The ministry of agriculture and farmers’ welfare has clarified that no decision has been taken to make the Pradhan Mantri Fasal Bima Yojana or the PM Crop Insurance Scheme voluntary.
At present, any and all farmers who take agricultural loans have to compulsorily take crop insurance. The scheme is reported to be a big money spinner for insurance companies.
Raising the issue of the scheme giving an “undue advantage to insurance companies” due to its compulsory nature, Lok Sabha MP TN Pratapan wanted to know if it was true that insurance companies made a margin (profit) of Rs 15,975 cr in the last two financial years from the scheme.
He also wanted to know if the government had carried out its promise to make the scheme voluntary.
Agriculture minister Narendra Singh Tomar said no such decision to make the scheme voluntary has been taken, and did not give any time table for doing so.
“The revisions/improvements in the crop insurance schemes is a continuous process and decisions on suggestions/representations are taken from time to time after consultation with various stakeholders,” he told Pratapan.
The scheme is reported to have become a major money spinner for many private insurance companies who have tied up with state governments to be the insurance partner.
Tomar denied the assertion that the Rs 15,975 cr — the difference between what the insurance companies collected as premiums and what they paid out as compensation — constituted the margin or profit earned by the insurance companies.
He said the insurance companies have to pay the cost of reinsurance and endure administrative costs from this amount.
“..the difference between premium collected and claims paid is not the margin for the companies,” he added.
According to the numbers given by the minister, a total of 5.53 cr farmers enrolled in the crop insurance scheme last year, out of which 3.55 cr farmers had also availed of various bank loans.
The highest number of farmers enrolled in the scheme are from Uttar Pradesh, at 59.83 lakh. Out of these 57.67 lakh were ‘loanee’ farmers.
The scheme protects farmers from crop loss due to natural calamities, pests & diseases.
However, it has also impacted many who take out ‘fake’ farm loans without conducting any farming activity, as such people too have been forced to take insurance for their non-existant crops.