Mentor’s Comment:

The issue of huge collection of premiums by the insurance companies has been highlighted by the CAG. Introduction should mention about the current ongoing schemes of insurance related to crop insurance and the problems highlighted by CAG.

Further mention what are the other problems crop insurance faces. Price sensitive, poor awareness, lengthy and complex system of claim settlement, mandatory only for loanee farmers etc.

Next, discuss about the contribution of ICT in the aid of crop insurance scheme.

Next, mention challenges in implementing such insurance schemes and suggest way forward.

Bring conclusion based on the points of main part.

Model Answer:

Pradhan Mantri Fasal Bima Yojana is the flagship crop insurance scheme running in India right now. It is comparatively a new scheme but the working of previous crop insurance schemes have come under the criticism of CAG, specially the insurance companies.

Problem highlighted by the CAG report:

• Only 45% under PMFBY claims were settled.
• Some companies failed to settle even a single claim.
• Agriculture Insurance Company failed to exercise due to diligence in verification of claims by private insurance companies before releasing funds to them.
• Very less monitoring and oversight and lack of competition which is prevented the operations from running smoothly.
• Ghost farmers, manipulation of crop cutting experiment data to show minimum crop losses, collecting more insurance premium in low-risk areas through informal middle men from banks, wrongly rejecting claim applications of eligible farmers, non-effective grievance redressal mechanism for farmers are other issues flagged by the report.

Other challenges of crop insurance schemes:

• Demand for crop insurance is highly price-sensitive.
• Even a small change in premium rates leads to wide shifts in demand.
• Poor awareness.
• Lengthy and complex system of claim settlement.
• Mandatory only for loanee farmers.

Information’s and Communication Technology in the aid of Crop Insurance schemes:

• Farmers can capitalize on the availability of low-cost internet and the rising use of smartphones.
• Through the series of images uploaded by the farmers, insurance agencies can examine the condition of the crops.
• Based on the assessment, payments for losses can be directly issued to the farmers’ bank accounts.
• Additionally, the application also provides customized agricultural advisory to farmers by experts, ensuring continual interaction.
• Use of satellite imagery and weather forecasting systems, early warning can be issued against any adverse weather pattern and actions can be initiated to reduce loss through mobile phones.
• Instead of manual data collection, the use of satellite, drones, mobile cameras etc can be used to get cheap, fast and more accurate data for the area under production, canopy cover, weed coverage etc. to estimate the yield.
• Mobile technology can also be used to record and upload the crop-cutting experiments, a mechanism to determine the overall yield of the village.
• Internet of Things can be employed for availing wide range of services like use of soil sensor to avail the soil data.
• Digitization of PACs and connecting them through district co-operative banks for easy disbursal of credit and insurance money to the farmers.
• This will reduce the exclusion and delay of payments to the farmers.
• The use of ICT is expected to quicken compilation of data, verification and faster settlement of a claim.
• The use of mobile-based technology can also help allied activities.
• By identifying various challenges, such evaluations can lead to better programme selection and design that are cost-effective.

Challenges:

• Unawareness of farmers about both insurance schemes as well as use of ICT.
• Low level of penetration for internet based mobile networks in hinterlands, specially 4G.
• Lack of coordination between various agencies.
• Fear of wrong data inputs.
• Presently, farmers have no role in insurance. Everything from damage assessment to claim settlement by govt. and insurance companies.

Way Forward:

• Modern tech is crucial for timely claim settlement.
• Link the insurance database with Core Banking Solution (CBS) so as to keep farmers apprised of premium deductions and claim receipt
• Ensure social audit along with ICT.
• Cross check by various authorities and stakeholders.
• Modernization of land records.
• Co-ordinated information network for each and every parameter.

Through the PMFBY, the crop insurance sector is expected to get a boost. Information technology has a massive role to play in strengthening the nascent crop insurance industry in India and will act as a win- win situation for both farmers and Insurance Companies. The investment in Bharat-Net and National fibre optical network will ensure connectivity to the last mile and inclusion of every farmer with this scheme.