Tag: Agriculture Insurance Company

Rajasthan: After a Prolonged Battle, Farmers Get Crop Insurance Claims

In 2018, farmers, who had been denied insurance claims after the Agriculture Insurance Company of India refunded their premiums, filed a PIL before the Rajasthan high court.

Jaipur: After almost three years of legal battle against a public sector insurance company and a state-run co-operative bank that arbitrarily denied them insurance claims under the Pradhan Mantri Fasal Bima Yojana (PMFBY), farmers in Rajasthan’s Jodhpur have finally received their share of claims for the Kharif 2016 crop season.

The matter pertains to Satlana gram panchayat of Jodhpur where thousands of farmers were denied insurance claims because the Agriculture Insurance Company of India Limited (AIC), a public sector insurance company, refunded their premiums to the Jodhpur Central Co-operative Committee Bank, a year after they were paid, simply because the insurance details weren’t provided in a “soft copy.” The bank, too, didn’t make any effort to credit the refund in farmers’ accounts.

These farmers, with the support of their sarpanch Bhala Ram Patel, had filed a public interest litigation in 2018 before the Rajasthan high court’s Jodhpur bench.

In their order dated September 16, 2020, Justice Sangeet Lodha and Justice Rameshwar Vyas confirmed that the payment to the farmers for the 2016 crop season had been made on August 20, 2020.

Speaking to The Wire, the Sarpanch said, “It’s a big moment for all the farmers in Satlana. Receiving insurance claims under PMFBY has become a challenge for farmers across India. The insurance companies and banks always find ways to escape from paying us. Imagine, if we wouldn’t have stood up for our rights, the company wouldn’t have cared to pay Rs 81 lakh.”

Also read: Rajasthan: Thousands of Crop Insurance Claims Denied as Premium ‘Refunded’

In three patwar mandals – Satlana, Karniyali and Bhacharna – close to 70% yield loss was assessed by the state revenue department for kharif 2016, but the farmers were not provided insurance claims.

When the farmers reached out to the court, the AIC was compelled to provide them with a reason for denying their claims. In its reply before the HC, the AIC stated that since the details of the premium were not provided in a soft copy, despite the rules suggesting that the details must be provided in both hard copy as well as soft copy, it didn’t accept the farmers’ policies and refunded their premiums.

AIC accepted before the high court that it had booked only a limited amount of insurance policies. “We had received a total premium of Rs 5,27,11,235.65 from Jodhpur Central Cooperative Bank for Kharif 2016. However, the booked premium was only Rs 5,10,48,379.14 since we had refunded Rs 16,62,856.57 back to the bank,” it stated in its reply before the high court.

While it is true that a PMFBY notification dated July 23, 2016, states that farmers’ insurance details must be provided both in hard and soft copies, AIC claimed that a soft copy was compulsory and in its absence, the premium could not be accepted.

Even as the AIC had claimed that the insurance details were not in the prescribed format, it took more than a year to refund the farmers’ premium to the bank. “We didn’t receive insurance details for that amount [Rs 16,62,856.57] from the Satlana Primary Agricultural Credit Society (PACS) as per the format prescribed in the PMFBY notification. Rs 16,60,196.71 of this amount were refunded on September 28, 2017 and Rs 2,659.8 on March 20, 2018,” the AIC said in its reply to the court.

To justify the delay, AIC stated it was waiting for proper details to come. However, during this period of one year it didn’t try to communicate with the bank regarding its objections.

“We didn’t want the famers to suffer just because the insurance details were not given in the prescribed format, so we waited for some time and that is why the refund process got delayed,” Pushkar Priyadarshi, regional manager of AIC, had told The Wire last year.

Also read: Rajasthan Farmers Denied Insurance Claim Under PMFBY as SBI Didn’t Pay Premium

On the other hand, the bank, after receiving the refund from AIC, didn’t transfer it to farmers’ account. In its defence, the bank said that it couldn’t  have “assumed” that the amount refunded was the farmers’ premium.

“When we received an amount of Rs 16,62,856.57 from AIC, we asked for clarification of the amount but it [AIC] didn’t reply. There was no reason for us to assume that the amount was a refund of farmers’ premium,” the bank had said in its reply.

It had further stated that when the premium was provided to AIC on October 5, 2016, it didn’t raise any objection.

The PIL had also raised concerns over the denial of insurance claims by AIC in Satlana in the Kharif 2017 season. The court has said it will further hear that issue.

Rajasthan: Thousands of Crop Insurance Claims Denied as Premium ‘Refunded’

The Agriculture Insurance Company of India returned farmers’ premiums after one year, claiming that details had not been provided in “soft copy”. The bank, however, has not credited the refund into farmers’ accounts.

Satlana (Jodhpur, Rajasthan): Thousands of farmers in the Satlana gram panchayat of Rajasthan’s Jodhpur, insured under the Pradhan Mantri Fasal Bima Yojana (PMFBY), have been denied insurance claims for two crop seasons – kharif 2016 and kharif 2017.

The claims have apparently been denied because the Agriculture Insurance Company of India Limited (AIC) refunded their premiums to the Jodhpur Central Co-operative Committee Bank a year after they were paid, as the insurance details weren’t provided in a “soft copy”. The bank, however, has not credited the refund in farmers’ accounts.

The matter was taken to the Rajasthan high court after farmers, with the support of their sarpanch, filed a public interest litigation to seek their insurance claims. “When the insurance claims didn’t reach us even as we saw that other villages in our gram panchayat had received them, we approached the concerned co-operative society, which is a unit of the Jodhpur Central Co-operative Committee Bank. But nothing substantial happened,” Bhala Ram Patel, the sarpanch of Satlana, told The Wire.

On December 15, 2017, the co-operative society in Satlana wrote a letter to theJodhpur Central Co-operative Committee Bank saying that three patwar mandals under its jurisdiction – Satlana, Karniyali and Bhacharna – where close to 70% yield loss was assessed by the state revenue department, hadn’t received insurance claims for kharif 2016 despite a premium of Rs 4,32,793 being debited from the farmers’ accounts in the co-operative society.

Also read | PMFBY: 50% of Farmers’ Dues Being Paid in Only 30-45 Districts, Agri Ministry to Probe

The bank, on the next day (December 16, 2017), asked the AIC to “investigate the facts and initiate disbursal of insurance claims”. However, it didn’t receive a reply until the matter was taken to the high court.

Issues in handling PMFBY policies in kharif 2016

While it has been proven that the bank credited the premium debited from farmers to the insurance company, AIC submitted before the court that it had refunded the premium to the bank a year later as “no insurance details” of the premium were provided.

AIC, in its reply to the high court, said, “We had received a total premium of Rs 5,27,11,235.65 from Jodhpur Central Cooperative Bank for Kharif 2016. However, the booked premium was only Rs 5,10,48,379.14 since we had refunded Rs 16,62,856.57 back to the bank.”

As per a PMFBY notification dated July 23, 2016, farmers’ insurance details must be provided both in hard and soft copies. AIC claimed that since a soft copy was compulsory, the premium could not be accepted.

Satya Narayan holding his pass book at his residence in Satlana, Jodhpur. Photo: Shruti Jain

As per the AIC’s submission, even if insurance details were not in the requisite format, the company took more than a year to refund the premium. “We didn’t receive insurance details for that amount [Rs 16,62,856.57] from the Satlana Primary Agricultural Credit Society (PACS) as per the format prescribed in the PMFBY notification. Rs 16,60,196.71 of this amount were refunded on September 28, 2017 and Rs 2,659.8 on March 20, 2018,” AIC said in its reply to the court.

To explain the delay, the insurance company said it was waiting for proper details to come. “We didn’t want the famers to suffer just because the insurance details were not given in the prescribed format, so we waited for some time and that is why the refund process got delayed,” Pushkar Priyadarshi, regional manager of AIC, told The Wire.

The mess doesn’t end here

The Jodhpur Central Co-operative Committee Bank, which received the refund from AIC, told the court that it couldn’t  have “assumed” that the amount refunded was the farmers’ premium.

“When we received an amount of Rs 16,62,856.57 from AIC, we asked for clarification of the amount but it [AIC] didn’t reply. There was no reason for us to assume that the amount  was a refund of farmers’ premium,” the bank said in its reply.

The bank further claimed that the premium, along with requisite particulars of farmers, was provided to the AIC on October 5, 2016, which it had received without any objection.

“AIC started disbursing the insurance claims of Kharif 2016 on December 13, 2016. If there were any lapses in the particulars of the farmers, then that should have been intimated before the disbursal of the claims. We never received any communication from the insurance company in this regard,” the bank claimed.

Farmer Satya Narayan’s pass book. Photo: Shruti Jain

As per farmer Satya Narayan’s pass book, seen by The Wire, insurance premium worth Rs 1,207 was debited on June 3, 2016 and Rs 1,380 on September 12, 2017, but there was no entry for an insurance claim. “Each season there is no delay in debiting our premium, but when it comes to paying claims, there is a long list of excuses and conditions. Even for kharif 2018, we are yet to receive the claim despite crop yield losses,” said Satya Narayan.

Issues in disbursal of claims from kharif 2017

For kharif 2017, AIC admitted that it had received insurance details of 1,151 farmers from Satlana through the state PMFBY portal in the desired format, but paid insurance claims to only 25 farmers. “It is not necessary that all the farmers who are insured are entitled to receive the insurance claims. There are a lot of factors that need to be seen,” said Priyadarshi.

However, the remaining farmers claim that they were also insured for the same notified crop for which a few farmers had received claims. “When the crop sown is same, then how is it possible that we are not entitled to insurance claim?” a farmer in Satlana asked The Wire.

The insurance company has rejected the crop loss assessment of these villages, stating, “As per the provisions of the PMFBY, the village-wise Jinswar report or any other report prepared by government has no relevance.”

This is in contrast with the Rajasthan government’s PMFBY notification, which states, “If more than 25% of the total insured area in a patwar circle has suffered crop yield loss, then all the insured farmers producing the insured crop in that patwar circle, who would have informed to the implementing agency within the stipulated time period, would be entitled to insurance claim.”

Also read | Rajasthan: SBI’s Ramgarh Branch Overcharges Interest of 500 Farmers

“In such a situation, the percentage of crop damage will be determined on the basis of a survey of the area with the joint consent of the local farmers and the officer of the revenue department,” the notification reads.

The farmers’ counsel in the PIL believes that the insurance company is making absurd excuses for having denied insurance claims of eligible farmers. “When the guidelines clearly mention that the damages in a patwar circle on a certain threshold make all the insured farmers in that circle eligible to seek claim, there is no point in discarding  village-wise crop loss assessment reports of the village,” Moti Singh Rajpurohit, counsel for the petitioners, told The Wire.

There is also a discrepancy in the insurance company’s and bank’s versions on the number of Satlana farmers who benefited under the PMFBY in kharif 2017. The insurance company claimed that it had paid claims to 25 farmers, while the bank details submitted to the court brings down the number to just seven. “In the season Kharif 2017, a total of 1,521 farmers in Satlana were insured under the PMFBY, however, insurance claim amounting to Rs 40,992.14 was paid only to 7 farmers,” the bank said in its reply to the high court.

Under Modi’s Crop Insurance Scheme, Companies Owe Farmers a Whopping Rs 2,800 Crore

Claims have remained unpaid even after the stipulated period of two months has long passed.

New Delhi: In January 2016, when the Narendra Modi led government announced the new crop insurance scheme – Pradhan Mantri Fasal Bima Yojana (PMFBY) – it had said that one of the key improvements over previous schemes would be that claims would be settled on time.

However, RTI data received and reviewed by The Wire has revealed that farmers’ claims worth Rs 2,829 crore remain unpaid for the two seasons that the PMFBY has been implemented.

The RTI response of the ministry of agriculture and farmers’ welfare is dated October 10.

“A majority of claims for rabi 2017-18 are yet to be estimated/approved by company,” the ministry noted in its response. Thus, for the 2017-18 season, a majority of the data pertains to Kharif 2017 and the data reflects only 1% of the claims paid for the rabi 2017-18 season.

For the 2016-17 season, claims of Rs 546 crore remain pending. Claims need to be settled within two months of harvest, according to the PMFBY guidelines. Harvest for the 2016-17 season would have ended in May 2017, at the very latest.

For the 2017-18 season, claims worth Rs 2,282 crore remain pending. The data essentially pertains to Kharif 2017-18, as pointed out by the ministry. The harvest for which would have ended in December 2017, at the very latest.

Also read: Exclusive: Under Modi’s Crop Insurance Scheme, Premiums up 350% But Farmers’ Coverage Stagnant

Thus, on the date the RTI was responded to, Rs 2,282 crore remained unpaid more than nine months after the harvest period ended, while the PMFBY guidelines require that claims be settled within two months of harvest.

For the 2016-17 and 2017-18 seasons, the estimated claims of farmers amounted to Rs 34,441 crore. Insurance companies have paid Rs 31,612 crore, and Rs 2,829 crore remains unpaid.

Major insurance companies including Reliance General Insurance, ICICI Lombard, SBI General Insurance, Agriculture Insurance Company (AIC) of India, New India Assurance company are key players in the crop insurance business.

Also read: India Needs to Make Crop Insurance Work for its Farmers

State-owned AIC accounts for a major chunk of the unpaid claims. It is yet to clear farmers’ claims worth Rs 1,061 crore. Rs 154 crore of these claims pertain to 2016-17 and Rs 907 crores pertain to 2017-18, effectively only for kharif 2017-18.

For the year ended March 2018, AIC’s operating profit from the crop insurance business was Rs 703 crore.

HDFC continues to owe farmers Rs 300 crore, while ICICI owes Rs 260 crore.

A large proportion of the claims that remain unpaid pertain to Maharashtra, Madhya Pradesh, Rajasthan, Tamil Nadu, Karnataka and Himachal Pradesh.  

In fact, of the Rs 546 crore that remain unpaid for the 2016-17 season, Rs 257 crore pertain to Karnataka. The state saw a severe drought that year, with 160 of the 176 taluks in the state being declared drought hit.

For the 2017-18 season, 91% of the estimated claims in Himachal Pradesh remain unpaid as on October 10, 2018. The corresponding figure for Tamil Nadu is 86% with Rs 124 crore of the Rs 144 crore estimated claims remaining unpaid.

Credit: Reuters

Delayed rabi claims for 2017-18

The chief complaint of farmers vis-a-vis PMFBY has been that their claims are not settled on time. They argue that they will benefit from crop insurance only if the claims for crop loss for one particular season are settled before sowing for the next season begins. For instance, if the kharif crop is damaged, the claims should be paid before sowing for the rabi season begins.

The response to our RTI query is dated October 10, 2018, over four months after rabi harvest ended in May. But, the ministry was not even aware of the estimated claims for the rabi season.

To reiterate, PMFBY guidelines require that the claims be settled within two months of harvest.

Reasons for delays

A working paper for the think tank ICRIER authored by Ashok Gulati, Prerna Terway and Siraj Hussain identified some of the key reasons for delays in settlement of claims.

They pointed out frequent extension of cut off dates; delayed submission of yield data of crop cutting experiments; delayed payment of premium subsidy to insurance companies, as some of the key reasons why claims settlement is delayed.

“The scheme with a noble intention to protect farmers can succeed only if operational guidelines are strictly followed,” they noted in the paper.

Siraj Hussain adds that the crop cutting experiments are also disputed. “The results are disputed by companies. So, that is another reason for delays,” he told The Wire.

Also read: How the PM’s Crop Insurance Scheme Turned Into a Goldmine for 10 Private Insurers

The Centre has also admitted to delays in settlement of claims. Responding to a question in the Lok Sabha in July 2018, it revealed that more than 40% of claims for the 2017 kharif were yet to be paid even when more than seven months had passed since the kharif harvest ended.

In September, the Centre attempted to address the issue. It issued fresh guidelines for the PMFBY. The key change was that insurance companies would have to pay 12% interest to farmers if the claims were delayed more than two months over the prescribed cut off dates.

The Centre also said that states will have to pay 12% interest to insurance companies if they delayed in releasing their share of the subsidised premium.

Kuldeep Tyagi, president of the Bhartiya Kisan Andolan, a farmer organisation that works in western UP, argues that the new guidelines have had little impact. “It has made no difference. Companies are continuing to work as they did before,” he said.

He points to the heavy rainfall that most of north western India saw in late September. “There was massive crop loss. Even sugarcane, which is a sturdy crop, was damaged.”

“But, no process has even been initiated to compensate farmers for that loss. We have approached district offices but nothing has happened,” Tyagi said.

How the PM’s Crop Insurance Scheme Turned Into a Goldmine for 10 Private Insurers

The only government insurer which participated exited the scheme after making large gains in the first year.

Correction: An earlier version of this article described the difference between premiums received and compensation paid in a financial year as profit. We regret the error.

New Delhi: The prime minister’s crop insurance scheme ended up being a goldmine for ten private insurance companies in just two years, with the difference between premiums received and compensation paid at nearly Rs 16,000 crore in just two years.

The scheme also failed to enthuse farmers. In just four BJP-ruled states, over 84 lakh farmers exited the scheme after just a year. This information has been obtained by an activist through Right to Information appeals.

The applications were filed by Haryana-based RTI activist P.P. Kapoor on September 12 with the ministry of agriculture. Charging that the crop insurance scheme was a major scam, Kapoor said while the scheme was meant to benefit farmers, it had ended up as a money maker for private insurance companies.

Also read: Exclusive: Under Modi’s Crop Insurance Scheme, Premiums up 350% But Farmers’ Coverage Stagnant

He said the replies received from the ministry on October 14 were proof enough that farmers have realised that the scheme is not meant for their benefit. “As many as 2.90 lakh farmers exited the scheme in Madhya Pradesh, 31.25 lakh in Rajasthan, 19.47 lakh in Maharashtra and 14.69 lakh in Uttar Pradesh,” he said.

In the year 2016-17, he said, 5,72,17,159 farmers had joined the scheme. The following year, only 487,70,515 remained in the scheme. This indicated that 84.47 lakh farmers had exited it. So over 68 lakh farmers exited the scheme in these four BJP-ruled states.

Insurance companies reduced compensation payments

In 2016-17, these companies paid a compensation of Rs 17,902.47 crore, and the difference between the premiums received and compensation paid was Rs 6459.64 crore. In 2017-18, they paid over Rs 2,000 crore less in compensation. The outgo in compensation during 2017-18 stood at just Rs 15,710.25 crore.

This meant that while the number of farmers covered under the scheme decreased, the profit of the insurance companies increased greatly, said Kapoor. He said, “The scheme was a big flop. Instead of allowing the insurance companies to make huge profits, the Centre should have devised mechanisms to compensate the farmers directly as these would have benefited them more.”

Also read: India Needs to Make Crop Insurance Work for its Farmers

The ministry, in its replies, also revealed that along with the government-owned Agriculture Insurance Company (AIC) of India, ten private insurance companies were involved with the Prime Minister’s Fasal Bima Yojana (PMFBY) scheme over a two-year period.

In its reply, the ministry had stated that the 2017-18 yearly data includes both kharif 2017 and rabi 2017-18. It added that “majority claims for Rabi 2017-18 are yet to be estimated / approved by company”. This amount, if and when released, would reduce the gains to the insurance companies.

Also, experts have pointed out that the difference between the premium received and the claims paid does not constitute a clear-cut profit for a company as a lot of operational expenses are also involved.

They also insist that farmers lost little in the bargain as they had paid only about 2% of the premium, with the Centre and the respective state government contributing the rest.

AIC made gains in first year, yet did not do business in the second

In the year 2016-17, AIC alone earned a premium of Rs 7984.56 crore by insuring the crops of 246,83,612 farmers in 21 states. Out of this, it paid a total compensation of Rs 5373.96 crore.

However, in 2017-18, the government-owned company did not remain in the crop insurance business. “At whose instance was this profit-making company asked to step aside? Was it only asked to not take any premiums so that the private players could make a killing?” Kapoor asked.

Gains of private insurers swelled in the second year

During these two years, RTI replies revealed, a total premium of Rs 49,408 crore was paid to the insurance firms for crop insurance on behalf of 10.6 lakh farmers. A sum of Rs 33612.72 crore was paid out of this to 4.27 crore farmers in compensation. The difference between the premium received and compensation paid was Rs 15,795.26 crore, and the activist alleges that most of this money was pocketed by the 10 private insurance companies.

The ten private sector companies which had been allowed to cover crops were ICICI Lombard, Reliance, Tata-AIG, Universal, Bajaj Alliance, Future, SBI, HDFC, IFFCO-TOKIO and Cholamandalam.

State-wise distinction

Among the states, the data revealed that in Uttar Pradesh, the number of farmers insured in 2016-17 was 67.69 lakh but fell the next year to 53 lakh. Surprisingly, despite the fewer insurance policies, the difference between premiums received and compensation paid rose sharply from Rs 548.94 crore in 2016-17 to Rs 1046.81 crore the following year.

In Madhya Pradesh, the insurance companies had insured over 71.81 lakh farmers in 2016-17 – and the difference between premiums received and compensation paid was Rs 1,862.32 crore. The following year, over 2.90 lakh fewer farmers insured their crops and the difference between premiums received and compensation paid for these companies plummeted to just Rs 39.21 crore.

Also read: To Benefit Farmers and Not Private Insurers, the Crop Insurance Scheme Must Be Overhauled Completely

In Maharashtra, nearly 1.20 crore farmers were insured in 2016-17 and the difference between premiums received and compensation paid was Rs 2,424.23 crore for the year. In 2017-18, only about one crore farmers were insured. The difference between premiums received and compensation paid was Rs 1617.94 crore.

Gujarat was probably the only state where the number of farmers who insured their crops increased during these two years. In 2016-17, the figure was 5.20 lakh but it grew exponentially to over 17.63 lakh the following year. Simultaneously, the difference between premiums received and compensation paid also shot up by nearly 5000% from Rs 40.07 crore in 2016-17 to Rs 2,222.58 crore in 2017-18.

The period also saw the number of farmers insuring their crops rising in Haryana. While 13.36 lakh farmers had insured their cops in 2016-17, as many as 13.51 lakh got them insured the next year. The difference between premiums received and compensation paid rose even more sharply from 71.83 crore to Rs 95 crore in these two years.

Another state which saw an increase in the gains of insurers during the period was West Bengal. Here the number of farmers who insured their crops in 2016-17 was 41.33 and this reduced by around 2.23 lakh to touch 39.09 lakh the following year. However, the difference between premiums received and compensation paid rose from Rs 321.26 crore in 2016-17 to Rs 547.87 crore in 2017-18.

Modi’s Flagship Crop Insurance Scheme Wavering as Farmers Continue to Suffer

In Maharashtra, a mere 7% of total claims have been settled under the Pradhan Mantri Fasal Bima Yojana.

New Delhi: In April this year, Beed district in Maharashtra won an award for ‘effective implementation’ of the Pradhan Mantri Fasal Bima Yojana (PMFSBY) – the Centre’s flagship crop insurance scheme for farmers. However, last week it was reported that farmers in Beed were provided compensation amounts of Re 1, Rs 2, Rs 3 and Rs 5 for suffering crop damage. This is against a total of Rs 51.42 lakh that had been collected from farmers in the district.

Yogesh Pande, a spokesperson for the Kolhapur-based farmers’ union Swabhimani Shetkari Sanghatna told NDTV, “The insurance companies either pay meagre amount as compensation or delay the payment inordinately.”

More than 2,000 farmers of Kej tehsil in Beed district of Maharashtra have been given between Rs 1 and Rs 5 as crop insurance compensation. A meagre Rs 1 was given to 773 farmers, and Rs 2 and Rs 4 to 669 and 702 farmers respectively. This data was recently released by a branch of the District Central Cooperative Bank in Beed.

Maharashtra’s agrarian crisis and the role of crop insurance

Maharashtra has been suffering a severe agrarian distress for the last few years. This year 1,092 farmers have already committed suicide. That is seven farmer suicides everyday.

In the Parbhani district of Marathwada, one of the worst affected regions, farmers’ groups have protested through rasta rokos, demanding compensation for crop insurance. Massive delays and inadequacy in payment of compensation have contributed to the mounting distress amongst farmers in the state.

For the 2017 kharif season, insurance companies were due to pay farmers Rs 2,269 crores as claims under the PMFSBY. However, till May 10, the companies had disbursed only Rs 165 crore, or a mere 7.2% of the total claims. The public sector Agriculture Insurance Company was the worst performing – it owed Rs 1,014 crore to 18.7 lakh farmers, and had only released Rs 9 lakh to 40 farmers until May 10.

The kharif season last year had witnessed a long dry spell during monsoon and was overall a difficult season for farmers due to the paucity of rainfall. Pest attacks lowered cotton yields by 40% from the previous year. Farmers who needed money for inputs for the next sowing season were left in despair.

Farmers’ groups have claimed that anyone who wants a crop loan has to compulsorily sign up for the government scheme. Government data shows that 81 lakh farmers in Maharashtra ended up enrolling for it, of which 45 lakh were supposed to be beneficiaries. However, only 3.5 lakh farmers (8% of total beneficiaries) actually received the compensation.

Opposition to compulsory enrolment in PMFSBY

On April 5, the Rashtriya Swayamsevak Sangh affiliated farmers’ union Bhartiya Kisan Sangh (BKS) filed a Public Interest Litigation (PIL) with the Gujarat high court demanding the removal of clause 2 of the scheme which makes it compulsory for a farmer to get crop insurance under the scheme when a farmer seeks any crop loan. Vitthal Dudhatara, the president of the Gujarat branch of BKS, told Hindu Business line, “Due to this Clause (2), the insurance premium amount will be straight away deducted from the loan amount, without the knowledge of the farmers. They have no access to representatives of insurance companies either. The provisions in the scheme are against the farmers. Insurance can’t be compulsory.”

BKS has sought improved transparency in the scheme and has stated that in its current state, the PMFSBY works against farmer welfare. It took exception to many operational sides of the scheme, like the concepts of “notified crop” and “notified area”. The crops which are not notified are not covered by insurance. Additionally, BKS mentioned in their PIL that the insurance companies are not required to provide any document or form of acknowledgement. They put forth that these should fall under the audit of the CAG.

The BKS objected to what it called ‘arbitrary’ deduction of premiums from farmers’ bank accounts. It expressed uncertainty about the role of private players who are involved in the scheme, who may not be trustworthy.

The PIL filed by the BKS termed the mandatory payment of an insurance premium for the scheme “financial exploitation”. It stated that since farmers already mortgage their land against crop loans, they don’t require mandatory crop insurance, and attacked the lack of clarity in the scheme in terms of undecided premium amounts by the state and central governments, the lack of specifications on crops and coverage. The PIL also questioned the absence of field surveys that should be rightfully conducted while issuing insurance policies.

It also mentioned some instances where after flood damage, surveyors did not even reach the affected areas when farmers claimed insurance pay-outs.   

What is PMFSBY

PMFSBY was introduced in April 2016 with the intention of insuring farmers against crop failure. In case of crop damage, the farmer is to be paid the difference between the crop’s threshold (the average yield of that crop for the last seven years) and actual yield. The scheme is mandatory for all farmers who take loans from any financial institution. The degree of risk of damage for the notified crop determines the rate of compensation. It covers post-harvest losses up to two weeks, and risks such as droughts, floods and hailstorms.

The scheme aims to rectify the shortcomings of the previous National Agriculture Insurance Scheme of 1999 and the Modified NAIS (mNAIS) of 2011, which covered only limited risks. There is no cap on the premium the farmer pays, and a share of the premium is paid by the government. The sum insured per hectare of the crop is determined by district and state-level committees on crop insurance.

The scheme has run into problems because of delayed premium payments by state governments and a dearth of adequate assessment of the risk of crop failure. The guidelines of the scheme say that state governments are supposed to call bids by February for selecting insurance companies to participate. Then notifications are to be issued – in March for kharif crop and in September for rabi crops – with required details such as crops, companies, average yields, actuarial premiums and so on. The deadlines for the farmers to pay the premium are set at July 31 and December 31 for kharif and rabi crops respectively.

The states are supposed to release initial instalments of premium subsidies by August-September for kharif and January-February for rabi crops, and release 50% by November-December for kharif and April-May for rabi. They are required to conduct a certain number of crop-cutting experiments in every village, tehsil and district and submit the data a month after harvesting. The insurance companies have to process this and make payments within three weeks. 

However, these prescribed deadlines are rarely adhered to. In Rajasthan, for instance, the notification of the scheme for kharif crops was issued on July 22, 2017, when most of the sowing was over. The primary mustard crop had been sowed by the time it was issued for rabi season on November 3, 2017. For kharif season of 2018 as well, most states issued notifications late. Several farmers were, as a result, prevented from accessing insurance for their crops.

The amounts of compensation provided at a pan-India level do not paint a rosy picture either. For the 2017-18 kharif season, Rs 19,000 crore was collected as insurance premium by insurance companies. The estimated claims were Rs 13,655 crore, and four months after the kharif crop harvest, only Rs. 402 crore had been paid against claims.

The Centre for Science and Environment did detailed surveys in Tamil Nadu, Uttar Pradesh and Haryana and interacted with farmers, governments and insurance companies. They found several problems with the way PMFSBY is being implemented. First, it found that an assessment of crop failure is either insufficiently done or not done at all. Surveyors are not properly trained, do not use advanced technology and are often found to be corrupt.

Despite lowering premium payment rates, kharif season 2016 witnessed a 12.6% country-wide actuarial rate. The rate in Gujarat was 20.5%, in Rajasthan 19.9%, and in Maharashtra 18.9%. During kharif 2016, insurance companies made massive profits totalling Rs 10,000 crore. Additionally, the scheme only covers farmers who have availed of loans. The proportion of farmers who hadn’t taken loans and still used the insurance scheme was less than 5%. Tenant and sharecropper farmers are also not covered.

The problems with PMFSBY, ranging from inadequate coverage and delays and inadequacy of compensation to the farmer, are significant. The distressed farmers are left with little choice but to turn to informal sources of credit for sustenance.

Bani Bedi is an intern at The Wire.

A Farmer’s Last Letter: ‘The Government is Also Responsible For My Death’

In Madhya Pradesh, a farmer committed suicide when he could not repay loans after his crop failed and he did not receive the insurance that he was entitled to.

In Madhya Pradesh, a farmer committed suicide when he could not repay loans after his crop failed and he did not receive the insurance that he was entitled to.

A farmer has committed suicide because he could not pay back loans once his crop insurance failed. Representational image. Credit: Reuters/Files

A farmer has committed suicide because he could not pay back loans once his crop insurance failed. Representational image. Credit: Reuters/Files

In Madhya Pradesh, a farmer reportedly committed suicide in Vidisha’s Ganjbasoda tehsil on January 31, when his crop insurance was not paid to him. A resident of Naughai village, the deceased farmer, Raju Singh Raghuvanshi had hoped to pay off his loans with the insurance money. But despite approaching the Central Bank of India several times and asking for help through the chief minister’s helpline, he received nothing.

Left without hope, he finally killed himself after writing a five-page suicide note which the police have recovered. A local newspaper, Nai Dunia, obtained the letter from the police. However, the authenticity of the letter is still being investigated, the newspaper said.

“My mother owns 15 bighas of land. In the year 2015-16, we took a loan to sow soya bean in it. Very early on after sowing, the crop was damaged. Then heavy rains destroyed the crops completely.

Because of it, the Kisaan Credit Card loan of Rs 2 lakh taken from the Central Bank was weighing on me. Then I had to take another loan of Rs 95,000 from four micro finance companies to support the family.

I was hopeful that once I get the insurance money, I will get rid of the loans. I made many rounds of the  Central Bank’s Ganjbasoda branch but I got only assurances. I even complained on the CM helpline on December 15 but even after a month there was no reply. On December 10, CM Shivraj Singh Chauhan had announced that all the farmers will get their insurance money. But it was a lie.

Today, I am committing suicide frustrated with the loans. I am responsible for the act. None of my family members should be harassed. The government is also responsible for my death.

Do not hide my suicide note. Print it and display it on social media so that the lies of the government are exposed. The state government announced that every farmer will get his crop insurance. It even promised to double the farmers’ income. But when will the income get doubled? Will the government fulfill its promises after 50 other farmers like me have committed suicide?”

According to Nai Dunia, the Central Bank of India’s Ganjbasoda branch had approved crop insurance for 360 farmers in 2015 and 2016, but only four farmers actually received the money. Bank manager Kewal Singh said that the Agriculture Insurance Company is yet to release an amount of Rs 73 lakh for 356 farmers.

However, Vidisha collector Anil Suchari has denied that the failed insurance payment is what led to Raghuvanshi’s suicide. He claimed that the farmer was stressed over the loan he had borrowed from micro finance companies.

Translated from Hindi by Naushin Rehman.

This article was originally published on The Wire Hindi. Read the original article here.