From Agro Insurance, the Insurance companies have collected premiums totalling around Rs. 22,345 crores and paid out claims worth just Rs. 5,876 crores to farmers under the Pradhan Mantri Fasal Bima Yojana (PMFBY). Insurance claim payouts are always low in normal years.  One reason for delay in claim payments by insurance companies is that the States do not release their part of the subsidy on time. Secondly, the companies themselves have no direct connection with the farmers.

In order to implement the PMFBY properly is to bear the whole premium subsidy and link its release to their meeting prescribed operational schedules. Once insurance companies are assured of timely release of subsidy and crop yield data from all states, there will be no more excuse for delay in claim settlements.

Under PMFBY, currently implemented in 14 States, farmers who are accessing institutional credit have to compulsorily have insurance cover for certain identified crops by paying part premium. The rest of the premium is paid by the Centre and the respective State governments.

“We have asked the States to set up their insurance companies. Punjab and Gujarat have decided to have their own companies. Other States should follow suit. If the States are keen to protect farmers from malpractices by private companies, they should take this step immediately,” said Singh.

Vikas Rawal, professor of economics at the Jawaharlal Nehru University, said farmers were disinclined to take insurance cover for their crops because they were never designed to help them. They do not cover the real risk for farmers, he said, adding that they only help the banks who have given loans to farmers.

“Most of this claim money would have gone directly to the banks, rather than to farmers,” he said.

Siraj Hussain, former Agriculture Secretary and Visiting Fellow at the Indian Council for Research on International Economic Relations in New Delhi, however, defended the involvement of private companies “because they bring in efficiency and transparency.”

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