The Pradhan Mantri Fasal Bima Yojana (PMFBY) was rolled out three agricultural seasons ago with the objective of reducing farmer suicides caused by crop losses. It is designed to compensate farmers for their cultivation costs in case there is a crop failure. It covers a lot of crop loss reasons on paper, however, its implementation still leaves a lot to desire. There have been a wide range of complaints from farmers, the most striking of which is perhaps the complete lack of awareness amongst most small and medium farmers. A conversation with farmers in Ahmedpur-Darewala village in the district of Sirsa in Haryana revealed that plenty of farmers were not informed before they were enrolled for the insurance. They only found out after the premium had already been deducted from their accounts. As a result, some of them could not claim compensation for their losses despite being insured just because they did not know they were insured.
The new insurance scheme, along with a weather based insurance scheme, are replacements of the earlier two insurance schemes, NAIS (National Agriculture Insurance Scheme) and MNAIS (Modified NAIS). It is meant to cover all the loopholes and problems that arose in the previous schemes. The last two schemes were only covered by government insurance companies, and the coverage of farmers under them remained dismally low. For PMFBY, the government roped in eleven private insurance companies, along with 5 public sector insurance companies in an attempt to improve performance. The scheme compulsorily covers all farmers who have availed loans for agricultural operations, and has consequently seen a rapid rise in the number of farmers enrolled in it. But there is no mechanism for loan farmers to disenroll from the insurance scheme. One particular farmer from Sirsa, Govind Ram, sat on a Dharna outside the bank having his account, demanding he be removed from the Yojana. When the question of delinking credit from compulsory insurance coverage was asked to the Agriculture Department during the Lok Sabha session of 2017, they replied saying there is no such plan yet. Around 30% of all farmers were enrolled in 2016 itself, with the government targeting 50% coverage by 2017.
With the rapid increase in the number of farmers being covered, a sharp increase has also been seen in the premium profits being made. Down to Earth magazine has reported that insurance companies have collected Rs 9,041.25 crore as premium for only Kharif of 2016. The total claims that were made at the end of Kharif were Rs. 4,270.55 crore. Out of these, just Rs 714.14 crore had been paid to farmers by March of 2017. Even if the claims were paid in full, the insurance sector would still have had a profit of Rs 4771 crore. About half of this premium is paid by the state and central governments. The money is directly moving from the government to insurance companies, without benefitting those for whom it is meant.
According to the guidelines of PMFBY, the selection of insurance companies as implementing agencies has to take place through a bidding process. This bidding process is there to create a competition between companies and offer the best possible premium rate to farmers. However, a Zila Parishad member from Haryana revealed that no such process took place. The companies were simply allocated districts in his region.
Another major problem with the Yojana is the process of estimation of crop yield. This is supposed to be done via CCEs or crop cutting experiments. The results of these experiments determine if the crop yield is less than the threshold yield. If it is, the insurance claims are calculated on the basis of the loss, and these claims are paid to the farmers. An estimate by AICIL, the Agriculture Insurance Company of India Limited, shows that the country will require four million crop cutting experiments. For these to be carried out within the limited time frame, at least four million people will also be required. The report of the Standing Agriculture Committee on the last Lok Sabha session noted that the exercise of crop cutting experiments is not being carried out with due diligence. The carrying out of CCEs at this scale requires the use of technological tools, as mandated by the guidelines of PMFBY. However, these tools are not being employed at the necessary scale.
By March 2017, six months after kharif 2016, the claims that were settled were less than a quarter of the claims made. That was the first season of the PMFBY. The Standing Agriculture Committee told the Agriculture Department that, “The Committee desire that an institutional mechanism may be put in place for monitoring expeditious settlement of pending claims by insurance companies within a stipulated time.” There is no data regarding the average time taken for settlement of claims by insurance companies. The Committee also demanded for this data to be collected by insurance companies and made available to it. According to Gopal Naik, professor at IIM Bangalore and a Board Member of AICIL, “After a crop loss takes place, anything beyond a month to receive claims is a long time for farmers to wait.” The long wait for claims settlement consequently affects their ability to prepare for the next agricultural season. They are forced to take loans from the informal sector at high interest rates to be able to sow their crops and are pushed into a debt trap yet again, effectively rendering the insurance scheme pointless.
A delegate from the All India Kisan Sabha (AIKS) met the Minister for Agriculture and Farmers Welfare with questions about the huge profits made by the insurance companies and the low claims settlement. According to their press release, the minister was unable to give any meaningful explanation. The delegation demanded that private insurance companies which have failed to settle insurance claims be blacklisted. However, according to the PMFBY guidelines, the performance of the empanelled insurance companies shall be monitored on an interval of three years. Detailed guidelines on the de-empanelment process were to be issued by the government but could not be found.
In the present scenario, the new Yojana does not seem to be tackling the problems it was meant to. Farmer agitation is already on the rise, and unless PMFBY goes through revisions and improvements, it will only add to the woes of the farmer.
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