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| Crop Insurance boon for Insurance companies | | | Mahadeep Singh Jamwal
India's population of 2018 is estimated at 1.35 billion based on the most recent UN data. One of every six people of planet lives in India. As per Registrar General of India & Census report 2011 the total farmers or cultivators population of India is 118.7 million, which consists 31.55 of total rural population. Farm sector has been in distress for more than a decade. Census 2011 figures corroborate farm distress as it recorded that the number of farmers declined by about 1 crore over the previous decade. Some analysts have calculated the farm dropout rate at 2,040 every 24 hours as agriculture has turned unviable. At the juncture it becomes necessary to enrich our self about a survey report undertaken between December 2013 and January 2014 on farmers. A study by a premier social sciences research institute 'The Centre for Study of Developing Societies' (CSDS) on behalf of a non-political farmers' association 'Bharat Krishak Samaj' (BKS), speaks of deepening farm crisis and 76% farmers want to give up farming. A high percentage of farmers complained of repeated losses; because of unseasonal rains, drought, floods and pest attack. Here we have to memorize that earlier the Government of India experimented with a comprehensive crop insurance scheme which failed. The Government then introduced in 1999-2000, a new scheme titled "National Agricultural Insurance Scheme" (NAIS) or "Rashtriya Krishi Bima Yojana" (RKBY) that envisaged coverage of all food crops (cereals and pulses), oilseeds, horticultural and commercial crops. It covered all farmers, both loanees and non-loanees, under the scheme. The Central Government formulated the Farm Income Insurance Scheme (FIIS) during 2003-04. The insured farmers were ensured minimum guaranteed income (that is, average yield multiplied by the minimum support price). If the actual income was less than the guaranteed income, the insured would be compensated to the extent of the shortfall by the Agriculture Insurance Company of India, a public sector insurance company that offered yield-based and weather-based crop insurance programs.
India has about 12 crore farmers who form nearly 25 per cent of the 48 crore workforce of the country. Along with dependent population, agricultural farms supply more than 50 per cent of voters. Modi's election campaign in 2014 drew strength of this vote bank from his promise of doubling farm income and ensuring protection of farmers against crop failure. Since the coming of present dispensation in power, much sensitized words and lines about farmers, we hear are: farmer's committing suicide, crop insurance, MSP, farmer's loan etc. and doubling of farmers income by 2022. Modi government launched rebranded improvement of a similar scheme under UPA government, as Pradhan Mantri Fasal Bima Yojana (PMFBY) a comprehensive crop insurance scheme that provides coverage to crops from pre-sowing to post harvest, in February 2016, against non-preventable natural hazards to compensate farmers for any loss in crop yield. The X-Ray of the 'Pradhan Mantri Fasal Bima Yojana' (PMFBY) revealed that the premium for insurance coverage has been kept at 2 per cent for Kharif and 1.5 per cent for Rabi crops. In the case of commercial and horticultural crops, the farmers are required to pay an enhanced premium of 5 per cent. Rest of the premium (98.5 per cent for Rabi crops to 95 per cent for commercial crops) is shared by the Centre and state government. Among the five public and 12 private companies empanelled under PMFBY are: E-NAM portal that connect farmers with buyers on online platform for trading commodities, E-rakam portal 2017 to facilitate the farmers to sell their agricultural yield online, Agri UDAAN 2017 to promote innovation and entrepreneurship in agricultural sector. The farmers' protests in several states across India's geographical diversity as major non-sectarian mass movement confronting the Narendra Modi government are enough to conclude failure of the welfare schemes of present dispensation.
How far the crop insurance schemes presented by Modi government have benefitted the farmers, require an analysis as the schemes have benefitted the insurance companies much than the farmers. We come across on search engine of information under Right to Information (RTI) Act, provided by the Union Ministry of Agriculture and Farmers' Welfare that In two years (2016-17 and 2017-18), the insurance companies collected insurance premium of Rs 49,408 crore for 10.6 crore farmers and distributed Rs 33,612.72 crore to 4.27 crore farmers, while earning a profit of Rs 15,795.28 crore. The insurance companies had earned a profit of Rs 6,459.64 crore in 2016-17, while the margin went up to Rs 9,335.62 crore in 2017-2018. Out of the gross premium, the insurance companies paid out as claims having average crop insurance claim to farmers for 2016-17 was Rs 10,790.83. Similarly, these companies have earned very high profit under another crop insurance scheme -- Restructured Weather-Based Insurance Scheme (RWBCIS). The insurance companies earned a high profit of 44 per cent during 2016-17, as they received Rs 15,735 crore while they incurred expenditure of Rs 8,862 crore in claims made by the farmers and during the last kharif (2017-18) season, the insurance companies had earned 96 per cent profit During kharif 2017-18, the companies received Rs 1,694 crore as premium and paid out just Rs 69.93 crore as claim compensation. A comparison of premium received and claims paid by the companies lead us to the conclusion that the Modi's scheme has definitely hit the jackpot for the Insurance Industry. Farm activists find a "big lacuna" in the design of the PMFBY, saying it has been more beneficial to the insurer than farmers. According to the Agriculture Insurance Company of India (AICI), the nodal agency for these schemes, the business has been "profitable" since they were launched in February 2016. Collectively the Insurance companies earned around 85 per cent profit, excluding expenditure on administrative purposes and reinsurance, during the 2017-18 kharif seasons. The farmers are continuously hanging in distress. The PMFBY data show that the year PM Modi launched the insurance scheme, area coverage of crop insurance saw a jump - from 5.24 crore hectares in 2015-16 to 5.71 crore hectares in 2016-17. But on the back of poor insurance claim, the area coverage dropped by about 17 per cent to 4.75 crore hectares in 2017-18. Interestingly to benefit the Insurance companies, the budgetary allocation was increased (provision for crop insurance premiums) for PMFBY from Rs 10,698 for 2017-18 to Rs 13,000 crore for 2018-19. Four years later, the Modi government is in the last lap of its run and farmers may again play a key role in deciding the next ruling power at the Centre in 2019 as the much talked crop insurance schemes of Modi government have led to swelling of wallets of the Insurance company's because of farmer's distress and the farmers are there where they were. |
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