Agriculture is backbone of India's rural economy especially in terms of the population involved (70 percent) various activities across the entire agriculture value chain. These activities are so well interwoven in the social fabric of our culture (festivals/stories/folklores around agriculture) that it is actually a way of life. It is much more than just a transactional business activities as it has become in many western (developed) countries. At the same time, agriculture is also most sensitive (compared to other industry) to natural/market/policy based uncertainties and have direct impact on life and livelihood of affected population (mainly farmers). Over a period of time, due to uneven modernization across various facets of society, and weakening of social security; such uncertainties have started resulting into painful experiences (farmer suicides) whenever uncertainties turn adverse. And, when we talk about high growth of Indian economy, participation of farmers in this growth is critical for sustainability of this growth. Crop Insurance has been a great support system for farmers in many of the developed countries. With fast maturing financial services market in India, it is the right time an effective crop insurance starts delivering benefit to farmers.

Crop insurance has been one of the key (popular) focus of governments for past few years. At the moment the Indian govt's flagship crop insurance scheme is PMFBY (Pradhan Mantri Fasal Beema Yojna). Current govt. claims to have 10.61 crore farmers under PMFYB and also, that insured money per hectare has grown to Rs. 38,035.  However, this is just one side of the story. It is also true that  the number of farmers insured during both the kharif and rabi seasons has gone down (by 14 per cent) this year. Thus, the government's final target of bringing 50 per cent (98 million hectares) of the gross cropped areas (GCA) under the PMFBY in 2018-19, appears to be an impractical goal. Govt. has allocated Rs 13,000 crore in the Budget for this purpose.

While crop insurance schemes seem great in vision and it actually a great initiative, its implementation and processes of evaluating and delivering value to the farmers is something which is even more important. Agriculture in India is still way of life for a large majority of its population. The concept of insurance has to adapt to the ground reality in India - especially the fact that it is not just transactional business as in many western countries. Farmers anyway have great mistrust in believing benefits announced by govt actually reaching them. A fancy term - crop insurance is still far from being correctly understood by the large majority of farmers. Even people in urban areas have insufficient understanding - hardly any chance to look into small letters of terms and conditions - a smaller proportion of those claims are disbursed to the satisfaction of customer. Just think about farmers and even a far more complex agricultural practices (factors affecting claim/produce/productivity). It is indeed painful and sad about recent reports - about farmers getting INR 5, 10, 15... as crop insurance claims. I am sure that cost of getting papers together and applying for the claim would have been multiple times more than the compensation they finally got. It is very likely that farmers will lose interest in availing insurance and/or proactively pursuing these.

Even more interesting fact is % of premium paid pattern. For an example farmers need to pay 2% (of the premium) for Kharif crop, 1.5% for Rabi and 5% for horticultural crops. It looks attractive for farmers, but conversely it could also be a reason why they have lesser interest. It means >95% is borne by govt. agencies (center and states). Then who is losing money? – it is government paying 95% of the premium... with a minuscule claim rate and on the top unrealistic claims (Rs.5, 10) !  It looks like most of the government/public money is going to insurance companies largely bypassing farmers. I am afraid to imagine if it is being misused in many cases to make a socially justifiable conduit for money - from govt to insurance companies.

As a high level realities check, It was found that only 28.7 per cent of the sampled farmers (survey done in eight states - Uttar Pradesh, Gujarat, Odisha, AP, Chhattisgarh, Nagaland, Bihar and Maharashtra by BASIX) are aware about the PMFBY. Among them 40.8 per cent gathered information from formal sources like agriculture department, insurance companies or customer service centers and rest were informed by specific channels creating awareness. From those who were aware of the scheme only 12.9 per cent could get their crop insured of which 77 per cent were linked to loan. 41.3 per cent of the farmers cited lack of necessary documents as the major challenge to get insurance and the other challenges were small land holdings (21.4 per cent), lack of assistance from government officials (26 per cent) and inefficiency of online systems.

As per the survey findings,

- farmers complain that the process for enrollment as non-loanee farmers is difficult. They have to obtain sowing certificates, land records from the local revenue department which is time consuming.

- Further, the bank branches and customer service centres are not always available for enrollment as they are pre-occupied with other works, it showed.

- Farmers are not told why they have received or not received claims and what is the basis for the claim calculations.

State officials say the bid of private insurance companies for more profit and delay in settlement of claims are crucial factors for the decline of farmers' interest in the scheme. Interestingly, the scheme has performed poorly in the BJP-ruled states of Maharashtra, Gujarat, Chhattisgarh and Uttar Pradesh, while it has received a good response in non-BJP states like Telangana and Tamil Nadu. In a most recent statement by agriculture minister, Kerala — the premium deposited was Rs 3 crore in 2016 kharif and farmers got benefit of Rs 18 crore. In my opinion, this is more to do with farmer literacy and awareness of these schemes.

Look like farmers had lost interest as the compensation was either denied or delayed, besides flaws with the crop-cutting experiment to obtain accurate estimates of crop output. The new scheme permits insurance company representatives to take part in the crop-cutting experiments. We have noticed that they lower the threshold level of the output than the ideal. So farmers cannot claim even if their actual output is low since it will be above the threshold limit, an official said, and requesting anonymity. According to farmers in Madhya Pradesh, they received their compensation six months after filing their claims.

Indeed, there is a need for a transparent platform wherein application, survey request and payout status can be timely checked and grievances of farmers and insurance companies can be redressed via a grievance redressal mechanism which should be set by government in advance. In parallel, there is need for participation from NGOs, businesses to help create awareness of such schemes among farmers (lot of public money is being spent for insurance premium, farmers must demand the benefit). Specifically, I do see a great opportunity to create services that will help farmers with documentation/processes of availing the scheme and with claims processing.