Crop Insurance Schemes: Timely Assistance to Farmers Missed

The Comptroller and Auditor General of India (CAG) today tabled its report on crop insurance scheme of the government and pointed out several flaws in its implementation

Crop Insurance Schemes: Timely Assistance to Farmers Missed


The Comptroller and Auditor General of India (CAG) on Friday slammed the government for poor implementation of crop insurance schemes in 2011-16, saying the funds were released to private insurers without verification.

Both the central and state government had incurred an expenditure of Rs32,606.65 crore towards payment of premium subsidy and claim liabilities in the said period.

The Report points out instances of delayed release by state governments which impacted the release of insurance compensation to affected farmers, defeating the objective of providing timely financial assistance to the farming community.

“Agricultural Insurance Company of India Limited (AIC) failed to exercise due diligence in verification of claims by private insurance companies before releasing funds to them. Coverage of farmers, particularly small and marginal farmers, under the schemes was very low compared to the population of farmers as per Census 2011.,” it said.

“Monitoring of the schemes by GOI, state governments and Implementing Agencies was very poor. Two-thirds of the farmers surveyed during audit were not aware of the schemes,” the Report observed. 

The CAG report examined the crop insurance schemes—NAIS, MNAIS and Weather Based Crop Insurance Scheme (WBCIS) implemented during 2011-12 through 2015-16.

These schemes, however, now have been replaced with new Pradhan Mantri Fasal Bima Yojan (PMFBY) from 2016 kharif season.

“During 2011-16, AIC had released Rs 36,222.79 crore as premium subsidy to 10 private insurance companies without compliance with any of the guidelines…,” the CAG said. 

The CAG also found out that there were delays in issue of notifications, receipt of declarations from banks within cut-off dates, receipt of yield data from states and processing of claims and irregularities in disbursement of claims by banks to farmers’ accounts.

Even monitoring of the schemes was “very poor” as implementing agencies did not do it effectively, it noted.

There was no proper grievance redressal system and monitoring mechanism for speedy settlement of farmers’ complaints at the central or state government level, it added.


1.DAC&FW should introduce a mechanism to ensure that state governments’ shares are received in time
2.DAC&FW should ensure that payments to Implementing Agencies are released only after due verification
3.GOI and state governments should ensure timely submission of UCs to it by Implementing Agencies and by Bank/FIs to implementing agencies so that the insurance benefits to the farming community are better monitored
4.GOI and state governments should maintain/have access to comprehensive database of beneficiary farmers for the purpose of monitoring and more effective implementation of insurance schemes to ensure that the benefits of the schemes have reached intended beneficiaries
5.DAC&FW should take effective measures to ensure that large numbers of farmers are brought under the schemes, and more non-loanee farmers are encouraged to participate in the schemes
6.State governments should be encouraged to adopt the village as the defined area for insurance
7.DAC&FW should introduce measures (through use of technology where feasible) for more accurate assessment of crop yields
8.DAC&FW and the state governments need to provide a reliable mechanism to ensure that the details of actual area sown are accurate as the amount of insurance claims payable to the affected farmers is dependent on this
9. DAC&FW should take more effective measures to ensure that Bank/FIs adhere to the timelines specified in the scheme guidelines
10. The governments have to take steps to ensure that the implementation of the schemes is monitored effectively at all levels
11.More concerted efforts are required to create better awareness among the farming community on the coverage and benefits of the schemes.

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BK Jha is the Special Correspondent of Rural & Marketing. Prior to this he has been associated with The Hindustan Times, Political and Business Daily along with many other media organisations.
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