CAG spots many holes in the crop insurace scheme including the PMFBY
CAG spots many holes in the crop insurace scheme including the PMFBY

The Comptroller and Auditor General (CAG) of India have spotted some holes in the crop insurance schemes started by various governments including the Pradhan Mantri Fasal Beema Yojna (PMFBY) of Narendra Modi’s government, saying delays in the release of compensation by states to affected farmers defeated “the objective of providing timely financial assistance”.

In its audit report on agriculture crop insurance schemes, tabled in Parliament on Friday, the Comptroller and Auditor General (CAG) highlighted irregularities in disbursing claims by banks and financial institutions to farmers’ accounts under the crop insurance schemes and recommended introduction of a mechanism to ensure that state governments’ shares are received in time.

The official auditor also said that the Agriculture Insurance Company (AIC) “failed to exercise due diligence in verification of claims by private insurance companies before releasing funds to them”.

Mentioning discrepancies in the data relating to area sown and area insured, the CAG said: “The integrity of the data provided by the state governments in this respect by the AIC was not ensured.”

The Central government introduced the PMBFY in Kharif season 2016 and restructured Weather Based Crop Insurance Scheme by replacing previous schemes.

Under PMFBY, farmers have to pay just 2 per cent of the sum insured for Kharif crops, 1.5 per cent for Rabi crops and 5 per cent for horticulture and commercial crops, while the central and state government pay the remaining amount equally.

The CAG said two-thirds of the farmers it surveyed were not aware of the schemes, coverage of farmers under the schemes was very low while coverage on non-loanee farmers was negligible.

It also criticised the Central and state governments for poor monitoring of the scheme and failing to set up an independent agency to monitor implementation of schemes, preparing periodical appraisal reports and carrying out work allocated to state level and district level committees effectively.

The CAG said it noticed delays in receipt of yield data from state governments and in the processing of claims by insurance agencies. It also said there was no scope for audit by the CAG though there was involved dispersal of a large amount of funds to private insurance agencies under the schemes. Grievances redressal systems and monitoring mechanisms for speedy settlement of farmers’ complaints at the central and state level were adequate, it said.

It said the governments had to to be dependent on information provided by loan disbursing banks, financial institutions, and insurance agencies as the scheme guideline did not seek to maintain a database of insured farmers “despite substantial financial contribution by way of premium subsidy (Rs 10,617 crore) and claim liability (Rs 21,989 crore)”.

The CAG has asked the Central government to maintain a comprehensive database of beneficiary farmers and to take efforts to bring farmers, especially non-loanees, under the insurance schemes.

Its recommendations also include the introduction of technology for more accurate assessment of crop yields and efforts to reduce liabilities of the government without reducing the coverage.