Insurance Companies Made Rs 10,000 Cr Profit Out Of Modi’s Crop Insurance Scheme: CSE Report

A Centre for Science and Environment report has said that insurance companies made close to Rs 10,000 crore profit out of the Modi government’s crop-insurance scheme during the crisis-ridden last kharif season, and has also poked holes in its implementation.

A Hindustan Times report says that insurers gained a ‘gross profit’ close to Rs 10,000 between June and November 2016. It quotes the CSE report which has flagged state-level “implementation gaps” in the Pradhan Mantri Fasal Bima Yojna (PMFBY) scheme, saying that it could negate the benefits which were provided for the farmers. The PMFBY replaced the National Agricultural Insurance Scheme in April last year, just prior to the kharif season.

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The CSE has reportedly come to the conclusion based on state-wide numbers from the Ministry of Agriculture and farmers welfare. Data reportedly shows that insurance companies had settled only 32.45 percent of the claims till April 2017 and that while farmers had made claims close to Rs 6,000 crore, only about Rs 2,000 crore was paid. Data from the Insurance Regulatory and Development Authority of India revealed to CSE that insurance companies had amassed above Rs 15,891 crore in premiums.

The premium for crop insurance is subsidised heavily with the costs being born by the state and the Centre. The report mentions that the states are bearing the brunt of allotting a large share of their budget to premiums.  

Insurance companies told the newspaper that the gap between premiums and claims will be reduced once more farmers come under the scheme. While more farmers have come under the ambit of the refurbished scheme under the Modi government, the CSE report describes it as a “a classic case of poor implementation of a good scheme”.

On Friday, the CAG, in a report tabled in Parliament, slammed the Centre for poor implementation of crop insurance schemes during 2011-16 saying funds to the tune of Rs 3,622.79 crore were released to private insurers without verification.

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According to the CAG report, claims amounting Rs 7,010 crore (under NAIS), Rs 332.45 crore (MNAIS) and Rs 999.28 crore (WBCIS) were pending as on August 2016 due to non- receipt of premium share of state governments, litigations, verification of claims by states, reconciliation and booking errors, among others.

The CAG report examined the crop insurance schemes — NAIS, MNAIS and Weather Based Crop Insurance Scheme (WBCIS) implemented during 2011-12 through 2015-16. These schemes, however, now have been replaced with new PMFBY from the 2016 kharif season.

With PTI Inputs

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