Implementation of Prime Minister Fasal Bima Yojana – Bihar Context
R K P Singh,
Former advisor, State Farmers Commission, Bihar
Bihar has a large agrarian economy of over Rs 810 billion with more than 80 per cent of rural population subsisting on farming. Agricultural work force increased more than two-fold during last 30 years, from 126 lakh in 1981 to 255 lakh in 2011 which constituted three- fourth of total working force in Bihar whereas net sown area declined by about two lakh hectares and gross cropped area has been stagnating at 80 lakh hectares during last 20 years. Due to increase in number of agricultural labour force in Bihar, per agricultural worker annual real productivity has not increased significantly. Despite increase in pace of growth in agriculture sector during 2005 – 11, per agricultural labour productivity increased by only Rs 603; from Rs 9565 in 2004-05 to Rs 10168 in 2011-12 (at 2004-05 prices) . The income from agriculture is increasingly becoming insufficient to meet even the basic consumption needs of farm households. It is more so for small and marginal farmers whose income falls short of their consumption expenditure. Bihar is characterized by excessive dependence of population on agriculture and dominance of small land holders. Marginal farmers constitute about 90 per cent of total farm households whereas farm households owning land less than 0.5 ha constitute 78 per cent of total farm households and their average farm size is about 0.10 hectare.
The agricultural production showed declining trend during 2001-05 but turned to be positive during last 10 years but fluctuation in agricultural production still persists. Farmers’ economic health is not only adversely affected by low productivity but fluctuation in income due to production an price risks also contribute to poor plight of farmers, particularly in Bihar. Rice production which covers more than half of net sown area , fluctuates up to 20 per cent in Bihar and its price declined by 18 per cent in 2014 -15. In this situation, there is need to improve the sustainability in production and price of agricultural commodities for sustainable increase in farmers’ income,particularly in agriculturally backward states.
Agricultural insurance offers protection against losses caused by fluctuations in the output of a crop from one year to another or from one crop season to another. Its objective is to stimulate and support the production of principal crops in the country. Providing financial support to farmers in the event of crop failure, it makes farmers credit-worthy for the next crop season. It has been observed that the majority of small and marginal farmers, as well as tenant farmers and farm labourers bear the brunt of crop failure. In 1979-80, a pilot crop insurance scheme was launched in limited areas in 12 states. In April 1985, the Comprehensive Crop Insurance Scheme was implemented which covered all the willing states and Union Territories. It was implemented in 17 states and 2 Union Territories up-to kharif 1990. The benefits of this crop insurance were extended to nearly 1.94 million farmers and covered 3.41 million hectares. However, the scheme covered mainly large farmers but small farmers did not get benefits of the scheme.
The benefit of the Comprehensive Crop Insurance Scheme was availed mainly by farmers of Gujarat, Maharashtra, Andhra Pradesh and Madhya Pradesh. Their share was nearly 90 per cent of the claims paid in the country. Bihar, Assam and north-eastern states lagged behind in availing the benefits of crop insurance. The share of these states was less than 1 per cent of total claims paid in the country.
In the year 1999-2000 the Government of India in co-ordination with the General Insurance Corporation of India (GIC), had introduced a new scheme namely; the National Agricultural Insurance Scheme (NAIS) from Rabi 1999-2000 season. The main objective of the scheme was to protect the farmers against losses suffered by them due to crop failure on account of natural calamities, drought, flood, hail storm, cyclone, pest and diseases, so as to restore their credit worthiness for the ensuing season. Agricultural Insurance Company of India Ltd. (AICIL) which was incorporated in December, 2002 and started operating from April, 2003 took over the implementation of NAIS.
In Bihar, National Agricultural Insurance Scheme is implemented in all the districts of
Bihar. However, insurance of cash crops is implemented in some selected districts where these
crops are grown on large scale. Loanee and non-loanee farmers including share croppers and
tenant farmers are eligible for insuring their crops under this scheme. However the coverage is
compulsory for loanee farmers and optional for non-loanee farmers. Farmers can insure their
crops for 150 percent of value of their crops by paying actuarial rate of premium.
The performance of National Agricultural Insurance Scheme has also been unsatisfactory in Bihar. The scheme did not cover more than 5 per cent farm households and about 5 per cent of gross cropped area in any of the period during 2001 to 2012 in Bihar whereas more than 15 per cent farmers were covered under this scheme at national level. Analysis of farm category-wise data revealed that the proportion of marginal and small farmers in total farmers participating in crop insurance is 83 per cent against their proportion of 97 per cent in total farm households in Bihar. The subsidy of 50 per cent to the premium paid to small and marginal farmers may be the reason for the coverage of a large number of these categories of farmers on record under crop insurance scheme. Despite compulsory insurance of notified crops in notified area for loanee farmers, commercial banks failed in providing insurance facilities to all their crop loanees. The co-operatives with their weak infrastructure performed much better in providing crop insurance facilities to farmers in Bihar. Non-loanee farmers are also permitted to get their crops insured but very few of non-loanee farmers participated in crop insurance in Bihar.
In Bihar, principal food grains, potato, onion rapeseed/mustard and sugarcane are
covered under crop insurance scheme.. The popularity of credit linked crop insurance might be the reason for less coverage of pulses and oilseeds under crop insurance in Bihar because the use of purchased inputs in pulses and oilseeds is comparatively low in Bihar and farmers do not approach
financing agencies for loans in cultivating these crops. Hence, there is low insurance coverage of these crops in Bihar.
In 2007-08, the weather-based crop insurance scheme (WBCIS) was implemented in the
selected areas of Karnataka on pilot basis. WBCIS intends to provide insurance protection to farmers against adverse weather incidence such as deficit and access rainfall which are deemed to impact adversely the crop production. It has advantage to settle claims within the shortest possible time. The BWCIS is based on actual rates of premium but to make the scheme attractive, premium actually charged from farmers has been restricted to at par with NAIS. The Agricultural Insurance Company of India Ltd. (AICIL) has implemeted weather based crop insurance scheme in Bihar also. About 83 thousand farmers got their crops insured under this scheme during last 8 years which is about 1 per cent farm holdings of the state.
It is clear from above facts that the farmers of Bihar are still much behind in getting benefit of crop insurance scheme. The main reasons for poor participation of farmers in crop insurance scheme are poor awareness of farmers, non – cooperation of concerned officials, Inefficient , un-reliable and untimely availability of crop cutting data. The non-coverage of most of horticultural crops was also responsible for poor progress of crop insurance scheme in Bihar. Low level of credit flow to agriculture sector in Bihar has also contributed to unsatisfactory progress of the scheme. State government and banking institutions niether took interest nor facilitated the implementation of crop insurance scheme in Bihar.
There is some hope from PMFBY for larger coverage due to following reasons:
AIC had no monopoly but now there will be multi-agency approach.
Unit of area will be village also but it should be strictly implemented.
Earlier also, there was provision of voluntary participation ( non - loanee farmers) but voluntary participation was 10 % in Bihar( 7% for small and marginal farmers and 27 % for other categories of farmers). Hence, poor farmers should be encouraged for participation in PMFBY.
Flood, Inundation, Drought and Dry spell seem to be focus in the PMFBY but these should precisely be defined ; as example- Dry spell ( number of continuous non rainy days), Flood and Inundation ( number of days of water stagnation and depth of water) and Drought ( deficit in rainfall).
Prevented sowing and post-harvest losses are included under insurance. It is good step but there should be reliable, honest and competent mechanism for identification of prevented sowing and post-harvest losses because our system is not dependable.
Post-Harvest Loss is also covered under PMFBY but farmers’ losses due to low price of crops should also be covered under PMFBY because farmers are losing huge amount of income due to low price of Paddy & wheat, particularly in Bihar.
Challenges of PMFBY
One of the major challenges that remains is how to segregate insurance and disaster relief. Insurance products have a commercial basis whereas the disaster relief for small and marginal farmers has a social implication. However, for India it becomes important to distinguish between subsistence farmers with no or very low chance to become commercially viable for whom insurance should be designed as a social protection policy rather than as a commercial risk management tool. Hence, it is necessary to distinction between these two groups.
Damaged by wild animals is not eligible for coverage under scheme but there is substantial loss of crops due to Blue bull(Nilgai) in Middle and lower Gangetic plain). It should be reconsidered because farmers are not cultivating many crops (Horticultural and summer mung) in summer season due to havoc of Blue bull and concern about other wild animal damages
In PMFBY, production risk is being addressed but farmers are not getting remunerative/ procurement price in Bihar. It should also be considered because even high level of crop production may not make agriculture financially viable.
There is concern about insurance and ad-hoc relief when run together, preference will be to avoid paying premiums if ad-hoc relief is offered. These programs should be implemented separately.
Lack of adequate databases for determining premiums and indemnities and lack of adequate infrastructure may be a major constraints in implementing crop insurance in India, particularly in backward states.
The procedure is complicated for fixing the farm gate price for non-MSP crops, which may give rise to disputes.
Our land record is old hence modernization of the land records should be promoted by the states .
Livestock is also an important sector of farm economy. Farmes’ access to livestock insurance is still limited .There is negligible coverage of livestock farmers in Bihar.It is needed because farmers started keeping cross bred cow which requires investment of atleast Rs 50 thousand and a poor farmer can not bear burnt of loss of animal. If prevented sowing is insurable, why sterility of cow is not insurable?
Like vehicle insurance, in case of not availing the insurance benefit by farmer in the first year, there should be provision of reduced premium in the succeeding year. Lastly, it may said that PMFBY seems to be a farmers friendly programme but there is every doubt in proper implementation in Bihar because there would not be much change in attitude of government and bank officials in implementation of this programme.
