CAG raps government for poor crop insurance scheme rollout in 2011-16

The CAG stated that funds to the tune of Rs 3,622.79 crore were released by the Centre to private insurers without verification.

Published: 21st July 2017 08:13 PM  |   Last Updated: 21st July 2017 08:13 PM   |  A+A-

Image used for representational purpose only. (File photo | Reuters)


NEW DELHI: The Comptroller and Auditor General of India (CAG) today slammed the government for poor implementation of crop insurance schemes in 2011-16, saying funds to the tune of Rs 3,622.79 crore were released to private insurers without verification.   

Both the Central and state government had incurred an expenditure of Rs 32,606.65 crore towards payment of premium subsidy and claim liabilities in the said period. This amount was channelised via state-owned Agriculture Insurance Company (AIC) to private companies, it said in its latest report.    

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 3,622.79 crore as premium subsidy to 10 private insurance companies without compliance with any of the guidelines...," the auditor said in the report placed before Parliament. It added that the AIC failed to exercise due diligence by verification of claims by private insurance companies before releasing the funds to them. It also failed to take re-insurance cover on behalf of both central and state governments.     

The government auditor also found out that though the central government released its share on time, there were instances of delay by state governments. "Such delays impacted the release of insurance compensation to affected farmers, defeating the fundamental purpose of the schemes to provide timely financial assistance to the farming community," it observed.     

According to the CAG report, claims amounting Rs 7,010 crore (under NAIS), Rs 332.45 crore (MNAIS) and Rs 999.28 crore (WBCIS) were pending as on August 2016 due to non-receipt of premium share of state governments, litigations, verification of claims by states, reconciliation and booking errors, among others. The other finding was that during 2011-16, five out of the nine selected states took more than prescribed 45 days with delays of up to 1,069 days in processing claims, it said.    

The auditor 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, the CAG noted.    

"Even though huge funds under the schemes were provided to private companies, there was no provision for audit by the CAG to ensure proper utilisation of funds...," it said. 

There was also lack of awareness as 67 per cent farmers surveyed during the audit were not aware of the schemes. 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.


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