CAG REPORTS. Crop insurance scheme: Public audit of private insurers, a must

The Comptroller and Auditor General has called for public audit of private insurance companies as they have been given huge funds as subsidies from the public exchequer.

In its performance audit report of Agriculture Crop Insurance Schemes, the government auditor said, while huge funds were provided to private insurance companies, there was no provision to check whether the funds were properly utilised.

It also said the Centre and the State governments should take steps to ensure effective implementation of crop insurance schemes in the country.

Even though the report dealt with crop insurance schemes that were in existence in the country from 2011 to 2015, the observations hold true for the new crop insurance – Pradhan Mantri Fasal Bima Yojana (PMFBY) – which came into being in January 2016. Currently, there is no independent regulator to scrutinise the PMFBY implementation, where private insurance firms play a much bigger role than ever, said a senior official of a state-run insurance company.

The government auditor also took exception to the lack of efforts on the part of governments to inform farmers about the insurance schemes as well as the benefits that will accrue to them.

CAG auditors found that almost two-thirds of nearly 6,000 farmers they contacted from different States weren’t aware of the crop insurance schemes.

It also pointed out that the Centre or State Governments lacked adequate grievance redressal system and monitoring mechanism for speedy settlement of farmer complaints.

India has been insuring major agricultural crops in the country since the launch of Comprehensive Crop Insurance Scheme (CCIS) in 1985. The schemes were subsequently rechristened several times always expanding in scope and coverage. The one currently operational is the PMFBY.

The report also pointed out several instances in which the State governments failed to release of funds on time, leading to delays in release of insurance compensation to affected farmers, defeating the very purpose of providing timely financial assistance to the farming community.

The CAG also took the state-owned Agricultural Insurance Company of India to task for failing to exercise due diligence in verification of claims by private insurance companies before releasing funds to them.

A spot check by the CAG in 12 districts in the States of Andhra Pradesh, Maharashtra, Odisha and Telangana found that the area insured exceeded by 17.33 lakh hectares during 2011-12 and 2015-16.

“The discrepancy in insured area in excess of sown area indicates that while collecting premium from the farmers, banks or financial institutions were not ensuring that the farmers had actually sown the declared crops for which they have availed the crop loan,” it said.

COMMENT NOW