After Chief Minister Nitish Kumar scrapped Prime Minister’s crop insurance scheme (known as Prime Minister Fasal Bima Yojna —PMFBY) in Bihar and complaints poured in from across the country about insurance companies making huge profits at the cost of farmers, the Union Government has ordered a review of the scheme. The Ministry of Agriculture has asked General Insurance Corporation of India to look into ways to finalise rational premium.
In a note to General Insurance Corporation of India, the Agriculture Ministry has said, “The Government is reviewing the implementation of the PMFBY and how to make it effective in practical terms so that more farmers could be benefit from the scheme.” The sources said several State Governments have complained that the scheme is more beneficial to insurance companies rather than farmers in distress. Insiders said the PMFBY is a classic case of poor implementation of a good scheme. Several State Governments have alleged that farmers have not benefitted from this scheme and delay in paying “claim amount” is still an issue. Though the Centre is working with the States and other stakeholders to adopt new technology at the earliest so that timely claim settlement is ensured, farmers in many States have to wait long to get claims.
Highlighting instances of inadequate and delayed claim payment to farmers, insiders said, insurance companies, in many cases, did not investigate losses due to a localised calamity and, therefore, did not pay claims.
Based on its field study in Haryana, Tamil Nadu and Uttar Pradesh and engagement with farmers, insurance companies and Government departments, the Centre for Science and Environment in its report had noted that the PMFBY mainly remains a scheme for loanee farmers. It means farmers who take loans from banks are mandatorily required to take insurance.
An official associated with the PMFBY, told The Pioneer that insurance companies had paid more “claim amount” than the “gross premium” in 2014-15 and 2015-16 which were drought years. “Most of the companies had, however, booked profits in 2016-17 which was good monsoon year. This is how insurance business runs,” official added.
On the other hand, officials said the new scheme permits insurance company representatives to take part in the crop-cutting experiments. “This may be one of the reasons for the decline in number of beneficiaries and areas under the scheme,” the official said.
“Besides, manual yield data collection and manual transmission to insurance companies impedes timely and accuracy yield data which in turn used to lead to delay in claim processing and settlement under erstwhile scheme,” the official added.
As per Agriculture Ministry’s data, the number of farmers insured during both the Kharif and Rabi seasons has gone down by 14 per cent.
And the area under crop insurance scheme has come down to 24 per cent of gross cropped area (GCA) in 2017-18 from 30 per cent in 2016-17. In 2017-18, the area insured under the PMFBY was 47.5 million hectares, which translate into 24 per cent of the GCA of 198.4 million hectares.
“Over 1.20 crore farmers benefited from the crop insurance scheme during the Kharif season last year and the Rabi season in 2016-17 as compared to 1.62 crore in 2013-14. In 2016-17, over 5.73 crore farmers insured their crop while 3.33 crore farmers in 2013-14,” it said.
As per the Government’s targets, the coverage in 2017-18 should have increased to 40 per cent but has actually reduced to 24 per cent.
Earlier, dumping the centre’s PMFBY, the Nitish Kumar Government in Bihar had alleged that the farmers were getting little relief through the scheme. “For Kharif and Rabi seasons, insurance companies were deposited Rs 800 crore (Rs 400 crore each from the Centre and the State) but the farmers got relief worth Rs 150 crore only,” it said.
In the Bihar, Rajya Fasal Sahayta Yojana (BRFSY) -- a new scheme introduced by the Nitish Kumar government -- makes Bihar the first State to launch its own insurance scheme for its farmers by discarding PMFBY. While in PMFBY the farmers had to pay a premium to crop insurance companies, they will not have to pay anything from their pocket under BRFSY. The State’s farmers will be entitled to fixed monetary benefits in the event of crop loss due to natural calamities. The Mamta Benerjee Government has already refused to implement the scheme in West Bengal.
The Government had allocated Rs 55 billion in the Budget for 2016-17, which was increased to Rs 1,324 billion. In 2017-18, the allocation was Rs 90 billion. For 2018-19, the Government has provided Rs 130 billion with a target to bring 98 million hectares -- close to 50 per cent of gross cropped area -- under the scheme.