PMFBY: Farmers Quitting Scheme But Premium Collection Rises

The number of farmers enrolled in the Modi government’s flagship crop insurance scheme (Pradhan Mantri Fasal Bima Yojana or PMFBY) dipped further to 343 lakh in kharif (summer) crop season of 2018-19 year, according to latest information revealed at the annual Kharif Conference organised by the Agriculture Ministry in Delhi on April 25-26. When the scheme was started in 2016, enrolment in the first kharif season was 404 lakh, which declined to 349 lakh in 2017.

Strangely, gross premium collected by insurance companies has continued to grow from Rs. 16,015 crore in 2016 to Rs. 20,522 crore in 2018. This is because per farmer premium rate is increasing, and so is the state and central government’s contribution to premium. In other words, insurance companies continue to reap enormous profits despite lower coverage. That’s the business model this scheme has foisted upon the farmers.

Less farmers covered means a larger number of farmers are now completely at the mercy of the weather gods. Small wonder then, that in many states, farmers demand compensation for crop losses from the state governments, who in turn press the Centre for drought relief packages.

The data put out at the conference by PMFBY CEO Dr. Ashish Bhutani also reveals that in the past two years (2016-17 and 2017-18) of the scheme’s operation, insurance companies have pocketed a surplus of Rs. 10,219 crore. They collected gross premium worth Rs.47, 447 crore, but had to admit farmers’ claims worth Rs. 37,228 crore in the four crop seasons (one each of kharif and rabi, in each year).

Also read: Close to 4,000 Madhya Pradesh Villages Stare at Acute Drought

In this period, there have been numerous reports of farmers agitating for faster claims settlement or against the meagre insurance compensation they were getting. In some states like Madya Pradesh, farmers have even gone to consumer courts with complaints of low settlements.

The scheme operated by insurance companies collecting 1.5% premium from farmers for kharif season (2% for rabi) and the balance is shared equally between the state and central governments. Then, after the harvest is finished, farmers claim for insurance compensation if they have suffered loss because of, say, deficient rainfall or other unavoidable natural events. In effect, the farmers and the governments are paying huge amounts to companies for providing the insurance.

Settling of claims is done after crop cutting experiments are carried out in affected areas by the district administration to estimate average loss per unit area. On the basis of this, insurance companies pay out the claim money.

Also read: #MahaDrought: Negligible Returns From the PM’s Insurance Scheme For Farmers

The rather dismal performance of the scheme – which has been much lauded by the Modi government and its supporters – has added to the woes of farmers in the country who were already suffering from increasing indebtedness and falling farm incomes. After almost continuous agitation by farmers during the five-year rule of the Modi-led BJP government at the Centre, a hand-out of Rs. 6,000 per farmer was announced by the PM weeks before the general elections in a transparent move to regain support in rural India. However, the meagre amount has not been able to assuage the angry farmers.

Last year, monsoon rains were about 9% deficient on an average country-wide, but certain areas including major agricultural states like Gujarat, northern Karnataka, Bihar, West Bengal, Jharkhand and Marathwada region of Maharashtra suffered the biggest deficit in rainfall. In these regions, drought-like conditions are prevailing, and there is deep distress. Despite that, the bad experience in earlier years has discouraged farmers from enrolling in the insurance scheme.

How the BJP and its leaders like PM Modi and various state chief ministers will explain this to farmers from whom they are seeking votes in the ongoing election campaign is difficult to imagine. Perhaps that’s why, there is no mention of PMFBY in Modi’s or other campaigners’ speeches these days.

Also read: Elections 2019: In Karnataka’s Drought-hit Bagalkot, Modi Prefers Talking About Balakot Instead