Agri Business

50 districts out of 600 account for half of all crop-cover claims: Official

TV Jayan New Delhi | Updated on August 08, 2019 Published on August 08, 2019

“The last three years were relatively good years for Indian agriculture”. Representative image   -  The Hindu

Centre asks States to check for foul play

About 50 per cent of total claims under the Pradhan Mantri Fasal Bima Yojana (PMFBY) come from the same 45 to 50 districts in the country year after year, prompting the government to check for foul play, said a senior official at the Agriculture Ministry.

“Around 45 to 50 districts out of 600 districts in the country are accounting for 50 per cent of claims year after year. At a recent meeting attended by the State Agriculture Ministers and top State government officials, we advised the State governments to do a detailed assessment of it, said Ashish Bhutani, PMFBY CEO and Joint Secretary (Credit) at the Agriculture Ministry. He was speaking at a conference organised by FICCI on crop insurance here.

One possibility is to move these regions and crops where claim payouts are suspiciously high from PMFBY to weather-based crop insurance scheme, Bhutani said. He cited the example of a couple of districts in Maharashtra where the cropped area covered under the scheme is more than the cumulative area available for agriculture in those districts.

Suspect districts

An official, who did not want to be named, said the districts from where unusually large number of claims come are in Saurashtra in Gujarat, districts such as Jalna and Aurangabad in Maharashtra, and Churu in Rajasthan.

According to Bhutani, farmers are having a wrong perception that insurance companies are making huge profits. The last three years were relatively good years for Indian agriculture. Still, nearly 80 per cent of the premiums collected by the companies went back to farmers as claim payouts. Out of the remaining 20 per cent, 12-14 per cent is used by the insurance companies to reinsure their risks. So, their profit actually is only 4 to 6 per cent.


Agreeing with Bhutani, Rajiv Chaudhary, Chairman and Managing Director of State-run Agriculture Insurance Company of India Ltd, which handles nearly half the crop insurance policies under PMFBY, said, “There is a need to counter the misconception that insurance companies are making huge profits at the expense of farmers. Last three years were relatively good years and there could be a bad year in which an insurance company may have to shell out up to 130 or 150 per cent of the premiums collected.”


To counter the wrong perception, the Centre is toying with the idea of creating a pooling mechanism where insurance firms will deposit all the premiums collected under PMFBY and payouts can made from this kitty, Bhutani said. The government put the proposal to the States when State Agriculture Ministers met in New Delhi on July 8. “But only 5-6 States have come back to us so far,” he said, adding that a decision would be taken in 15-20 days.

The government will also explore the possibility of making PMFBY not compulsory for farmers who take crop loans. This is quite possible now that a larger number of non-loanee farmers are voluntarily enrolling for PMFBY, Bhutani said.

Both Bhutani and Chaudhary said the serious challenge in PMFBY is the way crop cutting experiments (CCE) are carried out. The CCEs, which are carried out to estimate the crop estimation in an area, and thus to assess crop damage, are only 60 to 70 per cent accurate. Better technologies are required to get more accurate crop estimation, they said.

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Published on August 08, 2019
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