JHALAWAR, Rajasthan — Prime Minister Narendra Modi’s ambitious crop insurance scheme has benefited insurance companies more than the farmers in Rajasthan Chief Minister Vasundhara Raje’s home turf in Jhalawar district, HuffPost India has found. Interviews with farmers, farm rights activists, bank and government officials in the district reveal how the Pradhan Mantri Fasal Bima Yojana (PMFBY), touted as “a path breaking scheme for farmers’ welfare” by the government, has failed its intended beneficiaries because of red tape, lack of adequate publicity and thus, awareness among farmers, as well as apathy from official quarters, and could well have affected the BJP and Raje’s prospects in the elections.
Most farmers say that the scheme, billed as an improvement over its past versions which were named differently, has failed to help them in times of need even though they have been paying premiums to the insurance companies.
Consider the case of Gopal Dangi, a forty-two-year-old farmer and resident of the Kalitalai village in Jhalrapatan, a part of the Jhalawar district and Raje’s assembly constituency for three decades. Located in the state’s southern border with Madhya Pradesh, Jhalawar is also a part of her son Dushyant Singh’s Lok Sabha constituency.
In 2016, Gopal took a Rs 6 lakh agriculture loan through the Kisan Credit Card (KCC) from the Baroda Rajasthan Kshetriya Gramin Bank for three years. Since this loan was taken in March 2016, a month after the PMFBY was launched, it came bundled with crop insurance as well since the scheme makes it compulsory for all farmers availing agriculture loans to enroll and pay small parts of the premiums while the government pays the larger share.
Gopal’s passbook for this account shows that he has paid varying premium amounts, mostly into couple of thousands, for the insurance ever since he got the loan. Gopal said the bank withdraws premium amounts from the account at regular intervals on its own and pays to the insurance companies, which keep changing every crop season. “I don’t know the name of the companies these premiums are paid to. When asked, the bank officials aren’t very forthcoming,” he said.
In September 2018, when his crops were damaged by rains and he sorely needed financial support from insurance, no one helped. Gopal said his inability to submit a form deprived him from receiving any insurance money.
“About half of my Soyabean and 90% of Urad dal (split black gram) crops sown over 23 bighas of land were damaged by heavy rains over multiple days in the third week of September this year when the crops were still not fully cut from the field. I suffered a loss of around Rs 2-2.5 lakh as a significant part of the crops were damaged and what remains is not getting a good rate in the market,” he said. One bigha, an old metric used for measuring land, is approximately about half an acre.
When some activists affiliated with the Rashtriya Swayamsevak Sangh’s (RSS) farmers’ wing Bharatiya Kisan Sangh (BKS) procured a form for him to file the claim for crop damage, Gopal said he filled it but was unable to submit. “On the day when they were going to submit forms of all farmers in the village who suffered crop losses, I was not in the village and so could not give them the form. So, I don’t know if I will get any insurance cover now,” he said. A copy of this form, drafted by the public sector Agriculture Insurance Company of India, was shown to this reporter. Company and bank officials could not be reached for comment on Gopal’s statements.
Shobharam Dangi, another farmer from the village whose situation is similar to Gopal's, articulated a core reason behind the ordeal of the farmers. "While the banks deduct premiums on time from us, there is hardly anyone to help us with claiming insurance when we need it. Most of us are not aware about the details of this crop insurance scheme either. Since we need loans to sow crops, we pay the premiums as compulsion," he said. Shobharam has also taken a loan from the same bank through the KCC. He, too, is not very hopeful about any support from crop insurance money to offset losses to his soyabean and split black gram crops due to the September rain.
In Fatehgarh, another village in the Jhalrapatan constituency, Dhansingh Gurjar, whose family owns a sizeable land holding at 72 bighas, has a similar litany of woes. "Since 2016, with every small loan I take for sowing crops through the KCC, mostly Soyabean and split black gram, a premium amount which I don't know immediately about gets deducted from my bank account. However, till date, I have not been paid any insurance amount by any company to whom my premiums were paid despite multiple crop losses due to weather. The latest was in September this year when it rained. We have never been informed properly about how to apply for claims of crop damage either," he said.
When asked which company his current premiums are being paid to, he said it was Bajaj Allianz. A staffer from the local village level office of the Central Co-operative Bank Limited, which gave Dhansingh multiple small agriculture loans for sowing specific crops, also said that it was Bajaj Allianz. However, on closer scrutiny of documents it was found that, for the Kharif season this year, the company was the public sector Agriculture Insurance Company of India. For Rabi, the sowing for which began recently, yet another company is responsible and thus liable to receive insurance premiums from farmers.
This is the practical fallout of a practice followed under the scheme through which a new insurance company operates every fresh crop season in each district. The allocation of districts is done by the state government based on bids received from companies.
For farmers, all of this only adds to the confusion. Thus, farm activists have been critical about both the design and implementation of the scheme. Radheshyam Gurjar, a member of the RSS-affiliated BKS in Jhalawar and a farmer himself, said, "In this district, the Pradhan Mantri Fasal Bima Yojana is a jumla. A mere formality. That is because though farmers pay premiums, when they need insurance support on account of crop damage caused by any natural calamity, it is not paid to them. In cases where it is paid, it is never done in any reasonable time. The scheme has several flaws. If farmers have grievances, there is no mechanism available locally to seek resolution. And for farmers to go to Jaipur or Delhi is unfeasible. If the government makes deducting premiums mandatory, it should also make paying claims of crop damages on time mandatory."
Ramnivas Meena, a senior official of the Central Co-operative Bank Limited in Jhalawar, conceded that there were substantial delays to payments of claims by farmers. "Payments of crop damage claims for Kharif 2017 began to be received from only in Kharif 2018. That is, it started only in August this year and is still being received," he said. But he said the regional banks are not to be blamed as the calculations of crop losses and evaluations is a "time consuming process" done by multiple government departments and insurance companies.
Another official from a local co-operative bank, however, was more forthcoming. Speaking on the condition of anonymity, he said, "Insurance companies, especially the private insurers, benefit the most from this. The share of premiums received by companies from farmers is substantially more than the claims they settle. When they do settle claims, the delays are immense. Farmers are left waiting for long and rarely receive their claims of crops damage settled on time."
An audit report prepared by the Comptroller and Auditor General (CAG) and made public only in September this year revealed multiple instances of anti-farmer practices by companies and government departments in the previous versions of this scheme which were in force from 2013 to 2016. The CAG Report No. 1 on General and Social Sector of the Government of Rajasthan found instances of undue benefits to insurance companies and lesser payment of claims to farmers due to selection of 'less beneficial indemnity' option. Specifically in context with Jhalwar and three other districts, the CAG found an instance of, "Loss of claims to loanee farmers amounting to Rs 31.27 crore besides paying excess premium of Rs 8.68 crore due to application of incorrect Area Correction Factor by the Insurance Companies."
At the heart of this issue is the determination of the exact area being sown to insure it and include in calculations when crops are damaged due to natural calamities.
Explaining the issue, the CAG audit report stated that the Rajasthan government issued notifications permitting four insurance companies to insure crops based on crop area reported by the village accountant in Girdawari.
Relying on these Giradwari reports, the CAG says, the insurance companies applied the Area Correction Factor (ACF) and treated the acreage insured under the crops in certain specific areas as less than the acreage sown for the crops.
As a consequence, the sown area was reduced by 2,27,030 hectares for Rabi 2013-14, Kharif 2014, Kharif 2015 and Rabi 2015-16 by the Insurance Companies, which resulted in loss to 3,89,296 farmers on account of insurance claims amounting to Rs. 31.27 crore.
Area Correction Factor (ACF) is a number arrived at "by dividing the area sown by the area insured for a given unit area, and applied on the claim amount in order to scale it down." For farmers, as mentioned above, this means their claims about losses to crops are scaled down uniformly.
The insurance companies named in this portion of the CAG report are: Bajaj Allianz, Cholamandalam MS General Insurance, HDFC Ergo and ICICI Lombard.
HuffPost India has reached out to these companies and this report will be updated as and when they reply. SS Gopalarathnam, Managing Director, Chola MS General Insurance Company Limited, had this to say in a written response, "Chola MS General Insurance Co Ltd confirms having participated in the Rabi 2015-16 season of Weather Based Crop Insurance Scheme (WBCIS) of Government of Rajasthan at Jhalawar. For the same, all stipulated guidelines were followed, and after applying the government indicated area correction parameters, Chola MS refunded the balance farmers' share of premium to the participating banks and intimated the Rajasthan Government about the area correction factor applied. Chola MS has demanded government subsidy only on the area insured with us based on area sown, and confirms that it has not received any excess subsidy."
A company official from one of the other insurance companies, in an off the record conversation, blamed the government departments. "We can only settle claims of crop damage by farmers if the governments also pay their share of the premiums. Often it so happens that farmers have paid premiums but the government has delayed. So we are forced to the delay payments as well," the company official stated.
Incidentally, during most of the crop seasons mentioned in the CAG report, Raje was the chief minister in the state. Critics believe this is an instance of the Raje government's record on farm policies during the past five years.For instance, Manilal Labana, Rajasthan State president of the RSS-affiliated BKS, told HuffPost India, "The crop insurance scheme has been very poorly implemented in Rajasthan. We protested in Jhalawar in the past, engaged with the state government suggesting changes. Some of these were accepted while others were not. Unfortunately, farmers still do not get their claims of crop damages settled in a reasonable time."
The state government's Joint Director for Crop Insurance in the Agriculture Department, Mukesh Mathur, countered this characterisation. "Since 2016, insurance coverage among farmers has increased to 35-40%. There has been significant improvement in implementation since PMFBY was launched, as compared to the previous versions of the crop insurance scheme. In fact, for kharif 2018, I have not heard a single instance of any problem in Jhalawar," he said.
Mathur conceded that the rules of the scheme are complex and farmers are not aware of the scheme, but also said that insurance companies are regularly asked to hold "awareness camps" in districts and tehsils. He said there is a toll-free number for farmers to enquire about the scheme. Mathur also agreed that there were delays in payments but assured delays won't be significant from this year on account of certain improvements made.
Meanwhile, farmers like Gopal in Jhalawar continue to wait for a better rate for the portion of crops that survived. "I went to the Mandsaur market but did not get good rates for my soyabean. I am waiting and hope to get a better rate soon," he said.
This report has been updated to include a response from the Chola MS General Insurance Company Limited.