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.
