Chasing the mirage of crop insurance

Cultivation of annual food crops in the context of climate change is formidable challenge for farmer across India. Untimely rainfall during harvest season has direct impact on crop yields and grain quality. 

As a farmer, I was happy when the Pradhan Mantri Fasal Bima Yojana (PMFBY) was launched in 2016. The scheme promised to rescue farmers in distress due to crop failure, leveraging digital technologies and drones to assess losses and settle claims swiftly.  I genuinely believed this initiative could address the complexities of crop insurance. The premium was reasonable, with state and central governments sharing the cost. 

When I applied for an annual crop loan at the local cooperative, the insurance premium was deducted from my loan amount. However, despite repeated requests, I was not given a copy of the official crop insurance policy or even a receipt for the premium paid. More puzzlingly, I was not informed of the name of the insurance company responsible for the policy.

This lack of transparency was evident at all levels.

This year, our standing paddy crop was flattened by heavy rains in early December, caused by Cyclone Fengal. Initially, we hoped to salvage some of the crop once the rains abated. However, continuous rainfall and wild boar attacks destroyed the crop on the entire two-acre plot.

Logically, since our crop was insured, we expected at least reasonable compensation. I approached the cooperative to claim the compensation, but they claimed they couldn’t help because the responsibility for assessing crop damage lies with the revenue department.

Instead of using digital tools as promised, the assessment relied on primitive Crop Cutting Experiments (CCE). In this method, a sample plot is selected in which crop is cut and measured, and the yield is compared to the average of the past seven years. While the premium was based on my land holding, the crop assessment was at Panchyat level.

Coincidentally, I was informed by revenue officials during the transplanting phase that my plot had been randomly selected for CCE and that they would visit during the harvest.

When I reported the destruction, the revenue official told me they had already collected samples from another plot where the crop was good. Shockingly, he admitted that personnel from the insurance company had insisted on selecting plots with higher yields to avoid paying compensations. This blatant manipulation of data at the ground level effectively denied benefits to farmers.

Despite having digital evidence of the destruction as proof, I had no avenue for grievance redressal. I found myself up against an insensitive bureaucracy and an insurance company indifferent to registering claims.

This experience answered my lingering question: why, despite paying premiums for eight consecutive years,  I could not get any compensation under PMFBY.

The cooperative society that deducted my premium explained that the district-level bank forwards the premium amount to the insurance company. But in the entire process, no institution is held accountable to farmers in this convoluted process, making it nearly impossible to claim compensation.

What industry or business can survive when it cannot even recover its costs? I lost not only the input costs and labour but also the seeds required for the next planting season. With the drastic changes in climate, this suffering has become universal for millions of farmers. Forget about the promise of doubling farmers’ incomes; they are subsidising the nation while incurring repeated losses. 

Given this reality, it is no surprise that the Parliamentary Standing Committee on agriculture reported that private insurance companies made profits ranging from Rs 10,000 crore to 20,000 crore, earning profits of 50 to 70% without any investment.

At the scheme’s launch, the prime minister stated that it would provide financial security to farmers against nature’s vagaries reward their hard work. However, after eight years of chasing the mirage of crop insurance, I feel it is merely a tool to siphon off public money into the coffers of private insurance companies.

It is naïve to believe that the government is unaware of the flaws in the scheme’s implementation. What is alarming is the continued State support for this systematic exploitation in the name of crop insurance. 

Is India perhaps the only country in the world where the governments collude with private insurance companies to profit from farmers’ distress?

(The writer is a farmer and Uttara Kannada-based environmentalist)