• Data from the agriculture ministry shows that enrolment (during the rain-fed kharif season) rose from 30.9 million farmers in 2015 to 40.3 million in 2016, an impressive 30% jump.
• But delayed assessment of crop loss and settlement of claims which took six to nine months to complete led to farmers losing interest; enrolment fell to 34.8 million in 2017 and further plunged to 33.3 million in kharif 2018.
• Part of the decline was also because fewer farmers accessed fresh credit (due to a spate of farm loan waivers since mid-2017) since enrolment under crop insurance scheme is mandatory for farmers availing crop loans.
• Despite the drop in enrolment, state funding for PMFBY has increased significantly leading to complaints by farmer unions that the crop insurance scheme is benefiting insurance companies more than farmers.
• Available numbers show that premium collected by insurance companies rose from a meagre ₹5,614 crore in 2015-16 to ₹22,362 crore in 2016-17 and further to ₹25,046 crore in 2017-18 (including rabi and kharif crop seasons).
• Several studies and field investigations point to a host of reasons which has led to a trust deficit among farmers.
• To begin with, insurance companies are selling the product piggy backing on the banking infrastructure.
• For farmers availing crop loans, banks deduct the premium amount from the loan without even issuing a receipt.
• Farmers are never asked if they want insurance, and the product has became an easy way for banks to insure their loans.
• Further, in the event of any crop damage, farmers are at a loss as to whom to reach out to since most companies have not set up field offices to attend to customer complaints.
• A major challenge is conducting faster and accurate assessment of crop loss which is the responsibility of state governments.
• Assessment of crop losses are often delayed due to a paucity of local staff.
Assessment made by ICAR
• According to an assessment released by the Delhi-based think tank Indian Council for Research on International Economic Relations in February 2018,
• The reason why insurance companies charge high actuarial premiums is that cut-off dates for enrolment are frequently extended by states, often beyond the forecast and onset dates of the annual monsoon.
• The litmus test of any crop insurance programme is quick assessment of crop damages and payment of claims into farmers’ accounts directly, and from that point of view, the first year of implementation of PMFBY (2016-17) has not been very successful,” the study observed.
Mains Paper 3: Agriculture | Issues related to direct & indirect farm subsidies & minimum support prices
Prelims level: PMFBY
Mains level: Ensuring better implementation of PMFBY through additional provisions.