Centre feels the pinch of Bihar's new scheme of assisting farmers for crop loss

By Times Of India on 18 Jun 2018
NEW DELHI: Bihar’s new scheme to assist farmers in case of crop loss has created some unease at Centre. The Union agriculture ministry apprehends that the state’s move may drive small and marginal farmers away from the central flagship crop insurance scheme - Prime Minister Fasal Bima Yojana (PMFBY) - which has already extended its footprints across the country despite reporting some teething problems and delay in settling claims.

The Bihar government had early this month launched a scheme where farmers will get Rs 7,500 per hectare (maximum for two hectares) if the production loss is less than 20% of threshold limit and Rs 10,000 per hectare (maximum for two hectares) if the loss in production is more than 20%. Farmers will not have to pay anything in advance to get such relief.

The threshold limit will be calculated on the basis of average production of the last seven years. The scheme - Bihar State Crop Assistance Scheme - will come into force from the ongoing Kharif season.

Though the Bihar’s scheme is not an insurance scheme and therefore it will run concurrently with the PMFBY, officials in the agriculture ministry have already felt the pinch of it at the time when they have been trying hard to promote the central scheme enlisting how it benefited more farmers during the first year (2016-17) of its launch as compared to previous schemes.

A section within the ministry felt that the Bihar’s scheme will deter small and marginal farmers (having land holdings up to two hectares) from opting PMFBY which would, otherwise, provide them much bigger relief in lieu of very small premium.

“The amount and scale of compensation under the Bihar’s scheme will be very low as compared to the PMFBY,” said an official.

Arguing in favour of the central flagship scheme, he said the farmers would get minimum Rs 13,600 per hectare on 20% crop loss of paddy under the PMFBY as compared to Rs 7,500 under the Bihar’s scheme.

“In case of crop loss of more than 20%, the farmers will get an amount between Rs 13,600 and Rs 68,000 per hectare in case of paddy as compared to Rs 10,000 per hectare under Bihar’s scheme,” said the officials, flagging importance of the crop insurance scheme.

Asked about the state’s apprehension that the PMFBY had benefited more to insurance companies than the farmers, another official said the profit or loss depends on weather conditions. “Insurance companies had paid more ‘claim amount’ than the ‘gross premium’ in 2014-15 and 2015-16 which were drought years. Most of the companies had, however, booked profits in 2016-17 which was good monsoon year. This is how insurance business runs. Profit in good monsoon year can be utilised in bad monsoon year,” he said.

The ministry’s data shows that the farmers in certain states which were hit by drought or any other calamity even in 2016-17 got the benefits of the PMFBY as the insurance companies there had to pay more ‘claim amount’ than the ‘gross premium’. Kerala, Karnataka, Tamil Nadu and Andhra Pradesh are such examples.


During Kharif 2016, total premium paid by farmers and governments (both centre and state - 49% each) stood at Rs 8.58 crore in Kerala while the total claim paid to the farmers was approximately Rs 18 crore. Similarly, in drought-hit Karnataka, the farmers and governments had collectively paid Rs 873.35 crore as premium while the farmers in the state had received over Rs 1,165 crore as claim amount.


However, delay in paying ‘claim amount’ is still an issue. Though the Centre is pursuing with the states and other stakeholders to adopt new technology at the earliest so that timely claim settlement is ensured, farmers in many states have to wait quite long to get claims.


The PMFBY was launched from Kharif 2016 season. So far, 26 states have opted for the scheme. These are: Andhra Pradesh, Assam, Bihar, Chhattisgarh, Goa, Gujarat, Haryana, Himachal Pradesh, Jammu & Kashmir, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Manipur, Meghalaya, Odisha, Rajasthan, Sikkim, Tamil Nadu, Telangana, Tripura, Uttar Pradesh, Uttarakhand and West Bengal.


The Centre has fixed a target of covering 50% of ‘Gross Cropped Area’ (GCA) under the PMFBY by the year 2018-19. At present, over 30% of the GCA is covered under the crop insurance scheme.