PM increases compensation for crop damage by 50%

Prime Minister Narendra Modi on Wednesday announced a 50 per cent increase in compensation to farmers for damage to their crop because of untimely rainfall and other such causes. Also, the eligibility criterion for this was lowered from loss of 50 per cent of potential crop to 33 per cent.

The move comes when untimely rain and hail have destroyed standing rabi crops and there is resentment among farmers over the government’s land acquisition Bill.

In another development, the government rejected Congress president Sonia Gandhi’s demand that wheat be procured even if it had more than 14 per cent moisture. Food Minister Ram Vilas Paswan, however, relaxed procurement norms for discoloured and broken wheat.

“Compensation will be increased one and a half times. If he (the farmer) got Rs 100 earlier, he will get Rs 150 now,” Modi said at the launch of the Micro Units Development and Refinance Agency (MUDRA) in New Delhi.

Earlier, farmers could seek compensation of Rs 4,500 a hectare, or Rs 9,500 a hectare, or Rs 12,000 a hectare, depending on the crop sown and the nature of land, only if they lost 50 per cent of their crop because of natural calamities. Now, they will get Rs 6,750, Rs 14,250 or Rs 18,000 a hectare, if the crop loss is at least 33 per cent.

“Once, incremental (compensation) was two per cent or five per cent; now, it is 50 per cent. We are committed to providing compensation to farmers immediately. States have conducted surveys. The Centre and state governments will take this forward,” the prime minister said.

“Chief ministers had suggested the criterion for availing of damages be changed. Our ministers went to some of the affected areas and assessed the damage. After that, we took the important decision of providing compensation even if a farmer’s crop loss was 33 per cent,” Modi said.

The prime minister also asked banks to restructure their loans in affected areas. On this, Reserve Bank of India Governor Raghuram Rajan has already said necessary instructions have been issued to lenders.

Modi also asked insurance firms to help farmers get claims for their damaged crops.

The total hit the national exchequer will have to take on account of recent crop damages isn’t immediately known, as an assessment of individual farmers’ losses is yet to be made. In this regard, the Centre will send a team of officials to Rajasthan on Thursday.

According to the 13th Finance Commission, whose recommendations were for 2010 to 2015, the Centre disbursed Rs 33,580 crore to states as disaster relief. The 14th Finance Commission, whose recommendations have been accepted by the Narendra Modi government, the transfers to states for disaster relief is expected to be to the tune of Rs 61,219 crore during 2015-2020, an increase of about 80 per cent.

Last month, the government had slashed its estimate of crop damage due to unseasonal rain and hail within two days of assessment — from 18 million hectares to 10.6 million hectares. Now, it has reduced it to 8.5 million hectares.

Before this, the Centre had last revised the compensation guidelines in 2013. Officials said a decision to revise the parameters for assistance under the National Disaster Relief Fund was taken at a meeting of senior central ministers late Tuesday evening. The meeting, attended by Finance Minister Arun Jaitley, External Affairs Minister Sushma Swaraj, Road Transport Minister Nitin Gadkari and Home Minister Rajnath Singh, also took note of the Haryana model, which has revised compensation norms after the recent spell of rain and hail.

Later, Agriculture Minister Radha Mohan Singh said the government had directed states to set aside 10 per cent of their disaster response funds received from the Centre for localised calamities such as hail.

In view of the likelihood of an increase in the prices of onion and potatoes, the Centre has written to Uttar Pradesh, Maharashtra and West Bengal to purchase stocks and sell these at lower prices when needed; the difference in price would be reimbursed from the newly created Price Stabilisation Fund, which has a corpus of Rs 500 crore. It can be availed of if prices of onions and potatoes fall sharply.

“I believe all state governments are competent enough to provide adequate relief to farmers. Now, it is up to them as to how they do it,” Singh said.

Change in assistance structure available to farmers under the National Disaster Response Fund

  • Input subsidy is given if crop loss is 50 per cent or more
  • Rs 4,500/ha in rain-fed areas and restricted to sown areas
  • Rs 9,000/ha in assured irrigated areas
  • Rs 12,000/ha for all types of perennial crops


  • Input subsidy will be provided if crop loss is 33 per cent or more
  • Rs 6,750/ ha in rain-fed areas and restricted to sown areas
  • Rs 14,250/ha in assured irrigated areas
  • Rs 18,000/ha for all types of perennial crops