PM asks Niti Aayog to improve crop insurance scheme

PM Narendra Modi has asked Niti Aayog to suggest ways to improve the government’s flagship farm insurance scheme that has faced criticism for tardy implementation and being skewed in favour of insurers.

At a recent meeting, Modi asked the officials of the government think tank to spearhead a “review and assessment exercise” across ministries and draft a plan to improve the Pradhan Mantri Fasal Bima Yojana (PMFBY), sources said on Wednesday. Officials from agriculture ministry and Prime Minister’s Office were also in the meeting held on August 21.

“It is the best crop insurance scheme we have had,” Ramesh Chand, member (agriculture) Niti Aayog, said. “But the Prime Minister wants us to constantly monitor and improve it. We are scouting technology and looking at experience of other countries.”

Launched on August 5, 2016, the scheme, a first of its kind in the country, seeks to provide farmers with uniformly low premium that would help them sustain agriculture even if the yield is damaged. But it has been criticised for gaps in implementation and for the amount of premium collected by insurers far exceeding the claims they paid out to farmers in 2016-17.

Insurance companies collected more than ₹25,000 crore in premium and only paid out a fourth in claims. A study by the Centre for Science and Environment (CSE) released in July pointed out that the insurance companies had made “profits” of more than ₹10,000 crore within 10 months of the launch.

The insurers said the low payouts were due to a good monsoon. The higher premium collected was on the back of insurance cover rising from ₹1,15,000 crore in 2015-16 to ₹2,04,000 in 2016-17, government sources said.

Assessing damage through crop-cutting method was faulty, the CSE study said of the assessment done on the basis of samples collected from a handful of farms.

The Aayog will keep improving the scheme but for a complete evaluation, it will have to be studied for four years, Chand said.