NEW DELHI: Concerned over exit of a few states, dropping out of insurance companies and growing dissent among farmers on the government’s flagship crop insurance scheme, the centre has set up a sevenmember group of ministers (GoM) headed by defence minister Rajnath Singh to review the scheme and recommend changes to make it more farmer friendly.
The GoM includes home minister Amit Shah and agriculture minister Narendra Singh Tomar as members and other members include the ministers of state for agriculture, finance, tribal affairs and animal husbandry. There have been demands for making crop insurance voluntary to all farmers, removal of high premium crops and giving flexibility to states to provide customised add-on products.
“Three states and four insurance companies have dropped out from this scheme. We have received feedback from participating states. There have been demands from states and farmers’ organisations to bring some changes in the existing scheme. Now, the GoM will decide on the new format, if it feels any change is required,” said a senior agriculture ministry official who did not wish to be identified.
States like Bihar, West Bengal and Andhra Pradesh have exited from the central scheme and have launched their own crop insurance scheme. Bihar was the first state to opt out in 2018 followed by West Bengal in this kharif season and Andhra Pradesh is the latest to launch its own scheme a few days back ruling out its participation in Rabi season. States rue that the claim ratio, which refers to the claims paid as against the premiums, was low, benefitting insurers rather than farmers. In 2018-19, the claim ratio for Andhra Pradesh was 88.8% while for West Bengal, it was 53%.
“A few more states like Odisha, Karnataka and Gujarat have also shown intent of launching their own scheme. Their contention is farmers are not being compensated in tune with the premium paid. Also, states want to use crop insurance as a tool to replace loan waivers and get political mileage,” the official said.
Similarly, ICICI Lombard, Tata AIG, Cholamandalam MS, and Shriram General Insurance have opted out of this scheme citing losses in the crop insurance business due to high loss ratio, which refers to claims paid plus adjustment expenses against premium earned. “Out of total 17 companies which were in fray last year, only 13 bid for this season (Kharif plus Rabi). For the next season’s bidding, we fear that a couple more private insurers will back out due to payment of higher claim this Kharif season,” the official said.
The scheme provides comprehensive crop insurance from pre-sowing to post-harvest period against non-preventable natural risks at extremely low premium rates a farmer has to pay - 2% for kharif crops, 1.5% for rabi crops and 5% for horticulture and commercial crops. The remaining amount of premium is equally shared by central and the respective
state governments. Farmers too are not happy with this scheme. They complain that state governments use their discretionary powers to decide how much land will be insured and the sum insured to reduce their burden of subsidy premiums.
Source ( The Economic Times)