I had a lot of expectations from the newly introduced Pradhan Mantri Fasal Bima Yojna. Coming after a series of climatic aberrations in 2015 that saw unseasonal rains and hailstorm lash the standing crops in the northwestern States of Uttar Pradesh, Haryana, Punjab, Rajasthan, Madhya Pradesh and Maharashtra, resulting in an unprecedented spurt in farmer suicides, the farming community awaited eagerly for a silver lining to emerge from the otherwise dark skies that continue to prevail.
After the media had painted a bright picture, terming the new crop insurance scheme as ‘path-breaking’ and the government even going to the extent of calling it a ‘game changer’, I found the devil actually lies in the detail. The Pradhan Mantri Fasal Bima Yojna is certainly a big bonanza for the insurance companies but when seen from the point of view of farmers, it is yet another damp squib. But first let us look at how the insurance companies are going to gain. In 2015, the insurance companies earned a premium of Rs 1,500 from the farmers, and in addition got a premium subsidy of Rs 5,500-crore from the Centre as well as from the States, both contributing 50 per cent. In total, insurance companies got around Rs 7,000-crores.
Under the new PMFBY scheme, which will come into effect from April, the direct premium amount from farmers is expected to increase to Rs 2,000-crores. In addition, the Centre will provide Rs 8,800-crores, with the States expected to provide another Rs 8,800-crore. This totals to Rs 19,600-crore. From Rs 7,000-crore to Rs 19,600-core is quite a significant jump for any business. If not for farmers, certainly it is path-breaking for the insurance companies.
Now let us look at how the insurance scheme will work out for farmers. Under the new scheme, farmers will pay an uniform premium of 1.5 per cent for the rabi crops, 2 per cent for the kharif crops, and 5 per cent for horticultural crops. In the earlier National Agricultural Insurance Scheme (NAIS) farmers were paying a premium of 1.5 per cent for wheat and 2 per cent for other rabi crops. For the kharif crops, which are cultivated in the months of monsoon, it was 2.5 per cent for paddy and pulses but 3.5 per cent for more risky crops like bajra and oilseeds. For the horticultural crops, the premium was worked out on actual basis, which varied with crops and the region.
Although there is not much of a change, but the uniformity in insurance premium is certainly a welcome step. But what was troublesome was that most farmers who earlier enrolled for crop insurance were bank loanees. The premium amount would be automatically cut from their bank accounts and made available to insurance companies. Bankers tell me that the insurance companies only come to the bank once to get their share of premium and return the next season. Insurance companies don’t even know what crop the farmer was sowing nor did they ever care. In other words, Insurance companies often don’t even know what crop had been insured.
The same system will continue to operate under the new scheme. De-linking crop insurance from bank credit is what was required.
Farmers are not reluctant to go in for crop insurance because of the premium cost. They are not interested because they find the claims that are worked out for the crop loss they actually incur to be completely ridiculous. A news report in a major Hindi daily in Rajasthan for instance has in a survey conducted in four districts covering 200 Assembly segments found that 85 per cent farmers did not get any claim in the past four years. In another reply in Rajasthan Assembly, it was revealed that insurance companies had a net earning of Rs 1,234-crore between 2010 and 2014. Of the 2.14-crore farmers who paid the insurance premium, only 1.84-crore got some part of the claim. Accordingly, 0.30-crore farmers were left high and dry. This problem remains in the new scheme.
The basic fault lies with the way the average crop loss is worked out. In the past, the average loss computed in a block or taluka was considered while assessing the crop loss suffered by a farmer. In the Pradhan Mantri Fasal Bima Yojna too, a village or a village panchayat has been taken as the unit of insurance. It means that irrespective of what the loss an individual farmer suffers from hailstorm or strong winds etc, the compensation he will get will be based on the average loss in crop production in a village. This is primarily the reason why farmers were never enthused to take up crop insurance.
I have always questioned this faulty methodology. After all, if a house in a residential colony catches fire, the owner gets the claim he filed for. Why shouldn’t the same methodology work in the farming sector? After all, 60 per cent of the total insurance is done in 50 risk prone districts across the country. Given that 11 insurance companies are into the business, I see no reason why these companies cannot be directed to assess loss on a per unit farm basis? In these 50 districts to begin with, each company can map each and every farm in five villages each. Why are the insurance companies not being directed to pay the insurance claim based on each farm is baffling indeed.
So for all practical purposes, the new scheme is actually a repackaging of the National Agricultural Insurance Scheme that existed earlier. NAIS scheme still operates in 18 States. Much of the problem was actually compounded with the launch of a Modified National Crop Insurance Scheme a few years back. Many States governments which took up MNAIS have since abandoned it.
Use of technology to assess the crop losses is certainly welcome. But the use of drones and smart phones can only point to a crop field being visibly damaged. The loss has still to be computed on the ground. Crop cutting experiments is perhaps the only plausible way to assess the crop losses. Increasing the number of crop cuttings from the existing 16-lakh a year to about 30-lakh is certainly welcome but how it will be done has not been spelled out. Already the way revenue officials have been undertaking the task has remained under the scanner.
It is here that I think the Crop Insurance scheme drawn up by the Haryana government merits attention. Haryana too had plans to use technology, using satellite imagery in the first stage. In addition, Tehsildar along with concerned officials from the block level will be members of a team that will examine satellite data within 48 hours of a natural disaster. At the second stage, physical verification will be undertaken by two teams simultaneously – one comprising the patwari and nambardar, and the other having Sarpanch and Agricultural Development Officer. This will certainly minimize the chances of corruption that existed in the earlier girdwari exercises. #
Another damp squib, Deccan Herald. Jan 2, 2016
फसल बीमा की बाधाएं Dainik Jagran Feb 4, 2016