The NDA government’s Pradhan Mantri Fasal Bima Yojana (The Prime Minister’s Crop Insurance Scheme) is a bigger scam than even the Rafale scam, claimed renowned journalist and farmers issue activist P. Sainath earlier this month.

The veteran journalist, who has been covering rural distress over the last 25 years, accused the government of giving the task of providing crop insurance to selected corporates like Reliance, thus creating monopolies in the districts.

Calling it an insurance scheme for the banks and private companies, he said that the districts in which the scheme is being implemented, the farmers can only avail bank loan if they sign up for the insurance scheme. He revealed that the first claim of the compensation amount is that of the banks, and not that of the farmer.

Budgetary allocation
The scheme, which replaces the existing two schemes, the National Agricultural Insurance Scheme (NAIS) and the Modified National Agricultural Insurance Scheme (MNAIS), was launched with a vision of one nation, one scheme. One of the most highlighted provisions was low premium paid by the farmers with a vision to enhance the coverage. As per the scheme, the farmers, who have opted for the insurance, will get full benefit whenever they sustain crop loss on account of natural calamities. The premium paid by the farmers — uniform across India — is 2 per cent for kharif, 1.5 per cent for all rabi crops, and 5 per cent in the case of annual commercial and horticultural crops, with the balance premium of 16 per cent being equally shared by the state and the union government.

However, P Sainath claimed that in the last three years approximately Rs 66,000 crore was deposited to the insurance companies collectively as premium by the farmers, and the state and the union governments.

Expenditure by the union government on the PMBFY. The total share of the state governments would also be the same. Source:

Skewed against the farmer

Sainath further said that the claim filing process makes it difficult for farmers to claim any compensation. Substantiating this argument, he cited the example of Maharashtra’s Parbhani district, where, in 2017, around 2.5 lakh farmers, who sowed soya, lost their crops, and got total compensation of around Rs 30 crore. Whereas, he asserted, the total premium paid by the farmers, central and the state governments was Rs 173 crore. “Thus, there is a neat profit of Rs 143 crore in just one crop in one district,” he emphasised.

“Where is the grievance redressal mechanism in this structure,” he asked?

CAG’s scathing observations

The Comptroller and Auditor General of India (CAG) in its 2017 Performance Audit of the Agriculture Crop Insurance Schemes also heavily criticised the scheme for various reasons.

The government auditor flagged the absence of any provision for the audit despite releasing substantial funds. The CAG also observed a lack of awareness and interest about the schemes. Furthermore, the CAG noted that, despite paying the higher premium,  farmers were reimbursed lower amounts of claims.

Farmers withdrawing from the scheme

A reply to an RTI application has revealed that over 84 lakh farmers, which constitute around 15% of the total farmers insured in the first year of the scheme in 2016-17, withdrew themselves from the scheme in 2017-18.

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