Prepared by the Delhi Solidarity Group (DSG), it says that the bulk of this year’s budgetary increase comes from the Pradhan Mantri Fasal Bima Yojana (PMFBY), a crop insurance scheme. Its allocations were increased by Rs. 4,000 crore -- a 44% increase which is over 82% of the total departmental budgetary increase.
Calling it an insurance scam, DSG alleges, "Though robust crop insurance is a necessity in monsoon dependent agriculture, PMFBY’s structural and operational peculiarities seem to facilitate an almost criminal transference of public funds from the exchequer to private coffers."
Thus, it says, the scheme's "option to bid on an annual basis has allowed private insurance companies to take up the scheme only when a favourable monsoon (leaving public insurance companies to deal with the lean years) is predicted and at the same time charge exorbitantly."
"In fact", DSG says, the July 2017 data indicate that "insurers, mostly private made a windfall of roughly 16,700 crore. Eleven general insurance companies over the 2016 Kharif and Rabi seasons collected Rs 20,374 crore as premium but paid out only Rs. 3,655 crore as claims, which in itself constitutes only 63% of the claims submitted."
Insisting that PMFBY should be "actually classified under corporate subsidies", DSG says, what makes matters worse is "the scheme entails mandatory crop insurance for farmers cultivating particular crops in select states", with the farmer paying a "subsidised rate of premium, limited by the scheme, with government bearing the balance."
Says DSG, even the Comptroller and Auditor General's (CAG’s) Peformance Audit on Agricultural Insurance (Report No. 7) of 2017, which is highly critical of PMFBY, notes that two-thirds of the farmers surveyed during audit were not aware of the schemes.
Interestingly, the emphasis on PMFBY has come about at a time when, says DSG, the National Agricultural Insurance Scheme (NAIS), which entails interest subsidy for short term loans to farmers, has been allowed to remain stagnant since 2016-17 at Rs 15000 crore. "Despite repeated pleas by farmers' groups, the government has refused to increase the coverage beyond Rs 3 lakh limit."
According to DSG, referring to PMFBY, "97% of the farmers had opted for sum insured equivalent to loan amount they already had under NAIS, indicating that either farmers were intent on covering the loan amount only", with the PMFBY virtually becoming a "loan insurance rather than as crop insurance scheme."
CAG's audit report on PMFBY, says DSG, also notes that "no data of sharecroppers and tenant farmers was maintained despite the fact that the guidelines provided for their coverage under the schemes", adding, " Coverage of small and marginal farmers under the schemes was very low compared to the population of farmers."
DSG further says, referring to CAG report, "Despite provision of large amount of funds under the schemes to private insurance companies, there was no provision for audit by CAG", adding, "There were delays in issue of notifications, receipt of declaration from Bank/FIs within cut-off dates, delays in receipt of yield data from state governments, delay in processing of claims, and irregularities in disbursement of claims by Bank/FIs to farmers’ accounts."
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