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Review of PMFBY: More Farmers insured; lesser area covered. Standing Committee makes important recommendations

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The Parliamentary Standing Committee on Agriculture recently reviewed the four years of implementation of the Pradhan Mantri Fasal Bima Yojana. Over the last four years, while more farmers are insured than before, the area covered has reduced. Multiple states have also dropped out of the scheme. 

The agriculture & allied sector accounts for nearly 55% of the total workforce in the country as per the 2011 Census, and is a key contributor to the economy. In India, agriculture is riddled with various uncertainties and risks. Amid such risks, crop insurance helps in providing relief to the farmers and mitigating their losses to an extent. Accordingly, the Central government and respective state governments have devised & implemented various insurance schemes for agriculture over the years. 

In 1985, an insurance scheme was introduced by the Ministry of Agriculture, which was followed by the National Agricultural Insurance Scheme (NAIS) in 1999-2000. In 2013-14, National Crop Insurance Programme (NCIP) was launched with three component schemes. Based on the earlier experiences, and with an idea to include additional risk factors under Crop insurance cover, the Government of India announced introduced its flagship scheme – Pradhan Mantri Fasal Bima Yojana (PMFBY) in April 2016.  A detailed explainer about the PMFBY can be read here

Since it has been four years in the implementation of the Scheme, the Standing Committee on agriculture selected PMFBY for its examination and review. Accordingly, the committee recently submitted its 29th report on the subject “Pradhan Mantri Fasal Bima Yojana – An Evaluation’. The report was presented in both the Houses of Parliament on 10 August 2021. 

In this story, we look at a few of the highlights & key observations from this report. 

Fall in the Area insured and withdrawal of Multiple states from the Scheme 

As per the information submitted by the Department of Agriculture, a total of 494.8 Lakh Hectares (L ha) of the area was covered under PMFBY during 2019-20. This is less than the total area covered under the scheme in the earlier years. In 2018-19, it was 523 L ha. The coverage in the launch year i.e., 2016-17 was 567.3 L ha, which reduced to only 508.3 L ha in 2017-18. 

There is also a fall in the share of Gross Cropped Area (GCA) that is covered under the scheme. 

In 2019-20, the GCA was 25%, down from 27% in 2018-19.  During the first year of PMFBY i.e., in 2016-17, the GCA covered under the scheme was 30%. 

The standing committee has taken cognizance of the fall in coverage under PMFBY and has asked the government for the reasons for the same. The government has specified two major reasons for the fall in the coverage: 

  • Mandatory linking of Aadhar which has eliminated double/multiple insurance holders. 
  • Few of the states opting out of the PMFBY. 

While Punjab never joined the scheme, Bihar & West Bengal withdrew from the scheme in 2018 & 2019. Meanwhile, the states of Gujarat, Andhra Pradesh, Telangana & Jharkhand did not implement the scheme last year. 

The Committee also asked the government the reasons for the states not opting for PMFBY. The government stated the following reasons in response. 

  • Financial constraints of the State governments 
  • Low claim ratio during a normal season. 

These reasons were specifically cited for the two states that dropped out – Bihar & West Bengal. The government stated financial constraints to be one of the reasons for other states not implementing the scheme in 2019-20. 

Increase in the Farmer Applications despite the withdrawal of few states 

With the withdrawal of some of the States and few others not opting for PMFBY in 2019-20, the Standing Committee raised apprehensions on the popularity of the scheme and the possibility of the existence of some major flaws in the scheme. 

As a response, the government reiterated that financial constraints are the major reason for states not continuing with the scheme. The government further stated that despite the withdrawal of some states, the scheme has become increasingly popular with the farmers. The increase in the number of applications from the farmers is cited as the reason for this claim. 

During 2019-20, 6.08 crore farmer applications were insured which is higher than the earlier year, i.e., 2018-19, where-in it was 5.76 crores. During the first year of implementation, the applications were 5.83 crores. In its response, the government stated that the number could be much higher, if not for the withdrawal of some states.  

In the most recent Kharif-2020, there were a total of 3.98 crores applications as against 4.20 crores in Kharif – 2019, despite PMFBY being implemented in fewer states. However, despite the increase or the same level of applications, the area insured has reduced substantially.  

Delay in Settlement of Claims one of the main impediments to the scheme 

As part of its key observations about PMFBY, the Standing Committee stated that delay in settlement of the claims is one of the major impediments in the successful implementation of the scheme.  As a response to this aspect highlighted by the committee, the government responded with the following reasons for the delay in settlement of claims: 

  • Delayed transmission of yield data 
  • The late release of the share of premium/subsidy by a few of the State governments 
  • Yield related disputes between insurance companies and states 
  • Non-receipt of account details of some farmers for transfer
  • Fund transfer (NEFT) related issues 

However, the committee expressed that it is not convinced with the reasons presented by the government regarding the delays, highlighting the fact that it is the farmer who is being impacted due to the delay in settlement of the claims and it defeats the purpose of PMFBY – providing relief and mitigation of the loss to farmers in times of distress. 

It has therefore recommended that the scheme be made more technology-reliant to bring in synergy among the various departments and institutions involved in the implementation of the scheme. The committee has also recommended that the union government come up with stricter timelines and penalties to the insurance companies in case of delays in the settlement of the claims. 

Committee raises concerns about non-availability of details regarding resolved Complaints 

Grievance Redressal Committees (GRCs) were set up at different levels – State, District, Taluka, etc. to address the various grievances related to PMFBY.  However, there is no uniformity in the establishment of these GRCs across the states. For example, Tamil Nadu, Maharashtra & Rajasthan have redressal committees at the Taluka level. 

Hence, the Standing committee recommended that the best practices followed in a few of the states, be implemented across all the states.  However, the major concern highlighted by the committee was on the non-availability of data relating to the complaints resolved by these GRCs. The Standing Committee expressed its displeasure on the lack of the data and has strongly recommended that the government maintain a record on the types of grievances and the resolutions by GRCs. 

The committee is of the opinion that such information is important to understand the shortcomings of the scheme which has resulted in the grievances and help to work on improvements in PMFBY. 

Need for understanding the reasons for states opting out and to create awareness about PMFBY 

PMFBY was implemented with the intention to provide increased coverage of risks faced by the farmers. This was based on the experience of implementing various other insurance schemes over the years. Hence, the idea is that PMFBY would be more beneficial to the farmers than the earlier schemes. However, the withdrawal of some states from the schemes raises questions on the efficacy of PMFBY. 

While the central government stated that the financial constraints are the main reason for the withdrawal of some states, the withdrawal would be a hindrance to the farmers in those states. The committee has hence asked the Centre to explore more into the reasons behind the withdrawal of the states and make modifications to the scheme so that the farmers do not miss out on the benefits. While many of the states withdrawing from PMFBY are implementing their own schemes, the committee has opined that it would defeat the main purpose of the PMFBY. 

The Standing committee has also taken cognizance of the various efforts put in by the government to create awareness about the scheme. However, it has advised the government to focus on platforms and media that are more approachable to the farmers in creating awareness so that more farmers subscribe to PMFBY. 

Featured Image: Review of PMFBY

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