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Home / India News / Modi asks Niti Aayog to assess, improve crop insurance scheme

Modi asks Niti Aayog to assess, improve crop insurance scheme

Prime Minister Narendra Modi has ordered an assessment of the Pradhan Mantri Fasal Bima Yojana, criticised for poor implementation and helping insurance firms get richer.

india Updated: Sep 07, 2017 11:52 IST
Jatin Gandhi
Jatin Gandhi
Hindustan Times, New Delhi
Launched in August 2016, the crop insurance scheme aims to shield farmers from nature’s fury and crop damage.
Launched in August 2016, the crop insurance scheme aims to shield farmers from nature’s fury and crop damage. (HT file photo )

Prime Minister Narendra Modi has asked the Niti Aayog to suggest ways to improve the government’s flagship farm insurance scheme that has faced criticism for tardy implementation and being skewed in favour of the insurers.

At a recent meeting, Modi asked the officials of the government think tank to spearhead a “review and assessment exercise” across ministries and draft a plan to improve the Pradhan Mantri Fasal Bima Yojana (PMFBY), sources told Hindustan Times on Wednesday.

Officials from agriculture ministry and prime minister’s office were also in the meeting held on August 21.

“It is the best crop insurance scheme we have had,” Ramesh Chand, member (agriculture) Niti Aayog, told HT. “But the Prime Minister wants us to constantly monitor it and improve it. We are scouting technology and looking at the experience of other countries.”

Launched on August 5, 2016, the scheme, a first of its kind in the country, seeks to provide farmers with uniformly low premium that would help them sustain agriculture even if the yield is damaged.

But it has been criticised for gaps in implementation and for the amount of premium collected by insurers far exceeding the claims they paid out to farmers in 2016-17.

Insurance companies collected more than Rs 25,000 crore in premium and only paid out a fourth in claims. A study by the Centre for Science and Environment (CSE) released in July pointed out that the insurance companies had made “profits” of more than Rs 10,000 crore within 10 months of the launch.

The insurers said the low payouts were due to a good monsoon. The higher premium collected was on the back of insurance cover rising from Rs 1,15,000 crore in 2015-16 to Rs 2,04,000 in 2016-17, government sources said.

The think tank is now studying similar schemes in 86 countries to improve PMFBY.

Assessing damage through crop-cutting method was faulty, the CSE study said of the assessment done on the basis of samples collected from a handful of farms.

The think tank was looking at a technology-based model that uses Nasa data, developed by a Bengaluru-based entrepreneur to improve assessment.

Satellite images would give a more accurate picture of the damage caused to crops, sources said.

The Aayog would keep improving the scheme but for a complete evaluation, the PMFBY would have to be studied for four years, Chand said.

“Roughly in a four-year cycle, we are able to see both good monsoon and bad monsoon years. The test of the scheme will lie in a drought year,” he said.

The farm sector in the country is under pressure with rising costs of inputs, failing crops and falling prices adding to farmers’ debt burden.

Many states have seen farmer unrest and suicides, forcing governments to waive loans but critics say it is a stop-gap arrangement and not a solution.

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