A Dressed Up Version of the Pradhan Mantri Fasal Bima Yojna (PMFBY)
The hard pressed farmers are still committing suicide due to crop failure and not getting minimum support price (MSP) of their produce. The government sat quiet for four years to honour her promise on MSP and whatever announced under the scheme in a huff is very confusing and not in line with her promise. It was obvious that the MSP as announced by the government is un-implementable in the current term of their office. Crop failure is another major reason for farmers committing suicide due to their inability to pay back their loan to the bank.
Agriculture insurance is recognized the world over as an important safety net for farmers to deal with the impacts of extreme and unseasonal weather condition due to climate change. The Pradhan Mantri Fasal Bima Yojna (PMFBY) was launched by the Centre on April 1, 2016 to help farmers cope with crop losses due to unseasonal and extreme weather. It is hardly the historic and path-breaking scheme that the government claims it to be. It is a dressed up version of already existing crop insurance schemes without addressing any basic issues, announced with much fanfare by the NDA government.
The positives:
Coverage of agricultural insurance has increased in kharif 2016 compared to kharif 2015 across India. The number of farmers insured crossed 4 crores during kharif 2016, a jump from 3.09 crores in kharif 2015.
The sum insured is now closer to the cost of production than before. It has gone up from Rs 20,500 per hectare of land during kharif 2015, to Rs 34,370 in kharif 2016. This means in case of losses, farmers should theoretically get significantly higher compensation than before. However, in some states like Rajasthan, the sum insured remains very low—about one-third of the cost of production.
CAG report reveals :
Small farmers constitute 85% (12 crores) of India's total 14 crore farmers, but only 13.32% are covered.
The CAG report found that Department of Agriculture, Cooperation and Farmers’ Welfare (DAC&FW) under the Ministry of Agriculture and Farmers’ Welfare released funds, but was delayed at the state government level to provide financial aid to farmers.
Protocol by Agricultural Insurance Company of India Limited (AIC) not followed as the schemes failed to exercise due diligence in verification of claims by private insurance companies before releasing funds to them.
Records of the money reached the beneficiaries are missing as the database of beneficiaries was not maintained and as per CAG audit the government failed to ensure if Rs 10,617.41 crores released as premium subsidy under which Weather-Based Crop Insurance was also included as an important component. The government also failed to ensure whether Rs 21,989.24 crore released as claim reimbursement reached the intended beneficiaries or achieved the intended purposes, the report observes.
Claims worth Rs 8,947.41 crores were paid in the nine audited states, but only 30℅ of the amount had utilization certificates (UC) to prove it reached farmers. The report observes, Implementing agencies did not ensure submission of UCs by Bank/financial institutions and therefore, did not have even the minimum assurance from the Bank/FIs that they had distributed the claim amounts to beneficiary farmers.
To look at the practical side the farmers’ movements have been demanding a comprehensive relief-cum-insurance scheme that is universal in its coverage - all farmers, all crops, all forms of damage and at every stage of crop cycle, affordable for the farmers. Their legitimate demand is that coverage should offer adequate amount of compensation, quick and simple ways of assessing crop damage and is free of corruption and hassle in the delivery of the insurance amount. On these counts, PMFBY fails to meet most expectations.
The government’s claim about reduction in premium for the farmer is not wholly true. The already existing NAIS (National Agricultural Insurance Scheme) has low premium – 1.4% to 3.5% in 14 states whereas the MNAIS (Modified NAIS) in 6 states has higher premium. States with NAIS lower premium rates still have very low coverage of farmers and area under crop insurance than MNAIS. Thus the crop insurance schemes have failed to protect and enthuse the farmers so far. The various crop insurance schemes have had very limited subscription, that too mainly through compulsory insurance of Kisan Credit Card holders, limited coverage and very complicated ways of assessing damage and making payments.
Farmers have no hopes in government’s promise to the farmer and her expectation that insurance cover will go up from existing 23% to 50% in three years appears to be based more on hope than any evidence.
The expansion plan and sharing subsidies in 50-50 ratio between Centre and State is unclear yet if the states have agreed to bear their share of the subsidies.
Scheme do not address the problem of tenant farmers who bear the risk of crop failure and thus are not entitled for compensation and insurance payments.
It is not clear as to how yield based compensation of last how many years shall be considered to determine the method of damage based on individual farm unit than tehsil/block/panchayat to the village base. This is what the farmers are demanding.
It appears that the PMFBY has been based on the understanding within the departments and insurance companies on what is "best" without incorporating the view of farmers, farmers' movements and indeed the recommendations of the P K Mishra Committee appointed by the government itself.
Agriculture insurance is recognized the world over as an important safety net for farmers to deal with the impacts of extreme and unseasonal weather condition due to climate change. The Pradhan Mantri Fasal Bima Yojna (PMFBY) was launched by the Centre on April 1, 2016 to help farmers cope with crop losses due to unseasonal and extreme weather. It is hardly the historic and path-breaking scheme that the government claims it to be. It is a dressed up version of already existing crop insurance schemes without addressing any basic issues, announced with much fanfare by the NDA government.
The positives:
Coverage of agricultural insurance has increased in kharif 2016 compared to kharif 2015 across India. The number of farmers insured crossed 4 crores during kharif 2016, a jump from 3.09 crores in kharif 2015.
The sum insured is now closer to the cost of production than before. It has gone up from Rs 20,500 per hectare of land during kharif 2015, to Rs 34,370 in kharif 2016. This means in case of losses, farmers should theoretically get significantly higher compensation than before. However, in some states like Rajasthan, the sum insured remains very low—about one-third of the cost of production.
CAG report reveals :
Small farmers constitute 85% (12 crores) of India's total 14 crore farmers, but only 13.32% are covered.
The CAG report found that Department of Agriculture, Cooperation and Farmers’ Welfare (DAC&FW) under the Ministry of Agriculture and Farmers’ Welfare released funds, but was delayed at the state government level to provide financial aid to farmers.
Protocol by Agricultural Insurance Company of India Limited (AIC) not followed as the schemes failed to exercise due diligence in verification of claims by private insurance companies before releasing funds to them.
Records of the money reached the beneficiaries are missing as the database of beneficiaries was not maintained and as per CAG audit the government failed to ensure if Rs 10,617.41 crores released as premium subsidy under which Weather-Based Crop Insurance was also included as an important component. The government also failed to ensure whether Rs 21,989.24 crore released as claim reimbursement reached the intended beneficiaries or achieved the intended purposes, the report observes.
Claims worth Rs 8,947.41 crores were paid in the nine audited states, but only 30℅ of the amount had utilization certificates (UC) to prove it reached farmers. The report observes, Implementing agencies did not ensure submission of UCs by Bank/financial institutions and therefore, did not have even the minimum assurance from the Bank/FIs that they had distributed the claim amounts to beneficiary farmers.
To look at the practical side the farmers’ movements have been demanding a comprehensive relief-cum-insurance scheme that is universal in its coverage - all farmers, all crops, all forms of damage and at every stage of crop cycle, affordable for the farmers. Their legitimate demand is that coverage should offer adequate amount of compensation, quick and simple ways of assessing crop damage and is free of corruption and hassle in the delivery of the insurance amount. On these counts, PMFBY fails to meet most expectations.
The government’s claim about reduction in premium for the farmer is not wholly true. The already existing NAIS (National Agricultural Insurance Scheme) has low premium – 1.4% to 3.5% in 14 states whereas the MNAIS (Modified NAIS) in 6 states has higher premium. States with NAIS lower premium rates still have very low coverage of farmers and area under crop insurance than MNAIS. Thus the crop insurance schemes have failed to protect and enthuse the farmers so far. The various crop insurance schemes have had very limited subscription, that too mainly through compulsory insurance of Kisan Credit Card holders, limited coverage and very complicated ways of assessing damage and making payments.
Farmers have no hopes in government’s promise to the farmer and her expectation that insurance cover will go up from existing 23% to 50% in three years appears to be based more on hope than any evidence.
The expansion plan and sharing subsidies in 50-50 ratio between Centre and State is unclear yet if the states have agreed to bear their share of the subsidies.
Scheme do not address the problem of tenant farmers who bear the risk of crop failure and thus are not entitled for compensation and insurance payments.
It is not clear as to how yield based compensation of last how many years shall be considered to determine the method of damage based on individual farm unit than tehsil/block/panchayat to the village base. This is what the farmers are demanding.
It appears that the PMFBY has been based on the understanding within the departments and insurance companies on what is "best" without incorporating the view of farmers, farmers' movements and indeed the recommendations of the P K Mishra Committee appointed by the government itself.
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