No benefit for farmers in Rajasthan's Bundi district from PMFBY

The low sum insured as compared to the scale of finance in Rajasthan said to be the culprit

For many farmers in Rajasthan's Bundi district, the 2017 southwest monsoon season hasn’t been particularly impressive so far with rains being above normal in just two of the past seven weeks.

Just like in many other parts of the country, the main crops grown in the district are exposed to the vagaries of weather.

In the event of any loss to the standing crop, the newly-launched Pradhan Mantri Fasal Bima Yojana (PMFBY) would have come to the rescue of farmers in the region. However, if studies conducted by the not-for-profit Centre for Science and Environment (CSE) are to be believed and if the trend seen in 2016's Kharif season is any indication, the scheme is a non-starter for thousands of farmers in Bundi.  

The main reason for this is the low sum insured as compared to the scale of finance in Rajasthan. 

While the total sum insured under PMFBY is higher than all previous crop insurance schemes, it has been lower, at least in the first season of its operation, when compared to the scale of finance in many states.

In the case of Bundi, the CSE report showed that the District Level Technical Committee (DLTC) had determined the scale of finance for soybean, paddy, urad, and maize at Rs 50,000 per hectare, Rs 65,000 per hectare, Rs 30,000 per hectare, and Rs 40,000 per hectare, respectively. While the sum insured for soybean, paddy, urad, and maize was Rs 16,539 per hectare, Rs 17,096 per hectare, Rs 21,750 per hectare, and Rs 26,110 per hectare, respectively, according to the Rajasthan State PMFBY Kharif 2016 notification, the CSE report said.

This effectively meant that the sum insured was just 33 per cent, 26 per cent, 72.5 per cent, and 65 per cent, respectively, of the scale of finance for the four crops in Bundi during the last Kharif season.  

The effect of such low sums being insured is that farmers would not receive any compensation even if they lost a significant part of their crop.

At 90 per cent indemnity level for soybean crop, the CSE analysis shows that the claim amount would have been just 25 per cent of the cost of production. For paddy, it would have been 25 per cent, while for urad, it would be about 65 per cent, and for maize, it would be around 60 per cent.

"It seems the states intentionally reduced the sum insured to decrease their part of subsidy to be paid as premium under PMFBY. This significantly reduces the claim received by farmers as only a fraction of the cost of cultivation value is insured," the CSE study showed.

The progress of PMFBY in Bundi was one of the many case studies that CSE showcased in its report on the scheme.

Citing another example, the study said that in Maharashtra's Beed district, the cost of cultivation in 2015-16 given in the Maharashtra State Agriculture Price Commission was Rs 34,147 per hectare, while the Maharashtra State Kharif 2016 notification of PMFBY kept the value of sum insured at just Rs 18,000 per hectares — a mere 53 per cent of the cost of production.

While the central government, in a statement issued on Monday, claimed that the sum insured has seen a significant jump nationally, from Rs 1,15,000 crore in 2015-16 to Rs 2,04,000 crore in 2016-17, the situation on the ground in many districts, according to CSE’s study, presents an entirely different picture.

Another problematic area was the calculation of threshold yield for PMFBY in vulnerable regions. 

The threshold yield was based on the average yield of the previous seven years, excluding two state-declared calamities.

This leads to low coverage in areas that are more prone to natural calamities because even if the region has experienced more than two natural calamities in the past seven years, only the worst two are taken into account.

This, according to the CSE study, reduces the average threshold yield significantly, which, when coupled with the low indemnity levels, makes the threshold yield even lower. This ensures very little compensation for farmers. 

Further, the threshold yields for each crop are determined by the state governments. The mandatory Crop Cutting Experiments, which are the bedrock of any robust crop insurance scheme, also leave a lot to be desired.

Under PMFBY, states have to undertake four samples from each village or village panchayat for major crops, while eight samples are to be taken for other crops. 

These many villagers, the study found, was too small to determine the actual loss. If in any village, out of 600 farmers, if the fields of 200 farmers were completely destroyed, no one from the village would get compensation if the affected fields don’t fall under the four samples.

Scale of finance and sum insured in Bundi District of Rajasthan in Kharif 2016

Crop	Scale of finance*	Sum insured**	Sum insured as % of scale of finance
Soyabean	50,000	16,539	33
Paddy	65,000	17,096	26
Urad	30,000	21,750	72.5
Maize	40,000	26,110	65

*In Rs per hectare, as per DLTC

**In Rs per hectare, as per Rajasthan State PMFBY Notification for Kharif 2016

Source: PMFBY An Assessment by CSE