Parliament’s Public Accounts Committee (PAC) has asked the government to find out the reasons for the failure of Agricultural Insurance Company of India Ltd (AIC) to comply with the guidelines under National Agricultural Insurance Scheme (NAIS), which was scrapped in 2015-16.

It also recommended action against erring officials as ₹21,989.24 crore liabilities of Centre and States could have been saved through re-insurance.

Presenting the 78th Report, the PAC, headed by Congress MP Adhir Ranjan Chowdhury, said: “The Committee, therefore while emphasising the need for devising a robust compliance mechanism, desire that reason for failure to comply with the NAIS guidelines be identified and appropriate action taken against the erring officials responsible for it.”

Crop insurance

The matter actually pertains to a C&AG Report (No. 7) of 2017 on “Agriculture Crop Insurance Schemes” relating to the Ministry of Agriculture and Farmers’ Welfare and the PAC took six years to submit its report.

The Centre had introduced the Comprehensive Crop Insurance Scheme (CCIS) in 1985, which was replaced by NAIS from Rabi season 1999-2000. Again from 2010-11, Modified National Agricultural Insurance Scheme (MNAIS) was introduced in 50 districts as pilot. In 2013-14, MNAIS was merged with Weather Based Crop Insurance Scheme (WBCIS) and a new National Crop Insurance Programme (NCIP) started. However, NAIS was allowed to be continued in some States, as per their option, until 2015-16. From Kharif season 2015-16, the Centre introduced the flagship Pradhan Mantri Fasal Bima Yojana (PMFBY), the PAC report said.

The Audit Report had said that AIC was required to obtain appropriate re-insurance cover in the international re-insurance market as per NAIS guidelines. Though AIC had arranged for re-insurance support only for its own share of claims under NAIS, it did not arrange re-insurance support for the share of claims to be borne by Central and the State governments.

“Had such re- insurance been provided, liabilities of Government of India and the State governments amounting to Rs 21,989.24 crore could have been reduced,” PAC report noted. It has also rejected AIC’s reply saying it is “not acceptable as the scheme (NAIS) guidelines provided that Insurance Agency (AIC) is responsible for arranging re-insurance support for the entire scheme claims under NAIS and not for the AIC portion alone.”

AIC had said in its reply in October 2016) that in NAIS (for food and oilseed crops), governments acted as re-insurers by sharing the risk whenever the claims exceeded the stipulated margin. “In so far as actuarially rated products like WBCIS, MNAIS and NAIS (for commercial and horticultural crops) are concerned, where AIC was fully responsible for all the claims, adequate reinsurance protection was availed of,” according to PAC report.

“The reply of AIC was conspicuously silent on the observation of Audit on reduction of liabilities of Government of India and the State governments to the extent of ₹21,989.24 crore, if the re-insurance cover was obtained,” PAC said.

Coverage of farmers

The PAC report while noting that coverage of farmers in the country as well as in the nine selected States under the erstwhile schemes was very low compared to their population, has asked the government to: “the factors attributable for the poor performance of the schemes are required to be identified and appropriately addressed.”

Sources said there have been several changes made since 2017 and PAC should not have recommended something based on C&AG’s earlier observations. For instance, PAC said that coverage of non-loanee farmers was negligible, whereas their share was 34 per cent (pan India) in kharif 2023 applications. Even share of non-loanee in states like Maharashtra is higher than loanee farmers’ applications for enrollment, the sources said.

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