News eDaily24 Jul 2017

India:Insurers grossed US$1.55 bln in profits from crop insurance in 1 season

24 Jul 2017

Insurers gained nearly INR100 billion (US$1.55 billion) in gross profit during the last kharif (monsoon) season, from June to November 2016, according to an independent evaluation of the Modi government's crop insurance scheme, the Pradhan Mantri Fasal Bima Yojana (PMFBY).

However, the insurers settled less than a third of the crop-loss claims that had been filed till early this year. They had only settled 32.45% of the claims made till April 2017. While farmers lodged claims for nearly INR60 billion, payments to them were less than INR20 billion, reported Hindustan Times.

The report released by the Centre for Science and Environment (CSE) showed state-level “implementation gaps” in the PMFBY, which was launched last year. These discrepancies could negate the benefits accorded by the scheme to farmers, the non-profit think tank said.

Citing data from the IRDAI, the CSE pointed out that insurance companies grossed more than INR158.9 billion in premiums. Claims amounted to a little over INR59.6 billion.

The premium for crop insurance under the government scheme is heavily subsidised. Farmers have to pay 1.5% of the premium for winter crops, 2% for monsoon crops and 5% for commercial crops. The central government and the states pay equal amounts of the remaining premium.

However, the think tank said that the economics of poor states does not allow for a 50-50 sharing formula with the central government. “The government should come up with a graded subsidy-sharing arrangement,” said Chandra Bhushan of the CSE.

Though the report described the PMFBY as “a classic case of poor implementation of a good scheme”, it also mentioned a few positives that arose through the central initiative. Foremost among them is the fact that farmer coverage had crossed 40 million, an increase of nearly 25% over the previous year.


 

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