(MENAFN- Asia Times) Severe debts, annual droughts, and suicides have plagued the Indian farming community. Prime Minister Narendra Modi's party's 2014 manifesto promised to boost the farming sector, but a report by the Comptroller and Auditor General (CAG) shows farm distress has only worsened in the last four years.
Rising discontent resulted in 100,000 farmers marching upon Parliament this year. The agrarian crisis in India, all too real and distressing, has been sustained by ruling parties' political agendas. P Sainath, the founding editor of the People's Archive of Rural India (PARI), has been stressing that the Prime Minister's 'Fasal Bima Yojana' (crop insurance scheme) has benefited private insurers more than the farmers.
The distress in the sector, which employs over half of the Indian workforce, will play a crucial role in deciding the people's mandate in this year's general election as Modi seeks a second term in office.
Manifesto vs. reality
Among other promises, the Bharatiya Janata Party's (BJP) 2014 election manifesto insisted on reining in inflation by setting up a Price Stabilization Fund and evolving a single National Agriculture Market. However in reality, the Modi Government, with all its power, has been unable to ease farmers' suffering.
The National Commission on Farmers (NCF), constituted in 2004 under the chairmanship of Professor MS Swaminathan. published its final report in 2006. It focused on farmer distress and the rise in farmer suicides and strongly recommended a holistic national policy. To extreme consternation, no such policy has been implemented.
The Land Holding Survey, Report No. 399 of the 48th National Sample Survey (NSS) shows that 11.24% of Indian households are landless. In 1991-92, the share of the bottom half of the rural households in the total land ownership was only 3% and the top 10% owned 54% of the land.
The BJP's 2014 manifesto declared, similar to the Swaminathan Committee report: '(The) BJP will adopt a ‘National Land Use Policy', which will look at the scientific acquisition of non-cultivable land, and its development; protect the interest of farmers and keep in mind the food production goals and economic goals of the country. Its implementation would be monitored by the National Land Use Authority, which will work with the State Land Use Authorities to regulate and facilitate land management.' However, after four years of BJP rule, it seems that the manifesto's main goal was to attract voters by cashing in on anti-incumbency sentiment.
Export-import disparities
Data accessed by Asia Times, via RTI, shows that exports for sunflower seeds, safflower or cottonseed oil and their fractions thereof only amounted to US$4.67 million for the fiscal year 2017-18. Compare this to imports during the same period, US$1.84 billion. This is especially surprising when one considers that India's rural spending is said to account for 55% of total national monthly expenditure.
Last year the government imposed import duty on edible oils even while domestic farmers could not get even the minimum support price (MSP) for oilseeds because farm-gate prices remained 15-25% lower than the MSP. This was completely counter to the recommendations of the Swaminathan report which recommended that the MSP should be at least 50% more than the weighted average cost of production.
CAG cover-up
Given the current state of the agriculture industry, questions arise over the suppression of the 89-page performance audit by the CAG [Report No.7 of 2017] on 'Union Government's Agriculture Crop Insurance Schemes'.
The crop insurance schemes were framed to provide insurance cover to the farming community against yield losses. These schemes were to be implemented in the states through the IAs (AIC and private insurance companies) and Bank/FIs operating in the respective States.
The CAG Report , observes that because of non-maintenance of the database of farmers, central and state governments were not in a position to ensure that 106 billion rupees released as premium subsidy reached the intended beneficiaries or achieved the intended purposes.
Furthermore, the auditor observes that the Rajasthan government, during the period of 2013-2016, issued notifications of crop insurance in selected districts in favor of different insurance companies. The condition was that the claims would be settled based on the crop area as reported. This was done despite knowing that the same does not include the "sowing failed down area" (area in which seeds do not grow for various reasons).
Due to the failure of crops in the four districts, the insurance companies, without the agreement of the state, reduced the sown areas of 389,000 farmers by 0.23 million hectares. This resulted in a loss of 312.7 million rupees to farmers' insurance claims. In addition, these farmers also suffered a loss of 86.8 million rupees on account of additional premiums paid for "sowing failed down area" without any insurance coverage as the premium amount paid by the farmers was not refunded.
Audit Deficiencies
Further scrutiny of records revealed that ICICI Lombard General Insurance Company Limited obtained proposals from 21,875 non-loanee farmers in Rajasthan during Rabi (winter) season 2012-13 and collected premiums of 23.5 million rupees from the farmers. Subsequently, the Insurance Company rejected the proposal of 14,753 farmers due to the inadequacy of relevant documents and did not refund the premiums to these farmers. No action has been initiated by the state to get 14.6 million rupees in payments refunded to the affected farmers.
The implementing agencies are required to open a separate account for maintaining all transactions under the scheme. However, the audit noticed that the private insurance companies in Haryana and Maharashtra did not maintain any such accounts. The insurance companies stated (September 2016) that no such requirement was raised by state or central government.
Furthermore, the CAG report evoked NCIP guidelines, which stipulate that empaneled insurance companies are liable to be disqualified if their performance is found to be below par. But the audit found instances of inaction by the DAC & FW despite sub-par performances by insurance companies. For example, in Rajasthan, the performance of HDFC Ergo General Insurance Company Limited was declared by the state government to be below par for the last seven crop seasons up until the end of Kharif season 2014. However, the DAC & FW has not acted on the recommendation of the state government to disqualify the insurance company.
The audit examination reveals the chilling financial impact of selecting the wrong insurance companies. The CAG also acknowledges that the replies by the Rajasthan government on the controversial evaluation of bids by insurance companies were unacceptable according to scheme guidelines. This illustrates how the vast funds involved have been decentralized and handled by the BJP at the state level so that the central government can maintain its clean image before the relevant authorities.
The CAG report concludes: 'The integrity of the data provided by the state governments in this respect and used by AIC was not ensured. There were delays in the issue of notifications, receipt of declarations from Bank/FIs within cut-off dates, receipt of yield data from state governments, in the processing of claims by IAs, and irregularities in disbursement of claims by Bank/FIs to farmers' accounts. There was no proper grievance redressal system and monitoring mechanism for speedy settlement of farmer's complaints at GOI or state government levels.'
Even though huge funds under the schemes were provided to private insurance companies, the CAG expressed concern that there was no provision for the audit to ensure proper utilization of funds by these insurance companies. The CAG has only studied the impact of insurance schemes in a few selected states, and then for statistical audit scrutiny. Despite the selective data pool, the conclusion remains strong.
Though capping of premiums under the NCIP restricted the liability of governments under the schemes, the loanee farmers were deprived of the full benefits of insurance coverage they paid for. There was also a lack of awareness among the farmers as surveyed by the auditor.
Insurance companies appear to be exploiting the uneducated and uninformed farm laborers, and the plight of the Indian farmer has only been worsened by empty manifesto promises.
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