PMFBY: Insurance Companies in Rajasthan Haven't Received Govt Premium Subsidies for 3 Seasons

Farmers have not been able to collect their claims because the shares of both the state and Central governments have not been paid for Rabi 2017-18, Kharif 2018 and Rabi 2018-19.

Jaipur: Last year, Rajasthan’s farmers were promised two farm loan waivers. The first was by the previous Vasundhara Raje-led BJP government, meant for small and marginal farmers who had defaulted on short-term loans from cooperative banks. The other was by the newly formed Ashok Gehlot-led Congress government that announced a complete loan waiver within two days of coming to power and executed its ‘first phase’ by waiving outstanding short-term crop loans of the cooperative societies.

Amid tall claims of easing farmers’ hassles, both the governments failed to pay the government’s premium subsidy under the Narendra Modi government’s ambitious crop insurance scheme, Pradhan Mantri Fasal Bima Yojana (PMFBY). The empanelled insurance companies for the scheme in Rajasthan haven’t yet received the entire state and Central shares of the premium subsidy for three seasons – Rabi 2017-18, Kharif 2018 and Rabi 2018-19.

Under the PMFBY, the maximum premium charged on the farmers is set at 1.5% and 2% of the sum insured, for Rabi and Kharif crops respectively. The remaining amount of the sum insured is the government’s premium subsidy, shared equally by the state and the Central governments.

Also Read: Rajasthan Farmers Denied Insurance Claim as Axis Bank Paid Premium For Wrong Crop

For instance, let us assume the cost of cultivation for a Kharif crop set by the district level monitoring committee for a particular district is Rs 51,000 per hectare. Then, a farmer owning four hectares of cultivable land will be  insured for Rs 2,04,000 [Rs 51,000*4]. If, hypothetically, the premium for crop in question in 11% of sum insured [0.11*2,04,000= Rs 22,440]. The farmer, who under the PMFBY is required to pay only 2% of the premium, will pay Rs 4,080 [2% of 2,04,000]. The rest of the premium, Rs 18,360 [Rs.22,440 – Rs.4,080 = Rs.18,360] will have to paid by the state and Central governments, shared equally.

Deadlines for payment of premium subsidy

As per the revised operational guidelines of the scheme, the deadline for the release of the first instalment of the government’s premium subsidy, which is equivalent to 50% of 80% of respective share of the state and the Centre, is July 31 for the Kharif season (July-October) and December 31 for the Rabi season (October-March).

The release of second instalment of the government subsidy is provisioned to be submitted within 15 days of the approval of business statistics finalised on the national crop insurance portal, that is, approximately a month after the deadline for the first instalment.

After the payment of farmers’ share of premium and first instalment of the government subsidy, insurance companies are required to release claims for farmers affected by mid-season calamities. Admissible claims, based on-post harvest losses, are provisioned to be settled on receipt of the second instalment of the government subsidy.

Farmers await claims

In absence of receipt of any instalment from the government, the farmers in Rajasthan are awaiting their claims. Even, the Centre hasn’t made any attempt to pay the subsidy. “Procedure says that after the state pays its share, it recommends the Centre to do so. Since the state couldn’t pay, the Centre was never requested,” said an official at the agriculture commissionerate in Rajasthan who didn’t wish to be named.

As per the insurance company, the payment is delayed for more than a year now. “The premium should have been paid by December 2017 for Rabi 2017-18, by July 2018 for Kharif 2018 and by December 2018 for Rabi 2018-19. It’s March 2019 now and we are yet to receive the premium. Farmers’ share in the premium is minimal, it’s the government’s share that helps us deliver. While, we never receive payments on the time mentioned in the guidelines, it has never been so delayed. How are we expected to disburse claims if we don’t receive the premium in the first place?” an official in one of the empanelled insurance companies in Rajasthan told The Wire.

Order sanctioned, but complete amount not released

The state government has issued a sanctioning order of Rs 235.46 crore for Rabi 2017-18 on March 6 this year.

The order, accessed by The Wire, shows that the state government has sanctioned Rs 235 crore to the Agriculture Insurance Company (AIC), which is empanelled to disburse it to other insurance companies for Rabi 2017-18. The order mentions a premium of Rs 142 crore to be paid to Bajaj Allianz General Insurance Company Limited, Rs 42 crore to the State Bank of India General Insurance Company Limited, Rs 21 crore to the United general insurance company and Rs 29 crore to the AIC.

Also Read: Rajasthan Farmers Denied Insurance Claim Under PMFBY as SBI Didn’t Pay Premium

As per sources, the government hasn’t made the full payment to the companies as mentioned in this order. Bajaj Allianz has received just Rs 22 crore against Rs 142 crore. “The state government has transferred a partial amount against the promised Rs 235 crore, because of which we could transfer only a proportional amount to other insurance companies,” an official at the AIC told The Wire.

For Kharif 2018, the state government has released the first instalment, but for Rabi 2018-19, the governments are yet to issue the premium subsidy. There is speculation that the state government is running short of funds, especially after executing two successive loan waivers estimated to have cost around Rs 10,000 crore on the exchequer.

“There isn’t enough money in the treasury to pay the insurance companies. Whatever we had, we issued a sanction order for it,” a senior official at the agriculture commissionerate in Jaipur told on the condition of anonymity.