New crop insurance scheme puts pressure on states

New Delhi, May 24 (IANS) The central government's ambitious crop insurance scheme for farmers -- Pradhan Mantri Fasal Bima Yojana -- has put pressure on states even though it succeeded in expanding the farm insurance coverage 50 per cent in a year since its launch.

A senior Agriculture Ministry official said some of the states have complained they have ended up paying up to half of their budgetary allocations for agriculture sector for premiums to insurance companies, creating a pressure on the coffers and existing infrastructure.

Under PMFBY, launched in January 2016, farmers have to pay just 2 per cent of the sum insured for Kharif crops, 1.5 per cent for Rabi crops and 5 per cent for horticulture and commercial crops, while the central and state government pay the remaining amount equally.

"Last year, about 20 per cent of farmers in the country had opted for crop insurance. However, PMFBY has led to the coverage to increase to 30 per cent. The Centre paid Rs 13,500 this year. As states have to share 50 per cent of government share, they had to divert major share of agriculture funds to pay premium for PMFBY," said the official, requesting anonymity.

Also, India stood eighth till last year in terms of volume of crop insurance. However, the country jumped to third position after PMFBY.

Another challenge according to the agriculture ministry officials is the irregularities in crop cutting experiments.

"Crop cutting experiments are being done since Independence but no one bothered how it is done, if done actually or just on paper. There is no clarity. Since launch of the new crop insurance scheme, huge vested interests have come up for assessment of crop cutting experiments," the official said.

While the scope of crop insurance widened substantially, the staff capacity and required machinery available with the states did not see any addition, putting the revenue departments under pressure.

"We are facing problem some problems as the existing revenue staff is under pressure. However, we hope we will be able to arrange the required infrastructure in the next few years. PMBFY can do good for farmers if implemented effectively and transparently," said an official of Maharashtra's Agriculture Department.

According to Agriculture Ministry officials, the number of non-loanee farmers opting for crop insurance has gone from 5 per cent last year to 25 per cent this year due to the scheme.

The scheme has also faced criticism for involving private companies.

However, the government has defended its decision, saying that the system does not have the required amount of money, infrastructure, insurance support while the private companies bring efficiency, provide healthy environment for transparency.