17/08/2020 - Government Policies | Mainstorming

IAS Parliament 4 years

KEY POINTS

· Five years after its inception in 2016-17, the Pradhan Mantri Fasal Bima Yojana (PMFBY) has run into rough weather. If farmers are dissatisfied with both the level of compensation and delays in settlement, insurance companies have shown no interest in bidding for clusters that are prone to crop loss.

· States (Bihar, West Bengal and Andhra Pradesh, Telangana, Jharkhand and now Gujarat) are opting out of the scheme and launching their own versions. They are unable to deal with a situation where insurance companies compensate farmers less than the premium they have collected from them and the Centre.

· In Maharashtra’s Beed cluster, farmers are up against the State government and insurance companies for not settling earlier claims, while the latter have decided to stay out of bids for this region for the current season.

· The task ahead is to sweeten the deal for farmers and insurance companies. Madhya Pradesh is struggling to find insurers for its 11 clusters, having reportedly finalised just five so far .

· Insurance companies should bid for a cluster for about three years, so that they get a better chance to handle both good and bad years. The bids should be closed before the onset of the kharif/rabi season.

· If the farmer is not enthused by crop insurance despite the 95-98 per cent subsidy on premium, it means that the product per se needs improvement.

· Farmers deserve a better choice of insurance products to meet the specifics of each crop or region. For this, insurance companies should be offered more freedom to operate.

· For now, the Beed ‘model’, where a company assumes liability only up to 110 per cent of the premium collected or shares gains in a good year with the State government, can emerge as a way out of the current mess.