India’s Comptroller and Auditor General (CAG) criticised the government for poor implementation of crop insurance programs from 2011 to 2016. The CAG also alleged that funds were released to private insurers without prior verification.

According to the CAG’s report, both central and state governments spent INR326 billion (US$5.06 billion) to pay premium subsidies and claims during the period. This money was coursed through state-owned Agriculture Insurance Company (AIC) to private insurance companies.

The report added the AIC did not exercise due diligence by not verifying the claims made by private insurers before handing them over the money. The state-owned insurer also reportedly did not take out reinsurance cover for the central and state government funds.

In addition, the state auditor noted several instances in which the central government released funds on time, but the state governments did not act on it accordingly, causing delays that reached up to 1,069 days in the worst cases.

“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,” the government auditor said, as quoted by the Hindustan Times.

The CAG also slammed monitoring agencies for not setting implementing agencies straight. Additionally, it was revealed that many farmers were not aware of government crop insurance programs, with 67% of farmers surveyed saying that they had no knowledge of crop insurance.

The lack of a proper grievance redressal system and monitoring mechanism for prompt settlement of farmers’ complaints also caused great dismay to the auditor.


Related stories:
Crop insurance proves fertile ground for India’s non-life insurance sector
India’s farmers may be engaging in riskier farming due to crop insurance
Indian government to partially subsidize crop insurance