Bereft of cover

A BusinessLine series from perennially drought-prone Jalna and Parbhani districts in Maharashtra has brought to the fore implementation lapses in the Pradhan Mantri Fasal Bima Yojana (PMFBY). Farmers have not been compensated for crop damage, owing to multiple factors. Chief among these is irregularities in crop cutting experiments. The CCEs are meant to be carried in the presence of officials of the State revenue and agriculture departments as well as insurance companies, to ascertain the extent of damage. This does not seem to be happening on the ground. Insurance companies have held back payouts, raising questions on documentation (such as land record of farmers) at the claim settlement stage instead of flagging such issues earlier with the banks concerned. Loanee farmers are default buyers of the crop insurance policy, while non-loanee farmers too can register for the same. The insurance companies should issue a proper policy document through the banks, instead of leaving the loanee farmer with just a mere challan (a receipt for premium deduction from his account) as proof for having purchased crop insurance. They also do not adequately participate in the CCEs, which impairs assessment of damage and gives rise to controversies. Indeed, there is a lack of transparency on how the sum insured is arrived at, or how the total premium is fixed in relation to it. While the farmer forks out just 1.5-5 per cent of the SI, with the States and Centre paying the rest, a lack of consensus on the SI assessment could lead to Centre-State differences, with the policyholder paying the price. There are indications of such friction, with the Bihar government, an ally of the NDA, opting out of PMFBY last year. Karnataka, too, is considering floating its own crop insurance. At this rate, the finances of the scheme could come unstuck.

According to data furnished in response to a Lok Sabha question (February 12, 2019), the number of farmers who received claims under PMFBY increased from 1.4 crore in 2016-17 to 1.6 crore in 2017-18. However, this masks major State-wise differences, with the number of beneficiaries (not necessarily the same as policyholders) falling in Uttar Pradesh, Rajasthan, Bihar, West Bengal, Karnataka and Madhya Pradesh. This could be attributed not just to the absence of an adverse weather event, but also perhaps to loan waivers leading to a drop in policy enrolments. The number of beneficiaries increased in Maharashtra from 29 lakh farmers to 53.12 lakh, the sharp rise indicative of the overall demand for income protection in a drought-hit State. It is all the more unfortunate that farmers here should feel short-changed.

However, it is hard to rule out implementation issues in a scheme that involves multiple actors. It is perhaps for this reason that direct income support schemes are gaining in popularity. While the PMFBY is better than its earlier avatars, a simpler, more transparent design is called for. Insurance players need the market freedom to introduce differentiated products to meet varied needs.

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