Centre’s Crop Insurance Scheme Fails the Drought Test, 40% Claims Unpaid RTI data obtained by The Wire show that for the 2018 kharif season, total premium collected by companies amounted to Rs 20,747 crore while the claims paid totalled Rs 7,696 crore.

New Delhi: Insurance companies have missed the deadline to recognise and pay claims worth over Rs 5,000 crore made by farmers under the Centre’s Pradhan Mantri Fasal Bima Yojana (PMFBY) scheme, according to data obtained by The Wirethrough right to information (RTI) requests.

The pending insurance claims – which state governments have certified, but have not been approved by the companies yet – add up to a whopping Rs 5,171 crore and are for the recent kharif season, which ended in December 2018.

According to the PMFBY guidelines, the dues should be paid within two months from the end of harvest – which means the kharif 2018 claims should have been paid by February 2019 at the latest.

But 40% of the Rs 12,867 crore estimated claims remained unpaid as of May 10, 2019, according to data obtained from an RTI response by the Ministry of Agriculture and Farmer’s Welfare.

The data provided by the ministry covers both the PMFBY and the Restructured Weather Based Crop Insurance Scheme (RWBCIS), which accounts for around 5% of farmers covered under an insurance scheme. The rest are covered under the PMFBY.

The delay in insurance payouts happened in a season when the rainfall deficit was almost 10% and large parts of the country were suffering from a severe drought. During its first tenure, the Bharatiya Janata Party-led National Democratic Alliance promoted the PMFBY as one of its key measures to deal with rural distress in general and crop loss in particular.

A major reason for crop loss in India is deficient rainfall, since about 65% of the crop area is rain fed, according to the latest available data. So, the crucial test for the government’s flagship crop insurance scheme would be its performance in a year with deficit rainfall.

Sowing for the kharif season happens during June and July, and is heavily dependent on the June to September monsoon which accounts for about 70% of India’s rainfall.

The 2018 monsoon was below average. It recorded a rainfall deficit of 9.4% from the long period average, according to the Indian Meteorological Department (IMD). This was the fifth consecutive year with a deficit monsoon.

Seven states have declared themselves drought-hit. The total area affected by crop loss in these states is almost 15 million hectares.

According to a government response in the Lok Sabha, 252 districts – a third of the total districts in the country – received deficient rainfall between June and September of 2018. Most of these districts are in the states of Andhra Pradesh, Bihar, Gujarat, Jharkhand, Karnataka, Maharashtra, Madhya Pradesh, Rajasthan, Tamil Nadu, Telangana and certain parts of the north-east.

These states have suffered massive crop losses. In Gujarat, 401 drought hit villages have suffered more than 33% crop loss. In 269 villages, the crop loss was more than 50%.

“Crops like soya bean in Maharashtra have suffered 60%-70% crop loss. In cotton, crop loss is up to 50%,” said a senior official in the agriculture ministry, on the condition of anonymity.

Also read: More Than a Year After Crop Failure, Maharashtra Farmers Still Wait for Insurance Payout

Of the Rs 5,171 crore that remains unpaid under crop insurance for the 2018 kharif season, the maximum dues pertain to Maharashtra, which is among the worst-hit states by the drought. As against the Rs 3,893 crore of estimated claims, 36% or Rs 1,416 crore is pending, according to the RTI data.

In Karnataka, the drought has impacted 88.6%of the land area as 156 of 176 talukas have been declared drought-hit. Ninety-five talukas have been declared ‘severely hit’. The state is also chronically affected by drought as 16 of its 30 districts are ‘eternally drought prone’, according to a study.

According to the government’s response in the Lok Sabha, over two million hectares of cultivable area has been impacted by crop loss in Karnataka.

But under crop insurance, only Rs 28 crore has been paid to farmers as claims, against the Rs 679 crore of estimated claims. A little over 95% of the claims remain pending.

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