But if studies conducted by the Centre for Science and Environment (CSE) are to be believed and if the trend of the kharif season is any indication, for thousands of farmers of Bundi, the scheme is a non-starter. The main reason for this is the low sum insured, compared to the scale of finance in Rajasthan.
Though the sum insured under the PMFBY is higher than all previous crop insurance schemes, when compared to scale of finance in many states, it has been lower at least in the first season of its operation.
In the case of Bundi, the CSE report showed that the district level technical committee 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.
But 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 means that the sum insured was just 33 per cent, 26 per cent, 72.5 per cent, and 65 per cent of the scale of finance for the four crops in Bundi during the last kharif season. The implication of such low sums insured is that farmers will not get compensation even if they lose a significant part of their crop.
At the 90 per cent indemnity level for the soybean crop, the CSE analysis shows that the claim amount would have been just 25 per cent of the cost of production, for paddy 25 per cent, for urad about 65 per cent, and for maize 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 cost of cultivation value is insured,” the CSE study showed.
The progress of the PMFBY in Bundi was one of the many case studies that the CSE showcased in its report on the scheme.
Citing another example, the study said that in Beed district of Maharashtra, 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 the PMFBY kept the value of sum insured at just Rs 18,000 per hectare, which was mere 53 per cent of the cost of production.
Though the central government in a statement issued has claimed that in 2016 kharif, 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 because of equating the sum insured with the cost of cultivation. However, the CSE’s study presents an entirely different picture.
Another problematic area has been the calculation of the threshold yield for the PMFBY in vulnerable regions.
The threshold yield is based on the average of the yields of the previous seven years, excluding two state-declared calamities.
In areas that were more prone to natural calamities, this leads to low coverage as even if the region has experienced more than two natural calamities in the last seven years, one of the worst two is taken into account.
This, according to the CSE study, reduces the average threshold yield significantly, which, coupled with low indemnity levels, makes the threshold yield even lower, ensuring very little compensation to farmers.
Again, the threshold yields for each crop are determined by the state governments. The mandatory crop cutting experiments, which is the bedrock of any robust crop insurance scheme, too, remained lot to be deserved.
Under the PMFBY, states have to undertake four samples from each village or village panchayat for major crops, while eight was for other crops.
This, as the study found, was too small to determine the loss because if in any village of 600 farmers the fields of 200 were completely destroyed and if the output of the affected fields does not fall in any of the four samples, no one in the village will get compensation.