Govt's flagship crop insurance plan lose sheen as coverage area reduces

Gross cropped area has reduced to 24% in 2017-18 from 30% in 2016-17 when the actual target for the current year was 40%

The Narendra Modi government's flagship crop insurance scheme, launched with much fanfare two years ago, has witnessed negative growth this year as the coverage has reduced to 24 per cent of gross cropped area (GCA) in 2017-18 from 30 per cent in 2016-17. This, when the actual target for the current year was 40 per cent.

Similarly, the number of farmers insured during both the kharif and rabi seasons has gone down by 14 per cent this year.

In 2017-18, the area insured under the Pradhan Mantri Fasal Bima Yojana (PMFBY) was 47.5 million hectares, which translates into 24 per cent of the GCA of 198.4 million hectares.

 

After the PMFBY was launched in February 2016, the area under coverage had gone up to 30 per cent in 2016-17 from 23 per cent under the old schemes a year ago.

As per the government's targets, the coverage in 2017-18 should have increased to 40 per cent but has actually reduced to 24 per cent.

Thus, the government's final target of bringing 50 per cent (98 million hectares) of the GCA under the PMFBY in 2018-19, which has been allocated Rs 13,000 crore in the Budget, appears to be an impractical goal.

Under the scheme, farmers have to pay just two per cent of the total premium in case of the kharif crop, 1.5 per cent for rabi and five per cent for horticulture. The remaining premium is equally shared by the Centre and the states.

The central government has been citing poor implementation by the states for the lackadaisical response to the scheme. State officials say the bid of private insurance companies for more profit and delay in settlement of claims are crucial factors for the decline.

Interestingly, the scheme has performed poorly in the BJP-ruled states of Maharashtra, Gujarat, Chhattisgarh and Uttar Pradesh, while it has received a good response in non-BJP states like Telangana and Tamil Nadu.

The crop insurance scheme has also witnessed a 14 per cent drop in the number of farmers insured to 47.9 million in 2017-18 from 55.3 million in 2016-17.

A state Agriculture Secretary said farmers had lost interest as the compensation was either denied or delayed, besides flaws with the crop-cutting experiment to obtain accurate estimates of crop output.

"The new scheme permits insurance company representatives to take part in the crop-cutting experiments. We have noticed that they lower the threshold level of the output than the ideal. So farmers cannot claim even if their actual output is low since it will be above the threshold limit," the official said, requesting anonymity.

According to farmers in Madhya Pradesh, they received their compensation six months after filing their claims.

The government had allocated Rs 55 billion in the budget for 2016-17, which was increased to Rs 1324 billion. In 2017-18, the allocation was Rs 90 billion. For 2018-19, the government has provided Rs 130 billion with a target to bring 98 million hectares -- close to 50 per cent of gross cropped area -- under the scheme.