Centre, states spend Rs32,606 crore as crop insurance without maintaining farmers record: CAG
New Delhi: The centre and state governments spent a staggering Rs32,606 crore towards premium subsidy and claim settlement under crop insurance schemes in five years, but did not maintain any record of beneficiary farmers, the Comptroller and Auditor General of India (CAG) said in a performance audit that was tabled in Parliament on Friday.
The government was not in a position to ensure that the money spent on crop insurance schemes “reached the intended beneficiaries or achieved the intended purposes”, the report said after an audit of schemes between 2011-12 and 2015-16.
The government was dependent on information from bank branches disbursing crop loans (as it is mandatory for farmers taking crop loans to enrol for insurance) for data on beneficiary farmers, crops and area insured, the CAG report said.
In December last year, the agriculture ministry told the auditor that this shortcoming “is being addressed under the newly launched Pradhan Mantri Fasal Bima Yojana (PMFBY)”.
The CAG’s report further said that delay in payment of premium share by state governments delayed release of insurance compensation to farmers. “Deficiencies were noticed in crop cutting experiments (required to assess extent of crop loss) and functioning of automatic weather stations,” the auditor said, adding that “two-thirds of the farmers surveyed during audit were not aware of the schemes”.
The CAG report also rapped the government for “inadequate” grievance redressal and “very poor” monitoring.
Many of the structural deficiencies of previous insurance schemes persist after the revamped PMFBY was launched last year, Delhi-based think tank Centre for Science and Environment (CSE) said in an assessment report released on Friday.
Only 32% of the reported claims were paid to farmers by insurance companies till April this year, the CSE report said, adding that claim settlement was poor even in states that had paid their share of the premium on time.
Average actuarial premium rates charged by companies were the highest ever at 12.6% during Kharif 2016, the report said. The rates were 20.5% in Gujarat, 19.9% in Rajasthan and 18.9% in Maharashtra. The high premium rates explain the fact that insurance companies collected close to Rs22,000 crore in insurance premium during 2016-17, mostly borne by the Centre and state governments, as premiums paid by farmers are capped at between 1.5% to 5% of sum insured.
For farmers in vulnerable regions like Marathwada and Bundelkhand, PMFBY is not beneficial and farmers may not get any claims even if half of their crops are damaged, said Chandra Bhushan, deputy director general at CSE.
Bhushan explained this is due to low indemnity levels, low threshold yields (based on which sum assured is calculated) and default of loans (as crop insurance is tied to bank loans).
“In some areas premium rates are as high as 40% of sum insured (for arhar in Umariya, Madhya Pradesh) and the government will do the farmer a favour by directly transferring the amount to our bank accounts instead of paying it as premium subsidy to insurance companies,” said Kedar Sirohi, a young farm leader from Madhya Pradesh during the release of the CSE report in Delhi.