fertilizer prices to over Rs 6,475 crore since April 2024. This initiative underscores the government’s determination to shield farmers from market fluctuations that could otherwise increase their cost of production.
Government’s long-term commitment to farmers
The government’s proactive approach is indicative of a longer-term strategy to foster a more sustainable agricultural ecosystem. By focusing on risk mitigation through insurance schemes and ensuring continued support in the form of fertilizer subsidies, the Modi administration is aiming to protect farmers’ livelihoods and promote agricultural prosperity. While the demand for a legal MSP guarantee remains a point of contention, these recent measures reflect the government’s ongoing dialogue with the farming community.
For the Modi government, the support of farmers is crucial not just for economic reasons but also as a political priority. As it heads into a new year with a focus on enhancing farmer welfare, the administration remains committed to addressing the evolving needs of India’s agricultural sector. With these latest cabinet decisions, the government is demonstrating that its dedication to the farmer community is unwavering, laying the groundwork for continued policy support in the coming years.
