Farmers' coverage stagnant but premiums up 350% under PM's flagship scheme

In January 2016, Prime Minister Narendra Modi launched a revamped crop insurance scheme, his government’s flagship scheme for farmers, the Pradhan Mantri Fasal Bima Yojana (PMFBY).

It would “bring about a major transformation in the lives of farmers”, Modi had said at the time.

However, after the implementation of the PMFBY, the number of farmers covered by crop insurance has gone up only by 0.42%. On the other hand, premiums paid to insurance companies have increased by 350%, according to data that the Ministry of Agriculture and Farmer’s Welfare provided to The Wire under a Right to Information (RTI) application.

When the government announced the new scheme, it said that the PMFBY “incorporates the best features of all previous schemes and at the same time, all previous shortcomings/weaknesses have been removed”.

It claimed that farmers will have to pay lower amounts as premium and that through the use of technology, the government will ensure ‘quicker settlement of claims’ compared to the previous crop insurance schemes.

For the two seasons that the PMFBY has been implemented (2016-17 and 2017-18), insurance companies – private and public – collected a gross premium of Rs 474.08 billion. Total claims paid as on October 10, 2018 was Rs 316.13 billion.

For 2014-15 and 2015-16, when the National Agricultural Insurance Scheme (NAIS) and Modified National Agricultural Insurance Scheme (MNAIS) were operational before getting subsumed under the PMFBY, the gross premium collected was Rs 105.60 billion. And total claims paid, at Rs 285.64 billion was in fact more than the premium collected.

Source: RTI response of the Ministry of Agriculture and Farmer’s welfare dated October 10.