Centre’s flagship farm insurance scheme hit or flop?

Information obtained under RTI ACT reveals sharp rise in gross premiums, drop in farmers enrolled in 201718 under PMFBY

NEW DELHI: Is the Centre’s flagship farm-insurance scheme – Pradhan Mantri Fasal Bima Yojana (PMFBY) – flying or failing? The scheme has faced much criticism after data obtained under Right to Information ACT revealed a sharp rise in gross premiums and a drop in farmers enrolled in 2017-18.

A deeper HT investigation of data shows these trends may well be signs of a scheme maturing and becoming efficient.

To be sure, the scheme – crucial in a country, where half the population depends on a farmbased livelihood – still faces many hurdles, notably delay in paying off claims promptly. The scheme, which became operational in 2016-17 and is now in its third year, has drawn flak on three main indicators.

First, compared to 2014-15 and 2015-16 (the immediate preceding years when two older crop-insurance schemes were in force), premiums shot up nearly 348% – from about ~10,560 crore to about ~47,408 crore.

The second issue is that farmers are reportedly exiting the scheme.

The number of those enrolled in 2016-17 was 57 million, but in 2017-18, it fell to 48 million.

Third, the total crop area insured, too, fell 15% in these years.

The fourth issue: higher premiums meant private firms were grabbing a bigger pie of the insurance business.

The second issue – of farmers exiting – is a more serious area of concern because this can mean the scheme is really faltering. However, the reasons behind the drop may not be about the scheme’s popularity at all.

The fall in numbers of farmers enrolled in 2017-18 was partly driven by farm-loan waivers by Maharashtra, Rajasthan and Uttar Pradesh.

Because farmers saw loan waivers coming, they saw no incentive in paying off remaining loan instalments.

This default immediately rendered them ineligible for insurance under applicable rules.

Crop insurance is mandatory for any farmer with a farm loan.

IN 201718, NEARLY 8.7 MILLION FARMERS DROPPED OUT OF PMFBY. OF THESE, ABOUT 6.7 MILLION FARMERS WERE THOSE WHO HAD DEFAULTED ON THEIR LOANS, OFFICIAL DATA SHOW