Premium delayed, farmer denied -Ashok Gulati & Siraj Hussain
-The Indian Express
Pradhan Mantri Fasal Bima Yojana does not inspire confidence of farmers. They have to wait for months, sometimes years to get compensation.
This article is the second in the series assessing the performance of the BJP-led NDA government at the Centre in the agri-food space over the last four years. The first one appeared in this newspaper on May 2 (IE, ‘Four years of neglecting farmers’). Here we look at the BJP’s promise in its manifesto, namely, “a farm insurance scheme to take care of crop loss”.
Prime Minister Narendra Modi took a bold decision to revamp the existing crop insurance scheme after two years of successive droughts in 2014-15 and 2015-16. The Pradhan Mantri Fasal Bima Yojana (PMFBY) was launched in April 2016. It fixed a low premium for farmers — 1.5 per cent for rabi crops, 2 per cent for kharif crops, and 5 per cent for horticulture and other commercial crops — and enhanced the sum insured to cover basically the cost of cultivation. It targeted bringing 100 million hectares (50 per cent of gross cropped area) under PMFBY by 2018-19. One had hoped that this new PMFBY will undertake the assessment of damages and settlement of claims expeditiously in the event of any natural calamity, and farmers will get enhanced compensation on time. Has that happened?
The answer is no. One does not see PMFBY achieving its target of covering 50 per cent of gross cropped area (GCA) by 2018-19. Except a few states (see graph), India’s current insurance cover is about 30 per cent of GCA. As against this, China insures about 70 per cent of its GCA and the US extends insurance cover to about 90 per cent of GCA. The primary reason behind PMFBY’s lacklustre performance is that it suffers from several administrative glitches and the typical red-tape that does not inspire confidence with farmers as they have to wait for months, and even years, to be compensated for their losses.
The most important role, however, is played by state government, which finalises the insurance company for every cluster through open tenders, pays half of the premium subsidy, conducts crop cutting experiments and submits data of crop yield to the insurance company. In order to get reasonable rates of premium, timely finalisation of bids to discover premium is critical. This should be done well before the first forecast of the monsoon by the IMD so that there is no adverse selection. However, the experience of the first two years shows that most states do not finalise the selection of the insurance company in time. This year, for example, Gujarat and Rajasthan have still not finalised the insurance company for their clusters. We fear that in a year of a poor forecast of the monsoon, the companies will quote a very high premium.
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