The Pradhan Mantri Fasal Bima Yojana(PMFBY), brought out in 2016, has opened crop insurance to the private sector at the national-level. The PMFBY suffers from a serious problem of lack of regulation, with there being no independent mechanism to verify the validity of data provided by insurance companies, according to Vikas Rawal, a professor of Jawaharlal Nehru University (JNU).
He was speaking at a national seminar on “Government insurance schemes”, organised by the Insurance Institute of India and Visakhapatnam Insurance Education Society, at Alluri Vignana Kendram here on Sunday.
‘More premium collected’
Prof. Rawal said that though there was an initial expansion of coverage under PMFBY, it had stagnated subsequently. The expansion of coverage under the scheme was mainly by providing cover to non-loanee farmers. The linkage with the banking system was broken. Referring to data provided by the insurance companies, he said that after introduction of PMFBY, the amount of premium collected by insurance companies has far exceeded the amount of claims, they have provided. Prior to PMFBY, claims exceeded the premium collected.
He explained that with PMFBY, the total payment of claims increased to about three times the level prior to PMFBY. Prior to 2016, total premium collected for crop insurance (from farmers and the government) was about ₹7,000 crore. Since 2016, this has been more than ₹20,000 crore annually.
Prof. Rawal elaborated on the risks associated with agriculture. This was due to dependence of agriculture on rains, natural calamities like cyclones, heat and frost, which have a bearing on agriculture, attacks by pests and variability of prices. There were different means for mitigation of the same. The Green Revolution of the 1960s has resulted in surplus production, and the need for the government to come up with Minimum Support Price (MSP) to protect the farmers. MSP enables farmers to sell their produce to the government at remunerative prices, when he could not do so in the open market. However, over 90% of farmers were selling their produce at less than the MSP.
He explained about various aspects of crop insurance as a strategy for dealing with the risks of farming, the difficulties to assess crop damage by the insurance companies in view of localised nature of crop damage, possible negligence or even false claims by unscrupulous persons and the non-availability of data at the local level.
Sarada Prasad Dash, Senior Divisional Manager, Visakhapatnam Division of LIC, also spoke.
A.V.R.K. Murthy, honorary secretary, Insurance Institute of India, Vizag chapter. and committee members of the Institute N Ramakrishna, S.S. Moorthy, Subba Rao, SS. Ganesh, CHV Ramana, and Venkata Kumar participated.
Published - November 05, 2023 07:45 pm IST