In March, G Giridharan, a farmer leader in Tamil Nadu, moved the Madras High Court seeking settlement of his crop insurance claim for the 2015-’16 season – and those of 8.6 lakh other farmers from his state. Giridharan had sown paddy on his five-acre field but lost nearly half of the crop because of an acute shortage of water.

He told the court that the Central government-run Agriculture Insurance Company had informed farmer unions that the payment delay was because the Tamil Nadu government had not paid its share of the insurance premium on time and that the crop coverage data it provided did not match the Centre’s statistics. The state government has denied these charges.

Across the country in Assam, a similar story unfolded. An insurance company that refused to process farmers’ claims accused the state government of delaying payments of its share of the premium. Under the Central government’s National Agriculture Insurance Scheme – which has now been replaced by the Pradhan Mantri Fasal Bima Yojana – and the Weather-based Farm Insurance Scheme, the premium amount to be paid to the insurance company is divided between the farmer, the state government and the Union government.

These squabbles between state agencies over crop insurance payments could not have come at a worse time for farmers in the two states. In Tamil Nadu, most cultivators could not sow their main samba (winter) crop in the October-January season: the failed North East monsoon resulted in the worst drought to hit the state in 140 years. Lakes and rivers were left dry and reservoirs near empty. The result was a 41.5% drop in agricultural production. In Assam, a failed rice crop and crashing potato prices have brought farmers out on the streets demanding compensation.

Farmers in both states said payment delays, lack of information and other technical problems have eroded their trust in crop insurance – which, as it is, covers only a small section of farmers across the country.

There are 118.9 million farmers in India, according to the 2011 Census. The number of farmers covered by crop insurance schemes for the 2016 kharif (summer) crop season was about 39 million, with a total premium of over Rs 16,000 crores. According to data presented by the Union Agriculture Ministry to Parliament on April 7 and analysed by the magazine Down to Earth in their State of India’s Environment 2017, only 17% of the claims for this season had been paid as of March 31.

Assam: Clueless about crop insurance

In June, Barpeta district in Assam witnessed protests by farmers claiming compensation for their ruined paddy harvest, reportedly because of spurious seeds. Others demanded proper implementation of the minimum support price mechanism, a market intervention by the state to insulate farmers against a sudden drop in the prices of their produce. None of the affected farmers, marginal or large, seemed to have any clear idea about crop insurance.

“Assam, we have been told, does not have crop insurance,” said Nakul Pal, a potato grower who said he had suffered losses in excess of Rs 5 lakhs this year. Others echoed his view.

Their lack of knowledge is understandable considering that only a little over 50,000 farmers in Assam have enrolled for the Weather-based Crop Insurance Scheme – which promises protection against weather-related crop losses – since its inception in 2013-’14, Central government data said. It added that around 41,000 people in the state had benefited from the scheme. According to the 2010-’11 Census, Assam has 37.3 lakh farmers

Starting this year, the state switched to the Pradhan Mantri Fasal Bima Yojana. According to state government data, around 60,000 farmers, or 2% of the state’s farmer population, had signed up for it till May.

Three crops can be insured under this scheme in the state: paddy, jute and black gram. The plan allows the entry of private players in the crop insurance market. The insured sum and the premium to be paid by farmers vary marginally from district to district, depending on the insurance company employed.

The regional head of a state-run crop insurance company blamed the Assam government for the poor coverage. “Crop insurance is not at all a priority for the government,” said the executive, who did not wish to be identified. “If the state does not own a scheme, little can be done. The scheme is designed by the Central government but the state is responsible for its effective implementation.”

He added that most farmers who insure their crops do so only because the government has made insurance mandatory for applying for a bank loan.

Rice growers demand compensation for crop ruined by spurious seeds in Barpeta, Assam, in June. (Credit: Arunabh Saikia)

Delayed payments

The executive also accused the state government of not paying its share of the premium on time, leading to delays in settlings claims. “The essence of insurance is claim. And we can only fulfil claims when the state government pays its share, and in our experience the state government does not do so in time,” he said.

He admitted his company had not made payments in 53% of the claims it had received since the 2014 kharif season. “Money for the period from the state government came in on the last working day of 2016-’17, so naturally there has been a delay,” he explained.

Pankaj Nabh Das, senior agriculture development officer in Assam’s directorate of agriculture, said the state government had released Rs 7.5 crores as its share of the insurance premium for 2013-’16. “It took some time, but the fact that money has been released proves this government is serious about crop insurance,” he added.

Das said the government was aware that a flood-prone state like Assam needs a robust insurance mechanism for its farmers. “We realise it is very important,” he said.

However, the insurance company executive pointed out, “The state government does not incentivise crop insurance as it does not subsidise the premium to be paid by the farmer, which is the practice in many states.”

Tamil Nadu: Trading charges

In Tamil Nadu, farmers are caught in a blame game between the insurance company and the state government over delayed payments and mismatched data.

Farmer leader Giridharan said that when he made inquiries with the Agriculture Insurance Company about insurance claims, he was told the state government had delayed the payment of its share of the premium by an entire year. “Farmer unions were told that the insurance premium money was released by the state government only in February 2017 for the 2015-2016 season,” he said. “The payment should have been made by February 2016”, he added.

However, when spoke with senior officials in the state agriculture department, they blamed the insurance firm for the delay. One official, requesting anonymity, said the payment was delayed because the company failed to send data on the total insurance coverage. “They should have done this in January 2016 but it was done the next January,” the official alleged. “We released the amount within a month of receiving the information from the company.”

The sum assured (the guaranteed amount under an insurance scheme) for a hectare of paddy for the 2015-’16 samba season is Rs 20,000, according to submissions made in the High Court. The premium is 2% of this amount. Of the 2%, the farmer pays half and the other half is split by the state and Union governments in a 55:45 proportion.

Even after the state released its share of the premium in February, farmers said the Agriculture Insurance Company held up their payments – amounting to Rs 450.6 crores – claiming that the crop coverage data provided by the state did not match the Centre’s data.

But state government officials denied this charge, and also said that when this matter was first raised in September, the insurance company was asked to contact the joint director of agriculture for the data.

The insurance company is yet to file its reply in the court.

Questions sent to the company by received no response both in Tamil Nadu and Assam.

Drought-hit farmers from Tamil Nadu protest in Delhi in April. (Credit: Sushil Kumar / HT)

In 2016-’17, in the face of a severe agricultural crisis, Tamil Nadu saw a sharp increase in the number of farmers opting for crop insurance under the Pradhan Mantri Fasal Bima Yojana. For the samba season, the main cropping season in the state, 15.2 lakh farmers bought crop insurance, up from 8.6 lakh the previous year. The jump was attributed to the drought and to a reduction in premium rates.

The optimism has since faded. The pending status of insurance claims for the 2015-’16 season has left farmers dejected, wondering when payments for the 2016-’17 season will be completed. They are also wary of the entry of private players in the insurance market. “If a government company can delay payments for so long, we do not know how to deal with private players,” a worried Giridharan said.