What is the issue?
- PM Fasal Bima Yojana (PMFBY) is an all encompassing crop insurance scheme that was touted relieve farmers of their uncertainties.
- But its implementation has been patchy and widespread delays in payment have been defeating the very purpose of the scheme.
What are the statistics?
- PMFBY crop insurance covers losses at every stage, “from sowing to post-harvest” and was intended to insulate farmers from the strain of crop failures.
- PMFBY insures for production costs for various crops, and farmers having to pay about 2% of total estimated production value as insurance premium.
- An additional amount is pitched by the government (subsidy) for every policy to make the scheme financially viable for insurance companies.
- The amount to be paid by the government is decided based on the risk assessment done for various crops and regions – which presently accounts for approximately 50% of the total.
- The Numbers - Insurance companies collected premiums of Rs 22,180 crore in 2016-17 and Rs 24,454 crore in 2017-18 under PMFBY.
- But they disbursed only Rs 12,959 crore in claims for 2016-17 and have paid out just over Rs 400 crore for the last crop year so far.
- There is an argument that 2016 and 2017 were normal monsoon years (thereby resulting in lower payouts), and that claims might go up in calamitous years.
- However, this assertion doesn’t correlate with the field reports, and it appears that PMFBY is faltering to delivering what was promised.
What are the teething troubles?
- The 2017 kharif crop’s harvesting was over by December, but farmers have thus far got only Rs 402 crore of payments.
- This is against the estimated claims of Rs 13,655 crore by state government and Rs 1,759 crore approved by insurance companies.
- Even for the 2016-17 crop year, there is a difference of Rs 1,474 crore between the payments approved and actually made.
- The delay in payments is defeating the very purpose of the scheme, which is to reduce the financial distress and save them from the crutches of moneylender.
- Timely payments are critical to enable farmers settle previous borrowings and access formal credit for the next sowing.
What is the way forward?
- 50% of the PMFBY premium subsidy is borne by the state governments that are also responsible for determining yield losses.
- As insurance deserves higher priority that fertilizer and other agri-support, it makes sense for the centre to fund the entire subsidy amount.
- This will provide for better coordination in subsidy transfer to the insurers and also make claim disposals swift.
- The Centre can further link release of subsidy to the states adhering to prescribed operational schedules for assessing the extent of crop failure.
- Also, extensive employment of remote-sensing technology for sampling of fields and capturing survey data with time and date stamping is required.
Source: Indian Express
