Tag: Kisan Credit Card

Exclusive: Farmers Owed Rs 3,000 Crore in Crop Insurance Claims 7 Months After Deadline

Delay in payment of claims has been a major problem with the PMFBY scheme, which PM Modi had said would ‘bring about a major transformation in the lives of farmers’.

New Delhi: Farmers have not been paid Rs 3,001 crore worth of crop insurance claims seven months past the deadline date, according to information obtained by The Wire through an RTI application.

The data pertains to the 2018-19 season whose last harvest – the rabi season – ended in May 2019, almost 10 months ago. According to the Pradhan Mantri Fasal Bima Yojana (PMFBY) guidelines  – which require claims to be settled within two months of final harvest – the claims ought to have been settled by the end of July.

In the RTI response, the ministry of agriculture and farmers’ welfare has said that the estimated claims for the 2018-19 season were Rs 21,250 crore and Rs 18,249 crore has been paid as on February 27, 2020. So, 14%, or Rs 3,000 crore, worth of claims, have not been paid seven months after the deadline by which they should have been paid.

The gross premium collected by insurance companies in the 2018-19 season was Rs 25,822 crore, of which Rs 4,299 crore, or 16%, was paid by farmers. The rest – Rs 21,523 crore – has been paid – or will be paid, as some states have not paid the entire amount – by the Centre and the respective state.

Also read: By Making Crop Insurance Optional for Farmers, Has the Centre Effectively Ended the Scheme?

The maximum disbursement of claims has happened in Maharashtra where Rs 4,398 crore of the Rs 4,407 crore estimated claims have been paid. Gujarat has a 100% record of settling claims as Rs 2,777 crore of estimated claims have been settled.

The state with the maximum amount outstanding is Andhra Pradesh with Rs 875 crore worth of claims pending, out of the estimated claims of Rs 1,112 crore. Next is Madhya Pradesh, where not a single rupee has been paid and all the Rs 658 crore of estimated claims remain pending. Rajasthan and Jharkhand, with Rs 400 crore and Rs 370 crore, are among the other states with high amounts outstanding.

Delay in payment of claims has been a major problem with the PMFBY, as The Wire has reported several times (read here, here and here).

The Centre attempted to address the problem. In September 2018, it announced that the insurance companies will have to pay 12% interest on the amount due if the claim is not paid within two months of the cut-off date.

The threat of penalty has not worked fully, the information obtained via RTI has revealed, as Rs 3,000 crore remain pending seven months after the deadline date even when the penalty mechanism was in place. It is also not yet clear if the insurance companies will end up paying the penalty.

Insurance companies contend that the delay occurs when either the state or the centre delay in paying their share of premium, or when the state delays in providing data on crop loss. “We are not interested in delaying claims. We know we have to pay. But if we don’t get the premium amount, how can we pay claim?” said an official of a private insurance company.

The Centre argues that the delay occurs because states do not pay the premium amounts on time. “The states are not making the payment of premium on time. That is the main problem with crop insurance. For example, Madhya Pradesh has not paid its dues for the 2018-19 season,” said an official in the union ministry of agriculture and farmers’ welfare.

States, on the other hand, argue that they are cash strapped. “The Centre has been reducing Madhya Pradesh’s share of taxes every year. And given the fiscal responsibility act, there is very little fiscal space to manage all the schemes. The Centre keeps passing on its responsibilities to the states,” said an officer in the agriculture ministry of Madhya Pradesh.

These three stakeholders jointly responsible for the implementation of the PMFBY have been voicing these concerns since the first season under the scheme in 2016. But have been unable to solve the problems as delays in settlement of claims continue.

Farmers argue that the compensation for crop damage would be useful if it comes in time for the next sowing season. If a farmer suffers loss in the kharif season, the compensation should be paid in time for the money to be used as working capital for sowing during the rabi season.

When the PMFBY was launched in January 2016 by merging two existing crop insurance schemes, Prime Minister Narendra Modi had said that the scheme would ‘bring about a major transformation in the lives of farmers’.

Also read: BJP Manifesto: Voluntary Enrolment Under PMFBY Could Kill the Programme

That, however, has not happened and over the last two years, farmers have demanded that the scheme be made optional. Until recently, the scheme was mandatory for farmers who took loans under the formal credit system as premium amount was deducted from their loans.

In February this year, the Centre finally gave in to the demands and made the scheme voluntary. As Siraj Hussain has written for The Wire, this move could significantly scale down the scheme.

Farmers who had opted for the scheme, i.e. those who had not taken loans but had opted for crop insurance (non-loanee farmers), were only 27% in 2017-18. That percentage has increased to 39% in kharif 2019.

But most non-loanee farmers who have opted for crop insurance are from one state – Maharashtra – where a Bombay high court order means that premium cannot be deducted from the loan amount without consent of the farmer.

“The number of non-loanee farmers in Maharashtra is most probably an over estimate as loanee farmers have been listed as non-loanee to work around the court order,” said the agriculture ministry official.

So, if Maharashtra is taken out of the equation, only 17% of the total farmers enrolled in PMFBY in Kharif 2019 are non-loanee raising questions on the scope of the scheme now that it has been made voluntary.

Govt Revamps PMFBY Crop Insurance Scheme, Makes Farmer Registration Voluntary 

As The Wire has reported over the last year and a half, the PMFBY was of limited benefit to farmers in its erstwhile format.

New Delhi: The Union Cabinet on Wednesday made some major changes to the Pradhan Mantri Fasal Bima Yojana (PMFBY),  the most notable among which is that it is now voluntary for all farmers.

Earlier, all farmers who had availed themselves of loans on their Kisan Credit Card were registered for the PMFBY automatically and the amount of premium was deducted from their loan amounts. Farmers who were not in the formal credit system could choose to opt for the scheme. 

Now, even farmers who have taken loans can choose to not enrol themselves in the PMFBY. This had been one of the promises made by the Bhartiya Janata Party in its manifesto prior to the Lok Sabha elections of 2019. 

Over the period of implementation of PMFBY, on an average, around 70% of farmers who registered for the scheme were those who had taken loans, and who could have, potentially, chosen not to register for the scheme had the choice been available. 

Farmers and farmer organisations had demanded that the scheme be made voluntary as they argued that they see no benefit in the scheme and should not be made to pay the premium involuntarily. 

As The Wire has reported over the last year and a half, the PMFBY was of limited benefit to farmers as the claims raised remained pending for several months after the stipulated time period in which they ought to have been paid.

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

We had also reported that after the launch of PMFBY – which subsumed two existing schemes – premiums collected by insurance companies increased by 350% while the number of farmers covered by the scheme remained about the same. 

In its revamp, the government has also said that states which fail to pay their share of premium subsidy within the time allotted, will not be allowed to implement the scheme in subsequent seasons.

One of the reasons why insurance companies delayed making payments of claims to farmers was that in several cases, they had not received the premium amount that was supposed to be paid by states. The cut off dates will now be March 31 for kharif and September 30 for rabi. 

The new PMFBY also contains a provision for using ‘technology solution’ to arrive at yield data in case states fail to provide yield data beyond the cut off dates. It has not yet been made clear what exactly the ‘technology solutions’ will entail.

In another decision, the Cabinet also approved the formation 10,000 farmer producer organisations by 2024 which is set to cost Rs 4,496 crore. This will be implemented jointly by the Small Farmers Agri-business Consortium (SFAC), National Cooperative Development Corporation (NCDC) and National Bank for Agriculture and Rural Development (NABARD). 

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

The bank had charged an extra interest of at least Rs 64 lakh on the Kisan Credit Card loans.

Bhadra, Hanumangarh: The State Bank of India (SBI), largest public sector bank in the country, has allegedly over-charged interest on crop loans from farmers in Rajasthan.

As per the interest reversal entries in the pass-books of approximately 500 farmers accessed by The Wire, the Ramgarh branch of the SBI in Rajasthan’s Hanumangarh district charged an extra interest of about Rs 64 lakh on the Kisan Credit Card (KCC) loans. However, this is not the final figure as several farmers haven’t yet received the excess amount back.

The matter came to light in 2015 after farmers in the district realised that the interest charged on their crop loans had suddenly shot up. Under the leadership of the All India Kisan Sabha (AIKS), the excess interest charged was determined by looking into the passbooks of all the farmers in the village.

The then district president of the AIKS, Balwan Poonia, highlighted the issue in the 2018 assembly elections and subsequently won the Bhadra seat in Hanumangarh on the CPI(M)’s ticket. After the election results, under pressure, the bank authorities initiated a process to reverse the interest.

“The process is continuing. All farmers haven’t yet received their money back. We believe this amount will cross at least Rs 2 crore,” Poonia told The Wire.

How was extra interest is charged?

As per the interest subvention scheme of the National Bank for Agriculture and Rural Development (NABARD), the government provides KCC loans at 7% if the credit limit of the farmer is under Rs 3 lakh. After the loan disbursement, the farmer is required to pay back the principal amount and the respective interest within a time limit of 365 days. If the farmers fulfil this condition, the government provides a 3% subsidy, or the interest rate increases with each passing day after the 365 days limit.

Also read: Rajasthan Farmers in a Fix After SBI Charges Extra Interest on Kisan Credit Card

Dilip Bhamboo, an AIKS member in Ramgarh explained how farmers calculate whether the banks had charged them extra. “We calculate interest payable on a loan of Rs one lakh for a particular season (Kharif or Rabi). As per the calculations, the farmer is required to pay Rs 583.33 per month (7% of Rs 1,00,000 = Rs 7,000/12 months = Rs 583.33 per month) Now, we ask the farmers to multiply it with 6 months [since a season is spread over six months] and their principal amount. If he has taken a loan of Rs 2 lakh [basic unitary method], the final formula will be 583.33 *6 months *2 = Rs 6,999.96 and check whether they have paid accordingly,” Bhamboo told The Wire.

Apart from this, the farmers are also asked about the last time their account was rolled back. If it exceeds 365 days, it means the farmer hasn’t paid the interest and the interest rate that would be charged now will be as per the discretion of the bank.

Once the farmer pays back the 7% interest within the time limit, the bank is required to provide them with a 3% subsidy. But this rarely ever happens. In many cases, even when the farmers pay the interest amount back on time, the bank doesn’t renew their account in the system. They are then charged at a rate of 12% or more, as per the discretion of the bank.

A passbook displaying excess interest credit entry worth Rs 15,557. Photo: Shruti Jain/The Wire

When the bank credits the 3% subvention to the farmer, the entry is made in the pass-book as “3% subvention” but when the farmer is charged extra interest, the entry is made as “Excess interest reversed.” Interestingly, in many cases, the bank while crediting the excess interest charged to the farmers’ accounts, simply writes “by Salary” so that it couldn’t be found why the particular amount is credited to the farmer.

Lal Chand, a KCC-account holder in the Ramgarh SBI branch, was charged an interest of Rs 40,000. He is now credited with Rs 33,409 as “excess interest reversed” which is roughly six times more than the actual interest that should have been charged. “I took a KCC loan of Rs 1,80,000 in 2013 and paid back the interest on time. But still the bank showed that the interest is pending,” Chand told The Wire.

There are about 500 such farmers who have gotten thousands of rupees back in their accounts, but only after they agitated for over a year. “The bank says that since they have returned the money, there was no ill-intention over charging extra interest but we want to know why they initiated our payment only after we protested for months? And what is the guarantee that other branches might not be doing the same?” said Poonia.

However, the SBI has blamed technical errors in the system for the over-charge. Speaking to The Wire, R.K. Jain, chief manager of the SBI in Hanumangarh said, “Farmers were mistakenly over-charged because of some technical issues with the software. We can’t disclose the exact extra amount that was charged from the farmers but this mistake can happen anywhere.”

Also read: For Farmers in Rajasthan’s Hanumangarh, SBI’s ‘Loot’ is a Key Election Issue

In this drought-prone region, farmers are dependent on scanty rainfall and poor canal irrigation systems. In such conditions, the yield is always below the expected levels and the loss is borne by the farmers. Under pressure to repay their loans, many take their own lives. Adding to their woes, rural banking institutions have also been over-charging farmers – either fraudulently or mistakenly.

A similar issue was also reported in another SBI branch of Hanumangarh. In Chhani Bari last year, farmers staged a protest at the SBI branch against the extra interest charged on their KCC loans.

Interestingly, the subvention meant to be given to the KCC holders was incorrect in hundreds of accounts in the same SBI branch and the farmers had to pay thousands of extra rupees. After protesting for 58 days, an interest of approximately Rs 16,52,000 was reversed for 350 KCC accounts.

Bank reversing excess interest under ‘By Salary’ entry. Photo: Shruti Jain

Other issues in rural banking

Apart from overcharging interest, the SBI and other banks have also deprived farmers of the benefits of the crop insurance scheme the Pradhan Mantri Fasal Bima Yojana (PMFBY)

In September 2018, approximately 3,052 KCC-holding farmers of Ramgarh Ujjalwas, Gorkhana and Bhukarka villages in Rajasthan’s Hanumangarh district were denied insurance claims under the PMFBY. The SBI had failed to credit the debited premium of farmers to the account of the insurance company – Bajaj Allianz.

The SBI’s Ramgarh Ujjalwas branch transferred the premium to the account of Agriculture Insurance Company of India (AIC) instead. When the company returned the money, the deadline for payment had already passed. The other two branches – Bhukarka and Gorkhana – on the other hand, made no attempts to pay the premium.

In April this year, approximately 135 KCC-holding farmers in Nohar tehsil of Rajasthan’s Hanumangarh district were denied insurance claims under the PMFBY for kharif 2017, apparently because Axis Bank debited insurance premiums for cotton crops – which they had not cultivated but have higher premium rates.

Also read: Pensioners in Rajasthan Duped into Buying High-Premium SBI Life Insurance Policies

Crop-cutting experiments (CCEs) for assessment of yield loss couldn’t be performed as cotton crops were not found. Consequently, insurance claims were denied by Bajaj Allianz General Insurance Company Limited.

On the banks’ part, the delays or not attempting to pay premiums to the insurance company point at a bigger issue with the PMFBY’s guidelines on premium submission.

There could be a more sinister motive to delay the payments rather than an error on the bank’s part. Farmers say that the banks do not pay the premium before the deadline so that the insurance companies can remain free of any liability.

According to farmers, the last date for submission of premium to the insurance company is generally in the last week of August. by then, the insurance companies judge the rainfall pattern to determine if the yield would result in a loss. If the companies feel there will be a loss in an area, they collude with the banks, which delay the payment. The companies do not have to pay the insurance and the farmers are left with no relief.

Insurance-related issues mostly crop up in drought-prone areas, where companies had to pay hefty claims. Hanumangarh in Rajasthan is one such drought-prone area that is entitled to crop insurance claims, particularly for the kharif season every year.

BJP Gets a 25-0 Repeat of 2014 in Rajasthan

The vote margin has increased to 64,341 in Jodhpur, where chief minister Ashok Gehlot’s son Vaibhav Gehlot is trailing behind BJP’s Gajendra Singh Shekhawat.

Jaipur: The BJP is all set for a clean sweep in Rajasthan again with the party bagging six seats and leading in 18 others in the Lok Sabha election results declared Thursday, barely five months after it lost to the Congress in the assembly polls.

BJP candidates Bhagirath Chaudhary (Ajmer), Kailash Chaudhary (Barmer), Subhash Chandra Baheria (Bhilwara), Rajita Koli (Bharatpur), Devji Patel (Jalore) and Sukhbir Singh (Tonk-Sawaimadhpur) were declared elected.

Baheria won by a high vote margin of 6,12,000 votes.

NDA alliance partner Rashtriya Loktantrik Party candidate Hanuman Beniwal is leading on the Nagaur seat.

The BJP had bagged all 25 seats in the 2014 Lok Sabha election.

Vaibhav Gehlot faced defeat in his maiden election from the Jodhpur Lok Sabha seat which was won by the BJP’s Gajendra Singh Shekhawat for a second consecutive time.

Shekhawat won the seat with a high margin of 2,74,440 votes.

Union minister Rajyavardhan Singh Rathore is leading in Jaipur Rural constituency by 2.89 lakh votes.

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Over the years, Lok Sabha elections in Rajasthan have more or less been a two-party affair. Other than a seat or two, the BJP and the Congress scoop up the rest.

In the 2014 Lok Sabha elections, the BJP had won 25 seats in Rajasthan, repeating a 1984 verdict when the Congress party had won all 25 for the first time in the state.

Much of this success was attributed to the formidable Modi wave in 2014. However, the BJP lost ground in the assembly elections held in 2018 despite extensive campaigning by the prime minister.

While there was a marginal difference in the percentage of votes secured by the two parties in the assembly polls, Congress managed to win 27 more seats than the BJP with a lead of mere 0.23% of votes.

The contest this time is bound to be very close.

Relying on past victories, the BJP has fielded sitting MPs in 16 seats in Rajasthan. Tickets have also been allotted to candidates who didn’t quite share a cordial relationship with former chief minister Vasundhara Raje.

It is believed that the BJP has sidelined Raje especially because of her tussle with Amit Shah-Narendra Modi. This infighting is also likely to affect the party’s prospects in the state.

On the contrary, the Congress has fielded a mix of senior and new faces. Vaibhav Gehlot, the chief minister’s son, is fighting from the Jodhpur Lok Sabha seat against Union minister Gajendra Singh Shekhawat. The Congress is also fielding Manvendra Singh, son of a senior BJP leader Jaswant Singh from Barmer. 

During the last assembly elections, the state witnessed the emergence of a third front. A predominantly tribal party called the Bharatiya Tribal Party won two out of the eight seats in the tribal belt of the state.

The Jat community, which had been longing for strong leadership, found solace in Rashtriya Lok Tantrik Party and influential Jat leader Hanuman Beniwal. The party won three seats.

Both parties are also contesting the general elections.

Under the rule of the previous BJP government, several incidents of cow-related violence where Muslims were targeted took place. However, the Congress, despite coming to power in the state, has yet to action and confront the BJP for the lapses that took place.

Even so, in December last year, the Ashok Gehlot-led Congress government took significant steps to build a positive image for the party. These include an extensive farm loan waiver and an increment in the unemployment allowance to the youth.

However, agrarian distress is still a major concern. Farmers, under the leadership of All India Kisan Sabha, has led many protests across the state. Due to drought-like conditions, crop loss has been inevitable.

With the compulsory premium deduction from the Kisan Credit Card-holding farmers under the Pradhan Mantri Fasal Bima Yojana and subsequent non-payment of the insurance claim, farmers in the state are largely unhappy with the scheme and have diligently resented it.

Farmers in the Shekhawati region have also raised the demand of implementation of Swaminathan report. As a result, the left managed to win two seats in agriculturally-dominant Hanumangarh and Jodhpur last year.

After the Balakot airstrikes, Modi’s ‘Vote for Pulwama martyrs’ appeal is likely to make an impact on the votes of the Rajput and Jat communities in Rajasthan that have traditionally served the armed forces. Pervasive unemployment has time and again created a negative opinion of the Modi government, but whether it would be able to deflect votes is a matter that remains to be seen.

Rajasthan Farmers Denied Insurance Claim as Axis Bank Paid Premium For Wrong Crop

Axis bank debited premium for cotton even though the farmers were cultivating guar.

Nohar (Hanumangarh, Rajasthan): Approximately 135 Kisan Credit Card (KCC)-holding farmers in Nohar tehsil of Rajasthan’s Hanumangarh district have been denied insurance claims under the Pradhan Mantri Fasal Bima Yojana (PMFBY) for kharif 2017. Why? Apparently because Axis Bank debited insurance premiums for cotton crops – which they had not cultivated.

Crop-cutting experiments (CCEs) for assessment of yield loss couldn’t be performed as cotton crops were not found and consequently, insurance claims were denied by Bajaj Allianz General Insurance Company Limited. The farmers then decided to protest – they have claimed that Axis Bank insured them for cotton on purpose, as its premium amount is higher.

Banwari, a farmer from Surapura village in Nohar, was insured for cotton when he went to renew his KCC loan in 2017 for the kharif season. As per his pass book, accessed by The Wire, Axis Bank debited an insurance premium of Rs 62,780 from his KCC account for 24.35 hectares of land – but he has received no claims till date.

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

As per PMFBY guidelines, maximum insurance charges for commercial crops like cotton is 5% of the sum insured (the estimate total cost that would be incurred by the farmer to cultivate a particular crop on a particular amount of land). For foodgrain and oilseed crops, it’s 1.5% to 2% for rabi and kharif seasons, respectively.

The cost of cultivating cotton in Hanumangarh, set by the state-level coordination committee on crop insurance, was Rs 51,568 per hectare in 2017. Accordingly, the insurance premium payable by the farmer for this crop (5% of the sum insured) was equal to Rs 2,578 per hectare. (Banwari’s land area was 24.35 hectares. So the premium = 24.35×2578 = Rs 62,774.)

“Cost of cultivation in Rajasthan used to be low but under PMFBY, it has been significantly raised for optimum security of the farmers. In return, this has increased the premium to be paid by the farmers,” said Siraj Hussain, former secretary of agriculture and farmers’ welfare.

When it comes to loan disbursement by the private banks, the guidelines are blurred. To maximise their profit, the banks while disbursing KCC loans and subsequently insuring them under PMFBY, assume all land owned by the farmer to be the cultivable area, when practically, the area where the crop can be cultivated is quite small.

Axis Bank did the same thing with Banwari. As per the land record accessed by The Wire, he has a landholding of approximately 30 hectares, of which 21 hectares is rain-fed and so cannot be used for cotton cultivation. The other 9 hectares is being irrigated by the canal system.

Also read: For Farmers in Rajasthan’s Hanumangarh, SBI’s ‘Loot’ is a Key Election Issue

Also, his village Surapura is situated at the end of the Sidhmukh irrigation project, which as per the irrigation department’s report has only 16% irrigation efficiency during the kharif season. Therefore, his land isn’t suitable for cotton cultivation, which requires a fairly good amount of water.

“If one closely analyses the loan applications of the farmers in Nohar, it can be clearly noticed that the cultivable area shown by the banks is the entire landholding. It is technically not possible as in this rain-fed region, a farmer can’t irrigate a large land size depending only on the canal irrigation,” Pavan Deharu, the All India Kisan Sabha (AIKS) member leading the protest against Axis Bank, told The Wire.

Apart from this, on the high limit loans availed by farmers from private banks, they are automatically exempted from seeking the benefit of NABARD’s interest subvention scheme that provides 3% interest subvention on KCC loans under the limit of Rs 3 lakh.

“Private banks have the capacity and permission to disburse high limit loans. So farmers in need of large sums of money approach these banks and get easily trapped,” Deharu added.

Banwari’s passbook. Credit: Shruti Jain/The Wire

In February this year, the bank had also issued Banwari a notice saying it would auction his property if didn’t pay Rs 21,80,410 in a month. Totally dependent on crop yield for his livelihood, he feels betrayed.

“It is embarrassing for me to sit on a road demanding monetary relief for the loss I suffered, which should have been given to me promptly as my right. Not even once have the bank officials said that they made a mistake,” Banwari told The Wire.

Was it a mistake?

Essentially, the banks disburse KCC loans according to the report of the revenue board that declares notified crops that may be insured in the notified areas. In this case, while both cotton and guar were notified crops, the bank insured the farmers for cotton even though they grew guar.

While farmers rarely stick to the same crop every year, RBI guidelines on fixing the limit of a KCC loan say, “It is assumed that the farmer adopts the same cropping pattern for the succeeding four years.” It says that the limit may be reworked if the farmer changes the cropping pattern. However, in practice, neither do the banks inform the farmer about such an option, nor does the farmer have the requisite awareness.

“Banks generally issue KCCs to farmers on that particular notified crop that has the highest premium without informing the farmers. While there is a letter format for change of crop available in each bank issuing KCC which the farmers need to submit if they wish to change their crop, bank officials often fail to intimate the farmers about it due to work overload,” an Axis Bank official in Jaipur said, on the condition of anonymity.

Also read: Rajasthan Farmers in a Fix After SBI Charges Extra Interest on Kisan Credit Card

As per the operational guidelines of the PMFBY, if farmers plan to change their crop, they need to intimate the change to the insurance company at least 30 days before buying insurance through the bank, accompanied by the sowing certificate issued by concerned official of the state.

Despite these provisions, loans are disbursed according to the data from the revenue board, which notifies certain crops that can be cultivated in the area but not the specific crop a farmer seeking loan is cultivating on his land.

“It’s true that the farmers didn’t cultivate cotton, for which the insurance premium was deducted by the bank. The onus of verifying the crop, for which the loan is sought, is on the bank officials. If there is a mistake, the bank is responsible,” Jai Kaushik, tehsildar in Nohar, told The Wire.

Other issues with the claim disbursement

CCEs couldn’t be conducted in 22 patwar circles in Nohar for the assessment of cotton yield for kharif 2107 as the cotton genes were not found there.

As per clause XI of the PMFBY guidelines, if the required number of CCEs couldn’t be conducted due to the non-availability of adequate cropped area, the yield estimate for such insurance units can be generated by using methods as

  1. clubbing with neighbouring/contagious units
  2. adopting yield estimate of next higher unit, or
  3. adopting the yield of neighbouring insurance unit with maximum correlation.

While the state government has clubbed the patwar circles where the CCEs couldn’t be performed with the neighbouring patwar circles where the assessment was done, the farmers believe that it tactfully selected areas where the actual yield of crop was higher than the guaranteed yield to prevent them from getting compensation.

For instance, Sonadi and Chaksardarpura patwar circles were clubbed with Gorkhana and Birkali patwar circles, where the actual yield to guaranteed yield ratio was 2,560:1,236 kg per hectare (kph) and 2,312:1,154 kph respectively.

As per the Rajasthan’s agriculture commissionerate’s order on the matter, issued on February 26 this year, only 19 out of these 154 KCC holding farmers have been considered eligible for the insurance claim. This is done because Axis Bank had included land of farmers in more than one village under a single patwar circle when it belonged to different patwar circles, to cut short the claim burden on the insurance company.

Farmers protesting outside Axis Bank in Nohar. Credit: Shruti Jain/The Wire

Under pressure from protesting farmers, the bank compensated 19 farmers recently.

“The bank is just a mediator between the insurance companies and the administration. Our responsibility is only to credit the companies with the premium, after which the administration has to take care of the damage assessment. For kharif 2017, claims of 154 farmers had not come. We had a meeting with the agriculture commissioner and he has also pointed out that only 19 farmers are eligible for the claim, but these farmers don’t listen. They think that if they sit on a protest outside the bank, they’ll get the insurance claim,” Ashish, manager at Axis Bank in Nohar, told The Wire.

Returning the premium

Under pressure from the protesters, Axis Bank is now returning the premium for cotton it had debited in 2018 without farmers’ consent. As per Naurang Ram’s passbook, he was charged Rs 12,791 as insurance premium for cotton for kharif 2018 but as the protests intensified, the bank had to accept their mistake and return him 9,948.

Hidden charges

Then there is a long list of charges that the private banks incur on the maintenance of the account. For instance, Indraj was forced to close his KCC account because of the numerous service charges he had to paythe bank. As per his pass book, Axis Bank debited a processing charge of Rs 34,500, documentation charge of Rs 1,725, consolidated charge of Rs 5,500 and other charges worth Rs 2,850.

Note: The Wire reached out to Bajaj Allianz General Insurance Company Limited for a response, and this story will be updated when they reply.

Why Livestock Insurance Is yet to Take off in Rural India

Under the National Livestock Mission, Haryana, Uttar Pradesh and Rajasthan have not insured a single animal in the last four years.

One of the great success stories of rural India is its dairy sector. This is where resource-poor, small and marginal farmers, as well as landless labourers, have contributed to make the country the largest milk producer in the world. In 2017-18, India produced 176.35 million tonnes of milk.

The value of milk in money terms now exceeds the value of wheat and rice taken together. While the Narendra Modi government’s crop insurance scheme has received a lot of attention, the risk coverage of milch animals continues to be largely ignored. This even though their owners suffer as much loss in a calamity like a flood or drought as farmers suffer due to loss of crop.

In Kerala alone, 75,857 cattle are reported to have died due to floods and landslides in August 2018.

Under State Disaster Relief Fund guidelines, the assistance of Rs 30,000 is provided for replacement of a cow, buffalo or camel and Rs 3000 for a sheep, goat or pig. The actual cost of replacement of milch animals is 2-3 times this amount.

Insurance companies have been operating schemes for providing cover to indigenous, exotic or cross-bred milch cows or buffaloes, calves/heifers, stud bulls, bullocks (castrated bulls) and castrated male buffaloes.

Also read: How the Modi Government Is Killing India’s Livestock Economy

The sum insured under the policy is the market value of the animal. The basic premium rate per annum is up to 4% of the sum insured.

The insurance policy provides coverage for death due to:

  1. Accident (Inclusive of fire, lightning, flood, inundation, storm, hurricane, earthquake, cyclone, tornado, tempest and famine)
  2. Diseases contracted or occurring during the period of this policy
  3. Surgeries
  4. Riot and strike

Since May 2014, the Centre has been implementing risk management and insurance scheme in all the districts of India for all animals including non-milch ones.

Under this scheme, 50% subsidy is provided on insurance premium – but it is restricted to five animals per beneficiary per household for all animals except sheep, goat, pig and rabbit. In the case of these four, a subsidy is available for 50 animals. The proposal for insurance is to be accompanied by a health certificate from a veterinarian giving age, identification marks, health status and market value of the animal.

At the time of claim, most companies require a death certificate from a qualified veterinarian, post-mortem examination report and radio-frequency identification chip, which is inserted in the front left leg at the time of insuring the animal.   

Despite attractive terms, the insurance scheme for animals has not taken off. As per the reply given in Lok Sabha on March 13, 2018, in 2014-15, 14.80 lakh animals were insured. The number came down to 7.65 lakh in 2015-16 and 7.44 lakh in 2016-17.

While 2.97 lakh animals were insured in Maharashtra, Tamil Nadu insured 2.02 lakh animals.

Haryana, Uttar Pradesh and Rajasthan, which have witnessed most cases of cow-related violence in the last four years, did not insure a single animal.

As per Census 2012, there were 122.9 million cows and 92.5 million female buffaloes in the country. While we do not have the break-up of animals insured for each species, we can assume that most of the insured animals would be cows or buffaloes. It is clear that the number is less than miniscule.

Table 1: India is no country for animals

Number of animals insured
S/N State 2014-15 2015-16 2016-17
1 Andhra Pradesh   102,876 891
2 Arunachal Pradesh 2,650    
3 Assam 97,500    
4 Chhattisgarh   3,663 846
5 Gujarat     0
6 Himachal
Pradesh		      
7 Karnataka   540,000 92,166
8 Kerala     –
9 Madhya Pradesh 481,826 37,486 59,113
10 Maharashtra 90,913 19,211 297,860
11 Odisha 60,000 – –
12 Punjab 50,000    
13 Rajasthan   0 26,074
14 Sikkim     –
15 Tamil Nadu 509,000 32,007 202,376
16 Telangana     –
17 Uttarakhand   30,287 24,682
18 Uttar Pradesh      
19 West Bengal 186,360   40,546
20 Puducherry 2,500   –
  Total 1,480,749 765,530 744,554
(Source: Lok Sabha Unstarred Question 2827 answered on March 13, 2018)

In case of crop insurance under Pradhan Mantri Fasal Bima Yojana, one of the criticisms is that the scheme is compulsory for loanee farmers (for crops notified by a state government) and banks deduct the premium from the farmers’ Kisan Credit Card account.

On the other hand, the animal insurance scheme is optional and that is the foremost reason for its failure. Banks are not involved in livestock insurance and due to a lack of awareness and the procedure required to purchase insurance, few farmers bother to insure their animals.

Also read: The Beef Ban Has Killed Cattle Markets, Deepening Marathwada’s Agrarian Crisis

For an insurance scheme to succeed, large numbers of buyers of insurance product are needed, who then support the few whose claims become payable. This keeps the premiums low for everyone. Unlike crop insurance, the individual assessment of loss is required in livestock insurance. Insurance companies must be finding it highly expensive to reach out to a large number of small and marginal farmers who rear a few animals.

If the crop insurance scheme is also made optional and each farmer is asked to purchase insurance, it will possibly meet a similar fate as livestock insurance. The number of farmers may drastically go down and the actuarial premiums may actually go up substantially from current levels. Even in the case of tractors and motorcycles, it seems that few owners bother to renew even third-party insurance after the first year (Insurance in the first year is compulsory for registration and banks also insist on this while sanctioning loan).

So, in order to provide risk coverage to farmers rearing animals, especially in flood-prone states like Andhra Pradesh, Tamil Nadu, Odisha, Bihar and east Uttar Pradesh, the coverage of livestock needs to be substantially expanded.

Animal husbandry provides supplementary income to small and marginal farmers and it employs women in large numbers. Providing insurance coverage can protect them from losses in calamities. State governments and insurance companies need to do much more to popularise animal insurance products. If the flood-hit farmers of Kerala had taken animal insurance, they would have been able to minimise their losses.

While livestock insurance stagnates, it is possible that as a farmer-friendly measure in the run-up to parliament election, the government may ask farmers just to pay a token amount of Rs 1 per acre for crop insurance. A similar push for livestock insurance may also be in order.

Siraj Hussain is former secretary of Agriculture and Farmers’ Welfare (GoI) and currently visiting senior fellow at ICRIER.

Rajasthan Elections: Communist, Tribal and Jat Parties Come to the Fore

The assembly elections have marked an important change in state politics.

Jaipur: In a significant development in Rajasthan, communists won two seats from Bhadra (Hanumangarh) and Dungargarh (Bikaner). The party had no representative in the last assembly. On two other seats – Raisinghnagar (Ganganagar) and Dhod (Sikar) – CPI(M) candidates emerged as the runners-up.

The victory is being attributed to the farmers’ protests led under the banner of All India Kisan Sabha across the state.

Balwan Poonia, the CPI(M) candidate from Bhadra seat led his campaign around the protest he undertook to get back the additional interest farmers were charged on their Kisan Credit Card (KCC) loans. He also helped secure claims for kharif 2017 under the Pradhan Mantri Fasal Bima Yojana (PMFBY) whose premium was debited by the State Bank of India (SBI) in the region but not credited to the insurance company.

These efforts bore fruit with the SBI reversing approximately Rs 16 lakh in interest to the farmers and also paying them the PMFBY claims.

Girdharilal Mahiya had a similar campaign in Bikaner where 30% of the irrigation depends on tube wells. He led a protest to compel the government to hike the minimum support price (MSP) of the groundnut produce and roll back the power tariff hike. As a result, the government was forced to increase the MSP on groundnut and withdraw the hike on electricity.

Also read: For Farmers in Rajasthan’s Hanumangarh, SBI’s ‘Loot’ is a Key Election Issue

In the run-up to the elections, a few hours before the model code of conduct was imposed in the state, chief minister Vasundhara Raje also announced free electricity for farmers in the presence of Prime Minister Narendra Modi.

However, the farmers’ protest in Sikar last year led by Amra Ram, vice president of the All India Kisan Sabha and a veteran CPI(M) MLA, couldn’t alter the influence of the Congress and BJP in the Shekhawati region. In Sikar – Jhunjhunu and Churu together – out of the 21 seats, the Congress won 15, BJP won four, while the BSP and an independent candidate won a seat each.

Amra Ram contested from Danta Ramgarh seat in Sikar but only managed to finish in third place with 44,643 votes. This seat has a caste influence for which Ram was reportedly heading to BSP for support, but it couldn’t materialise.

Similarly, Pema Ram, a former CPI(M) MLA from Dhod was also an active leader in the protest in Shekhawati region but was a runner-up this time with 61,089 votes.

Party for the tribals

In its debut in Rajasthan, Bharatiya Tribal Party (BTP), founded by a tribal leader from Gujarat, Chhotubhai Vasava also won two out of the four seats in the tribal belt of Dungarpur – Chorasi and Sagwara, the reserved seats for Scheduled Tribes. The Congress and BJP have won a seat each here.

In Chorasi, BTP candidate Rajkumar Roat secured 64,119 votes followed by BJP’s Sushil Katara, who had won this seat in 2013 polls. The Congress had won this seat in the 2008 elections. In Sagwara, BTP candidate Ramprasad secured 58,406 votes followed by BJP’s Shankarlal. In 2013, Anjali Katara of BJP had won the seat with a margin of 640 votes. In the 2014 Lok Sabha elections too, BJP had led in the Chorasi and Sagwara assembly segments of the Banswara (ST) parliamentary constituency.

Also read: Congress Will Now Rule Rajasthan, But BJP Gave it a Tough Fight

Velaram Ghogara, head of BTP’s Rajasthan unit who is also associated with the Indian Confederation of Indigenous and Tribal Peoples (ICITP), has left no stone unturned to make the tribal population of Dungarpur aware about their constitutional rights. BTP’s campaign also saw opposition from the administration that didn’t want them to reach out to the tribals.

“In our campaign, we explained the tribal community about their rights and how their welfare has been compromised all these years. The youth was supportive and took the cause forward but when the police began intervening in our meetings, the community understood what we were trying to explain them and result is in front of everyone today,” Ghogara told The Wire.

The angst against the ruling party was mainly against an amendment to the Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act that diluted the provisions of arrest in the law.

On the Aspur seat won by BJP in Dungarpur, a young BTP candidate Umesh fell short by only 5,330 votes as compared to the sitting BJP MLA Gopichand Meena.

“For the BJP, even very young party workers are strong opposition here. In these tribal belts, both Congress and BJP become ‘friends’ to not let the tribals come up but the results this time are satisfactory,” he added.

Emergence of Jat leadership in Rajasthan

Jat is an important community in the Rajasthan electorate and has the potential to influence as many as 50 seats. Initially, being traditional Congress supporters, the Jats shifted their vital support to the BJP in 2003 when Congress’s Ashok Gehlot denied a candidate from their community a chance to become chief minister.

Ahead of the elections, Hanuman Beniwal, a rising Jat leader from Khinvsar in Rajasthan’s Nagaur, formed his own party called Rashtriya Loktantrik Party (RLTP) that independently contested 57 of the 199 seats in the state assembly elections and managed to win three of them from Khinvsar, Merta and Bhopalgarh.

While Beniwal retained his seat from Khinvsar, RLTP candidate Indira Devi, who was contesting the assembly election for the first time, defeated the two-time BJP MLA Sukhram by 12,835 votes in Merta, an SC reserved seat in Nagaur.

The party also successfully spread its reach outside Nagaur by grabbing a seat in the Congress bastion Jodhpur where RLTP candidate Pukhraj defeated Congress’s Bhanwarilal Balai by a narrow margin of 4,962 votes in the Bhopalgarh seat.

For Farmers in Rajasthan’s Hanumangarh, SBI’s ‘Loot’ is a Key Election Issue 

The bank has allegedly been charging extra interest, has not paid out insurance premiums, is lifting subsidies to recover debt and even charging money for mobile apps.

Nohar/Bhadra (Hanumangarh, Rajasthan): Thirty-five-year-old Anjani Bansal didn’t attend school after Class 8, but always had a way with numbers.

When his father was struggling to pay back the interest levied on his Kisan Credit Card (KCC) loan, Bansal, infamous in Chhani Bari for pursuing awkward jobs, quickly figured out from the passbook that the bank had charged him extra interest.

When he went to speak to the manager at the local State Bank of India (SBI) branch, he was fed a bunch of jargon that only further triggered his suspicion that something fishy was happening.

Bansal then decided to take the issue forward. He picked up discussions on KCC loans in his village to get a peek at the passbooks of other farmers.  To his surprise, the problem was not restricted to his father’s account. Many other accounts had similar irregularities.

After gathering substantial proof, Bansal took the matter to the-then collector Gyana Ram, who immediately called a meeting with bank officials to sort out the issue. The officials denied any wrongdoing but Bansal proved his point by performing basic arithmetic. He calculated the interest that should have been levied on the principal amount, which was taken as KCC loan at 4% rate of interest, forcing the bank to accept their mistake.

Soon enough, the myth that banks could do no wrong was busted. Bansal engaged the district president of the All India Kisan Sabha (AIKS), Balwan Poonia in order to get political attention to the problem, and to subsequently bring back the farmers’ money.

Their teams have been actively working in every village of Hanumangarh for the past three years. They collect passbooks from farmers, verify them for any irregularity and make a note of each such account in a register.

In February 2018, the farmers of Chhani Bari village in Hanumangarh district of Rajasthan staged a protest in front of the local SBI branch against the extra interest charged on their KCC loans. The protest was led by Poonia. After 58 days, SBI was compelled to credit Rs 16,52,000 to 350 KCC accounts.

Anjani Bansal. Credit: Shruti Jain

Poonia, a CPI(M) candidate who is contesting the election from Bhadra seat in Hanumangarh, has enormous public support. He is said to be leading the contest against his rivals from both the Congress and BJP. However, local dailies still indicate that it is a close fight between the two national political parties.

“After the AIKS protest, each farmer in Nohar and Bhadra has gotten thousands of rupees in their account which were stolen by the bank. The public here will definitely vote for him but the other two parties put in a lot of money to sway the votes in their favour. The newspapers don’t even show that the contest in Bhadra is triangular, forget showing how Poonia has an edge,” said Hari Singh, a farmer from Ramgarh village in Hanumangarh.

The harassment over excessive interest has reached a point now where farmers are willing to support anyone who speaks against the bank.

Also read: Two Insults, Two Encounters: Why Rajputs are Angry with Vasundhara Raje and the BJP

In October 2014, when Lalchand, a KCC-holding farmer in Chhani Bari, was informed that SBI had charged an interest of Rs 37,099 on his loan, despair grabbed him. Suddenly, he thought of Bansal who he had seen examining passbooks for incorrectly charged interest, and rushed to his house. Bansal checked and assured him that he would not be required to pay that amount as the interest would soon be reversed. Two months later, Rs 32,156 – roughly seven times the chargeable interest – was reversed by SBI as excess interest charged.

Another passbook shows that SBI charged Rs 15,557 as extra interest that was later reversed at the beginning of this year.

Tuli Ram, a KCC holder from Ramgarh village, says that the 3% subsidy meant to be given on KCC loans under the cap of Rs 3 lakh as per government guidelines hasn’t reached his account. “Government guidelines are just a formality, it’s us who are required to move around the officials to get our work done.”

Lalchand was charged Rs 37,099 as interest, of which Rs 32156 was later reversed. Credit: Shruti Jain

‘Software generated problem’

If money is being credited to these accounts, it is clear that the bank incorrectly charged a higher interest. But the question remains – was it a technical error or a deliberate attempt at over-charging farmers?

Bansal, who has closely seen the banking system transform, believes irregularities began cropping up after the system became computerised.

“Earlier, when the manager had to manually write the transactions, he could not get away with any mistake, but now, mistake of any magnitude is brushed aside as ‘software issue’ which has essentially made them pursue their will,” said Bansal.

Also read: Rajasthan Farmers in a Fix After SBI Charges Extra Interest on Kisan Credit Card

Speaking to The Wire, Mukesh Kumar, manager of the SBI Ramgarh branch in Hanumangarh, who was posted after the blunder came to light, said, “There is no denial that extra interest was charged but there was a problem in the system. The system is such that things cannot go error-free.”

Bank lifting subsidies

And there are an abundant number of errors. For instance, farmers in this district also claim that SBI is transferring LPG subsidies from their savings account to their KCC account without their consent.

Subhash Chand, a KCC-holding farmer from Chhani Bari, said, “LPG subsidy for the entire 2015 was transferred from my savings account to my KCC account, without my consent. We have no faith in the banking system; they work like thieves.”

As per the passbook records of Chand’s savings and KCC accounts accessed by The Wire, LPG subsidy worth Rs 4,000 was transferred from Chand’s savings account to the KCC account on January 7, 2016.

However, the bank has said that to recover its money, it has the power to take away subsidies.

“If the customer is not paying the dues, the bank has the authority to even transfer the money from their saving accounts. They care for the subsidies that are just in three digits but are not bothered to pay the banks whom they owe amount in five digits and more,” said SBI’s Kumar.

Chand is not the only one in Chhani Bari whose subsidy has been lifted. Many more farmers and non-farmers came out with similar claims.

Language barrier

For many farmers that The Wire met in Hanumangarh, understanding text messages from the bank – written in English – is also a big issue. Even the alert messages for payment, though delivered, serve no purpose. Basic banking terminology like ‘credit’ and ‘debit’ creates confusion for them.

Om Prakash, a farmer from Chhani Bari who has started selling groundnuts for an additional income to support his family, couldn’t decipher the messages from the bank. “I couldn’t pay the interest back on time. So when I requested the bank to grant me some extra time, they replied that they had already sent me a reminder message for the same and now there is no way out.”

SBI also deducted a premium of Rs 1,999 from their KCC account for RML Information Services, a provider of Reuters Market Light – under which farmers get messages on their mobile about mandi prices, weather forecast and agriculture advice. When the farmers protested against this app as it was of no use to them, SBI paid back the debited premium in some accounts. However, many are yet to receive it.

“Even the mandi prices it showed weren’t reliable and then the bank expects we should pay for such an app too. Many KCC holders haven’t received the premium back,” said Suresh, an active member of AIKS in Chhani Bari.

Pradhan Mantri Fasal Bima Yojana

Approximately 3,052 KCC-holding farmers of Ramgarh Ujjalwas, Gorkhana and Bhukarka villages in Rajasthan’s Hanumangarh district were denied insurance claims under prime minister’s crop insurance scheme as SBI failed to credit the debited premium of farmers to the account of the insurance company – Bajaj Allianz.

SBI’s Ramgarh Ujjalwas branch transferred the premium to the account of Agriculture Insurance Company of India (AIC) instead, and when AIC returned the money, the deadline for payment had already passed. The other two branches – Bhukarka and Gorkhana – on the other hand, made no attempt to pay the premium.

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

The farmers staged a 36-day-long protest in July under the leadership of Poonia to compel the bank to pay their claims. SBI had an agreement with the All India Kisan Sabha that the farmers would be granted claims as per the criteria set in the PMFBY guidelines. However, there are still many farmers who are yet to receive the amount.

Nathu Ram, a farmer from Nohar who has a KCC account in SBI’s Ramgarh Ujjalwas branch, was among the thousands whose debited premium was not paid to the insurance company by the bank. Even after the agreement, Ram hasn’t received the claim and is facing trouble sowing the crop this season.

Dilip Bhamboo, an AIKS member, talking to the farmers in the village. Credit: Shruti Jain

“Last year, the crop was damaged but the bank didn’t pay the claim. Now, this season, I have taken a debt for sowing the crop. If the production isn’t profitable, which is likely, I will have no option but to commit suicide.”

Jai Karan is the sole breadwinner of the family. SBI debited premium from his account for the 2017 kharif season, which assured him that the company would pay if the crop suffered a loss. He turned to the banking loan because the sahukar (moneylender) charges a lot of interest but is soon losing interest in this system too.

“Today, any farmer who suffers damage on two successive crops is finished. The banks and insurance is a show-off, they just work to loot a farmer’s money. It’s unfortunate that the government has chosen farmers to make money,” said Jai Karan, another KCC-holding farmer from Nohar.

SBI says that it has paid all the farmers. “We have paid all the KCC holders who were eligible for the PMFBY claim for kharif 2017,” said SBI’s manager Mukesh Kumar.

Denial of loans

People in Hanumangarh, whose business came to a halt post demonetisation, spoke about how they are denied loans to revive their work.

Ali Sher, a utensil manufacturer in Ramgarh village, saw a major downfall post demonetisation. In the village, people would purchase utensils from his shop at the time of their children’s marriage, with a promise to pay as and when they had money. In November 2016, during the wedding season, like any other year, a lot of customers owed money to him, but the note ban destroyed their capability to pay. Since then, he has been trying to get a loan to start a new business, but the bank keeps denying him.

“In my workshop, 15 workers used to work before the note ban, now there are just two – who are working on very low wages. I have been trying hard to seek a loan to start a new business; all my documents are complete yet the manager is denying it.”

Kuldeep, a mechanic, used to repair farm equipment. However, post demonetisation, farm activities dropped and so did his work. His sons who used to go to private schools had to take admission in government schools. The children now miss the English classes that used to happen in their previous school.

“My kids are not able to adjust in the government school; they keep complaining how the school has no system and students keep playing the whole day. All I can understand is that if the bank agrees to give me a loan, my condition will improve – to at least what it was a few years ago.”