Tussle between Nitish and Centre delays rollout of new crop insurance in Bihar

The ongoing tussle between Centre and Bihar Chief Minister Nitish Kumar over the implementation of Pradhan Mantri Fasal Bima Yojana (PMFBY) is set to hit the prospects of famers in the state. 

According to sources in Bihar government, the state, which has red-flagged the issue of high premium rate with the Centre, is reportedly not in a position to bear crop insurance premium burden as it is experiencing a critical financial health condition after the implementation of total prohibition of alcohol.

“The financial health of the state’s exchequer is in very bad condition. The state is not getting revenues as it had evaluated prior to implementation of alcohol prohibition in April this year. The average minimum weighted premium rate of Bihar has been fixed at 14.92 per cent after the bidding in which six insurance companies participated, while the average minimum premium rate of Jharkhand ranges from 10.34 per cent to 17.03 per cent,” a source said.

Notably, the state-level bankers committee of Bihar, of which State Bank of India is convenor, had written on June 27 to heads of all banks operating in the state regarding deducting the premium amount from the account of the al the farmers under the preview of crop insurance scheme for the kharif season 2016. The bankers committee had issued the orders in respect of a Bihar government order dated June 14 in this regard.

According to sources, the Bihar government is mounting pressure on centre to share the 90 per cent of insurance premium. “Why should the Centre accept such demand? When the norms of new crop insurance scheme were being formulated, Bihar was also a part of that team. If the state is seeking such a huge “relief” as backward state by claimant, then there are several other states, which are poorer than Bihar,” a senior official in Agriculture Ministry said.

“As many as 22 states have introduced the new crop insurance scheme, including Odisha, West Bengal, Jharkhand, Madhya Pradesh. The Centre has extended the last date to August 10 to enable more farmers avail its benefits and states like Bihar and Punjab should also come forward and roll out the scheme at earliest in the best interest of farmers,” said Union Agriculture Minister Radha Mohan Singh in Rajya Sabha on Friday.

Bihar CM on Thursday had alleged that the new crop insurance policy framed by the Centre is 

“flawed,” and noted with concern that the insurance agencies recommended by the Centre to be selected for insuring farmers against crop loss and damage have adopted a “partisan” policy towards Bihar compared to other states in terms of fixing the minimum average weighted premium 

(MAWP) rate. 

“The insured amount for the kharif 2016 season would be to the tune of Rs 10,000 crore. Against that, the total MAWP amount payable has been fixed at Rs 1,500 crore for the 2016 kharif season. Of this premium amount, the Centre and the state have to share Rs 650 crore each, while the insured farmers have to pay Rs 200 crore,” the CM said.