Page 14 - 28FEB2019E

CoverStory

n two years of launch of the scheme, all the 18
companies put together made a profit of 15,795
crores. This seems to have defeated the very pur-
I pose of the scheme launched by the government
to provide succor to farmers. The PMFBY says that its
aim is to “To provide immediate relief to the insured
farmers in case of mid-season adversaries causing
expected yield to be less than 50 per cent of Threshold
yield”. The scheme aims to provide for On-Account
partial payment (up to 25 per cent of likely claims)
without waiting for final yield data. The PMFBY is for
compulsory coverage of all farmers.
The Annual Report of Insurance Regulatory and
Development Authority of India (IRDAI) for the year
2017-2018 sent by Dr.Subhash C.Khuntia, Chairman,
IRDAI to the Secretary, Department of Financial
Services, Ministry of Finance, Government of India
confirms this fact. The report was sent to the Secre-
tary vide letter No. 101/8/R&D/SD/AR-2077-18/01/Nov-
18 dated November 28, 2018.
Enquires reveal that during 2016-17, the profit of 13
private companies was 3283 crores. In year 2017-18,
it went up further and totaled 4863 crores. Accord-
ing to the annual report of the Insurance Regula-
tory and Development Authority of India (IRDAI), 11
private sector insurance companies collected
11,905.89 crores as premium. However, these insur-
ance companies paid claims of only 8,831.78 crores to
farmers thus making fast buck.
The IRDAI says that the Indian crop insurance
market is dominated by government sponsored
crop insurance schemes. Government Crop insur-
ance program in India started with the introduction
of Comprehensive Crop Insurance Scheme (CCIS)
in 1985.
The CCIS was replaced by National Agricultural
Insurance scheme (NAIS) in RABI 1999 which contin-
ued till 2015-16. Under both the schemes, NAIS and being prevented from sowing/ planting’ due to deficit
CCIS, administered premium rate was charged and rainfall or adverse seasonal conditions.
claim liability beyond premium collected was shared To provide immediate relief to the insured farmers
by State and Central Governments. in case of mid-season adversaries causing expected
In the year 2016, the Pradhan Mantri Fasal Bima yield to be less than 50 per cent of Threshold yield.,
Yojana (PMFBY) was launched in the country. Hence PMFBY provides for On-Account partial payment
from Kharif 2016, the PMFBY replaced the existing (up to 25 per cent of likely claims) without waiting for
schemes. The Pradhan Mantri Fasal BIma Yojna is final yield data. The PMFBY mandates compulsory
primarily an Area Yield Index based scheme, where coverage for all loanee farmers and non-loanee farm-
losses (in reference to Pre-Notified Threshold Yield) ers are also encouraged as well. The scheme is open
for a notified area are determined based on requisite to all food and oilseeds crops and annual commer-
number of sample Crop Cutting Experiments (CCEs) cial and horticultural crops. The unit of insurance is
under the General Crop Estimation Survey (GCES). Village/Gram Panchayat for major crops; and for
However, to reduce the basis risk under the PMFBY, other crops the unit of size may be above this level.
localized losses (due to hailstorm, Landslide and in- While the Insurance companies charge the Actu-
undation) and Post-Harvest losses (due to Cyclone/ arial Priced Premium Rate (APR), farmer has to pay
Cyclonic Rains &Unseasonal Rains) are assessed on a maximum 2 per cent for Kharif and 1.5 per cent for
Individual farm level survey basis. The PMFBY also Rabi crops and 5 per cent for commercial/horticul-
protects farmers in the event of the ‘Insured area tural crops. The difference between actuarial premi-

tehelka / 28 february 2019 14 www.tehelka.com