A parliamentary panel has pointed out falling footprints of the Centre’s flagship crop insurance scheme and expressed concerns over its withdrawal or non-implementation in seven states, saying more such examples in subsequent years and “delay in settlement of claims” will defeat its very purpose.
The standing committee on agriculture, in its report tabled in Lok Sabha, said that though most of the withdrawing states are implementing their own schemes, the central government must properly look into the reasons/factors leading to the withdrawal or non-implementation of its Pradhan Mantri Fasal Bima Yojana (PMFBY).
Punjab had never joined this central crop insurance scheme, which provides insurance coverage to the farmers against crop loss on account of natural calamities, whereas Bihar and West Bengal had withdrawn from it in 2018 and 2019 respectively. On the other hand, Andhra Pradesh, Gujarat, Telangana and Jharkhand did not implement the scheme last year. The states cited “financial constraints” and “low claim ratio during normal seasons” as the major reasons for non-implementation of the scheme.
The PMFBY was launched with effect from April 1, 2016, after rolling back earlier schemes to include more risks under crop insurance cover and make it more affordable to the farmers. It was very well received by the farmers in the first year. Its coverage was 30% of Gross Cropped Area (GCA) in 2016-17—the highest coverage in the history of crop insurance in India. But later, it decreased to 27% in 2018-19 and 25% in 2019-2020.
Records, referred to by the panel, show that the coverage in terms of area insured under the PMFBY decreased from 567.2 lakh hectares in 2016-17 to 508.3 lakh hectares in 2017-18 and subsequently to 497.5 lakh hectares in 2019-20. Withdrawal of the states from the scheme was cited by officials as one of the reasons for decrease in the scheme’s coverage.
Flagging the issue of delay in claim settlement, the panel, headed by BJP Lok Sabha member PC Gaddigoudar, said the farmers avail the insurance under PMFBY with an expectation that it will help in mitigation of their losses in time of distress. “But the delay in the settlement of the claims defeats the very purpose of the scheme.”
Though the ministry has made provision of penalties—12% interest per annum to be paid by the insurance companies to farmers for delay in settlement of claims beyond 10 days of prescribed cut-off date for payment—it has, so far, not resolved the problem.
Under the PMFBY, the farmers need to pay a uniform maximum premium of only 2% of the sum insured for all kharif crops (sown in summer) and 1.5% for all Rabi (winter) crops. In case of annual commercial and horticultural crops, the maximum premium to be paid by the farmers is only 5%. The balance premium is borne by the government, equally shared by the states and Centre.