RTI Reveals Huge Irregularities in PMFBY; 50% of Farmers' Dues Paid in Only 30-45 Districts

The center’s ambitious Pradhan Mantri Fasal Bima Yojna has witnessed major irregularities including a huge disparity in the payment of claims where around 50% of the total dues are being paid only in 30-45 districts, the report says. Moreover, as per reports, the farmers’ dues amounting to more than Rs 5,000 crore are still unpaid, even though it is long past the deadline.

According to the reports from RTI in response to a query, it is reported that farmers had an estimated claim of a total of Rs 14,813 crore for the Kharif season that ended in December 2018. Of this, only Rs 9,799 crore had been paid until July 2019.

However, dues must be paid within two months from the end of harvest, according to the PMFBY guidelines, which means that the Kharif season 2018 claims should have been paid by February 2019 at the latest. 

Ashish Bhutani, a joint secretary in the Ministry of Agriculture and the CEO of PMFBY, however, said that he is investigating the matter together with the states and efforts are being made to understand why most payments are being made in these areas.

“During the talks between state governments and insurance companies, it was informed that there is a lot of disparity in payment of claims and a total of nearly 50% claims have been paid in only 30-45 districts. Opinion has been sought from all stakeholders or parties to gather information about the districts where most claims are being paid.”

Bhutani told in front of media, “these areas are facing more crop loss. But it is happening quite frequently, we are trying to figure out the reason behind it.” The list includes Vidarbha and Marathwada in Maharashtra, along with districts in ten other states like Rajasthan, Madhya Pradesh, and Andhra Pradesh.”

Regarding the irregularities in payment of dues, Bhutani said that the state government assesses crop losses. Therefore, it is not possible that an insurance company pays the claims of a particular area and not the rest.

Why Crop insurance is becoming a problem?

Farmers in India are exposed to large agriculture risks due to vagaries of nature. One of the most effective mechanisms to mitigate agricultural risks is to have a robust insurance system. Although crop insurance has been in the country since 1972, yet it has been beset with several problems such as lack of transparency, high premium, delay in conducting crop cutting experiments and non-payment/delayed payment of claims to farmers. Realizing the limitations of the existing system of crop insurance, a new crop insurance scheme was launched on Baisakhi day, Pradhan Mantri Fasal Bima Yojana (PMFBY), from Kharif 2016.

The Ministry of Agriculture offered several solutions for problems in a meeting with state agriculture ministers including hampering the proper implementation of the insurance scheme like making the scheme voluntary, estimating the yield through remote sensing, better use of the CCE app, and excluding high premium crops from its purview.

One of the prime challenges of crop insurance reported by the Ministry of Agriculture is the perception that the insurance companies are making money out of it.

As per agriculture ministry, certain districts have high premium crops due to which the total cost of PMFBY increases considerably. As a solution, it was suggested that high premium crops should be removed from the purview of the insurance scheme by Kharif 2020. However, the states are yet to send their responses.