Nabard plans farmer distress index to plug support package loopholes

Last Updated02/05/2022

National Bank for Agriculture and Rural Development (Nabard) is planning to formulate a farmer distress index (FDI) to track, identify and support the real needy and distressed farmers.

A farmer's distress is usually measured by the amount of damage to their crops.
Instead of handing out a distress package to all farmers as is the current practice, financial institutions and the government can decide on an appropriate support package based on the severity of distress.
This index will not be consistent across the country because it will vary depending on the level of stress in each location.
This index will help the government departments, financial sector, and insurance companies to find out farmers in real need of distress package

According to a survey performed jointly by NABARD and Bharat Krishak Samaj (BKS), over 60% of small and marginal farmers (SMFs) in high and very high distress have not benefited from farm loan waivers (FLW).
Additionally, the SMFs in the medium distress category had a 60% exclusion rate.

The index will incorporate high-frequency data on climatic circumstances, weather conditions, agricultural commodities, farmer loan burdens, and market situations.
Excessive rainfall, monsoon rains, fluctuations in soil moisture and temperature, dry spells and drought, irrigation area, yield of important crops in each district, unexpected frost, and depth of subsurface water will all be measured by this index.
This index will also evaluate the marketing alternatives accessible to farmers, such as MSP help.
There will also be data on the farmers' current debt burden and crop insurance coverage.

Lenders and the government will be able to provide crop loan modification, unconditional grants, or entire debt cancellations depending on the degree of the difficulty.
Individual farmers can be helped based on a mix of their distress and the district index, which is calculated using the irrigation status of their crops, land, the average price in the district's Agricultural Produce Market Committee (APMC) marketplaces, and the district's average productivity.
Policymakers will be able to use such an indicator to monitor and predict farmer suffering.
The early detection of distress will aid in the formulation of various mitigation strategies.
Instead of focusing solely on crop losses, the index will provide a holistic assessment of farmer hardship.

Prelims Takeaway

Mains Track

Q. Farmer Distress Index (FDI) proposed by NABARD will provide a holistic assessment of farmer hardship. Discuss.