This year when soybean farmers in Madhya Pradesh had to pay relatively less premium under the Pradhan Mantri Fasal Bima Yojana, they were extremely happy. Recently, when their entire crops were damaged due to floods, they were expecting that the insurance companies would give them appropriate compensation for the loss, but it was not to be.
For instance, last year, in Harda district, insurance company IFFCO Tokio took Rs 700 as premium from soybean farmers, for which a claim of Rs 35,000 per hectare was fixed. However, in 2019, in place of Rs 700, Rs 525 was taken — Rs 175 was reduced from the premium. But, along with this, the claim money was reduced from Rs 35,000 to Rs 26,250. In other words, instead of Rs 175 as relief in premium, the insurance company reduced Rs 8,750 in claims.
The scale of finance is the finance required for raising a crop in per unit cultivated area – hectares or acres. The scale of finance for different crops in a district is decided every year by a district-level technical committee. In case of crop damage, the farmers are entitled to receive compensation for the sum they invest as input costs.
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In 2018, the scale of finance was 100% — which meant the farmers received insurance for the total input costs. However, the Kamal Nath government in Madhya Pradesh has reduced the scale of finance to 75% for crop insurance for Kharif season 2019 and Rabi season 2019-20.
In Madhya Pradesh, nearly 60 lakh hectares of Kharif crop was ravaged by heavy rains, which has affected 22 lakh farmers.
“Input cost is the main component of the scale of finance. An increase in the scale of finance means there would be an increase in input costs in the coming year. This increment is taken into consideration when given a loan. Decreasing the scale of finance directly means that the government believes that in the coming year there will be a decrease in the input costs, based on which there will be a decrease in the value of the loan limit. Giving this reason, the scale of finance was decreased by 25%, which implies that input costs will be low,” said Vikrant Singh, founder-president of Finance and Economics Think Council at Banaras Hindu University in Varanasi.
“Against the rules of the government”
Sachin Patidar, sales manager of the rural agro-business group at HDFC Ergo, said: “We are still working on last year’s claim list. The state government decides the scale of finance and we compensate accordingly.”
In Madhya Pradesh, the Agriculture Insurance Company of India Limited, New India Assurance Company Limited, Reliance General Insurance Company Limited, Bajaj Alliance General Insurance Company Limited and Oriental Insurance Company of India are responsible to give loan under the Pradhan Mantri Fasal Bima Yojana.
The amount of insurance claims is different for different districts. Like in Harda, Rs 12,000 a hectare; in Agar and Malwa districts, Rs 8,750; in Alirajpur, Rs 4,200; in Anuppur, Rs 10,000; in Barwani, Rs 8,150 and Rs 10,000 in Burhanpur was deducted. This claim amount has been deducted in other districts as well, which amounts to Rs 8,000 per hectare on average.
In Madhya Pradesh, nearly 35 lakh farmers were insured for Kharif crops in 2018. However, this year, only 30 lakh farmers were insured. Five lakh farmers were not eligible for availing the benefits of the Fasal Bima Yojana. However, the state government blames that the central government is responsible for this.
“Input costs for soybean farming have increased by 20%. How can the scale of insurance be reduced by 25%? It is against the rules of the central government. Farmers are already suffering from losses due to heavy rainfall. Now they have to suffer losses from insurance companies. Who will compensate for this loss?” asked Ram Inaniya, leader of Aam Kisan Union.
“Farmers in Harda alone are suffering losses to the tune Rs 150 crore. If we estimate the total loss of the state, then it will run into thousands of crore,” added Ram.
Amount of claim and premium for Urad crop. (2018, 2019)
In Madhya Pradesh, Kharif crops are cultivated in an area of 150 lakh. Its production is worth Rs 3 lakh crore. Soybean, urad, and mung come under Kharif crops. More than 22 lakh farmers have suffered the losses. However, exact data will be released after the crop cutting survey.
“Last year, diesel was worth Rs 63-65 per litre, which is above 70 now. The cost of DAP has been increased from Rs 1,250 a sack to Rs 1,400. The cost of insecticides has been increased from Rs 100 to Rs 200. The cost of seeds too has increased. Soybean was Rs 5,600 a quintal, which is Rs 5,800 now. If we add the expenses of water and electricity, then it can be estimated that input costs have increased by Rs 8,000-10,000 per hectare. As such, the scale of finance should have been increased by 20-25%. But here the government has done the opposite,” said Ram.
However, Kedar Sirohi, working president of Kisan Congress in Madhya Pradesh, believes that deduction in the scale of finance will not affect the farmers in a big way. He said: “Anyhow, farmers were unable to avail this scheme. There are so many flaws in the scheme, farmers get a very less amount as claims.”
“We are trying that farmers may get insured at the state level. Maybe we will keep the scale of finance low, but we will make sure they get what we keep,” added Kedar Sirohi.
The ministers didn’t bother to reply
Gaon Connection tried to contact many ministers and departments of farmers’ welfare in the state. We called Sachin Yadav, minister of agriculture, but every time we were told that he was out in the field and asked us to call him the next day.
Mukesh Kumar Shukla, secretary of Kishan Kalyan and agricultural department in Madhya Pradesh, said that when the claim has not yet been given, then how can we say that the scale of finance has been reduced. He then disconnected the call and didn’t pick up when dialled again. Ajit Kesari, principal secretary of the government of Madhya Pradesh, said that he was busy in a meeting and asked us to WhatsApp him a questionnaire. Even after sending several messages on WhatsApp, he didn’t reply to any of our messages and didn’t even pick up the call.
Premium for soybean crop and the amount of claim fixed by the company. (2018, 2019)
How helpful is the Fasal Bima yojana?
An insurance company owes 936 farmers living in Nandra village Rs 2 crore. It’s been two years that the farmers have received the payment.
This is the ground reality of the Pradhan Mantri Fasal Bima Yojana, which was launched by the Centre for the welfare of farmers. As per the rules, claims that should be given within two months are taking years to reach beneficiaries.
Questioning the scheme, Vikrant said, “The biggest drawback of this scheme is that payment that it offers is very less compared to the premium paid. Moreover, it is not given in time. Recently, according to a report released during the 2018 Kharif season, insurance companies in India had collected Rs 20,747 crore premium. However, the farmers claimed Rs 12,867 crore as loss but received only Rs 7,698 crore as payment. It was Rs 5,171 crore less than the claim received.”
Brajesh Jaat, a Nandra-based farmer said, “In my village, Rs 2 crore of 936 farmers are due. Because of a very small mistake of the patwari, we have received compensation of urad in place of soybean. The rate of urad was less. We have reported against this to the collector. Although the collector looked into the matter, but then the insurance company said that we had exceeded the time limit and we will not get the compensation now.”
“We are going to file a complaint against the insurance company now. We are tired of filing complaints. The company is saying that we don’t give claim amount after so many days. They say that they send the compensation amount within two months. However, the truth is that there’s hardly any farmer in our village who has received the compensation amount before one-and-a-half-year,” added Brajesh.
In 2018, the ministry of agriculture launched a report based on this scheme. It was reported that instead of farmers, companies are benefitting from the Fasal Bima Yojana. In the Kharif season of 2017-18, benefits (excluding administration and re-insurance expenses) of these insurance companies reported were 85%.
In Madhya Pradesh, nearly 60 lakh hectares of Kharif crop was ravaged by heavy rains, which has affected 22 lakh farmers
In 2017-18, insurance companies were given Rs 22.18 crore as premium. However, farmers received Rs 12.94 crore as compensation amount from insurance companies. It seems that the insurance companies have been taking advantage of this scheme more than the farmers.
Gyanesh Khervar, a farmer based in Aalapur village of Harda, said: “I own around 11-acre land and I have two KCC cards. In 2017, Rs 3,500 were deducted from both. The crops were damaged that year as well. I got Rs 16,000 as claim amount, which was calculated based on Rs 1,520 per acre. Had my crop not got damaged, I would have earned Rs 2-3 lakh. First, I received less money. Second, it was given after 13 months. I didn’t get the money when I needed it the most. I had to take a loan from others to manage losses.”
Like Gyanesh, many other villagers faced similar problems. Gaon Connection met many farmers who have received claim amount after many years. Mukesh Tiwari, a farmer who lives in Faraspur village in Sanwar tehsil in Indore district of Madhya Pradesh said, “I phoned the insurance company and informed them that my entire soybean crop has been damaged. They asked me to contact the patwari of my village. When I talked to the patwari, he told me that I will know my share of compensation after crop cutting that will happen in October. It happened with me even in 2017. Then I was given only Rs 4,000 a hectare. However, our loss was more than Rs 15,000 per hectare. I was given a claim after one year.”
The disparity in total premium and payment
“The government claims that if insurance companies don’t pay compensation in due time, then they will be charged 12% as fine. But there has been no news on that yet,” said Vikrant.
According to the government data, in 2016-17, 5.80 crore farmers were registered under Pradhan Mantri Fasal Bima Yojana. However, in 2017-18, this number was reduced to 4.70 crore. No data was released after that.
In November 2018, P Sainath, a well-known journalist and agricultural expert, while addressing an event at the Kisan Swaraj Sammelan that was organised in Ahmedabad, had said that the Pradhan Mantri Fasal Bima Yojana is as big a scam as Rafale.
He said, “In Maharashtra, 2.80 lakh farmers did soybean farming. For Fasal Bima, Rs 19.2 crore was collected from farmers in one district. However, the centre and state government have paid Rs 77-77 crore. This is how the insurance company of Reliance received a total of Rs 173 crore.”
He further added that in 2017, the entire crop of farmers was damaged. Then Reliance paid only Rs 30 crore to farmers in one district. This is how without investing a rupee, they got perks of Rs 143 crore.”
