Area Discrepancy in Crop Insurance &
Measures to Prevent / Minimize
Ministry of Agriculture & Farmers Welfare,
Govt. of India
To mitigate the agricultural risks and to provide financial support to farmers against yield losses , GOI introduced Comprehensive Crop Insurance Scheme (CCIS) in 1985 for first time.
Thereafter, efforts have been continuing for development of crop insurance products more farmers’ friendly in terms of better services & benefits through incorporating improvements & modifications therein.
Evolution of Crop Insurance & Area
Discrepancy
Since early years of 90s, cases of discrepancy in area insured & area sown (i.e. area insured is higher than area sown) have been reported regularly in every crop season specially in yield-index schemes (NAIS &
MNAIS).
Settlement of such cases have been made through reducing sum insured of individual insured farmers in proportion to reported higher insured areas than area sown for particular insured crops in the notified areas and consequently all insured farmers are getting reduced claims.
Evolution of Crop Insurance & Area
Discrepancy
State-wise Cases of Area Discrepancy: NAIS
States No. of
Seasons of Discrepancy
Claims Reported
(Rs Cr)
Claims Revised
(Rs Cr)
Average Reduction Factor (%)
Range of Reduction Factor (%)
A&N Islands 2 1.23 0.97 22 19 - 79
Andhra Pradesh 11 3120 2202 29 4 - 74
Bihar 2 1414 1008 29 14 - 32
Gujarat 13 4156 2895 30 1 - 54
Karnataka 24 3218 2636 18 1 - 38
MP 3 3776 2967 21 5 - 28
Rajasthan 8 864 675 22 3 - 81
Tamil Nadu 8 2773 2193 21 1 - 31
Total 19322 14577 25
State-wise Cases of Area Discrepancy: MNAIS
States No. of
Seasons of Discrepancy
Claims Reported
(Rs Cr)
Claims Revised
(Rs Cr)
Average Reduction Factor (%)
Range of Reduction Factor (%)
A&N Islands 1 0.16 0.06 63 -
Andhra Pradesh 1 432 326 24 -
Bihar 1 1.98 1.83 7 -
Karnataka 5 192 146 24 13 - 32
MP 1 0.40 0.31 22 -
Rajasthan 3 266 215 19 13 - 23
Tamil Nadu 5 290 224 23 5 - 35
UP 2 71 68 5 4 - 5
Total 1254 981 22
Tendency of the farmers to show higher value crops in terms of Scale of finance though they avail loans for low value crops with intention to fetch higher claims in case of yield losses.
Usually farmers avail short-term loan against their whole land and as such lending Banks consider whole land in farmers’ proposals / declaration instead of the actual area cultivated of the notified.
Reasons Causing Area Discrepancy
Lending Banks do not object it due to their interest to fulfill target of the priority sector.
Requirement of collateral for short-term crop loans has been diluted after discontinuation of service-area approach for banks and, farmers are free to approach any bank. If needed, they may also approach more than one bank to meet their credit requirement. This results in multiple loans and multiple insurance for the same cropped area.
Since insurance is compulsory for loanee farmers, multiple coverage is an obvious outcome.
Reasons Causing Area Discrepancy
Tendency of farmers to avail total sanctioned limit of loan in beginning of year leading to insurance of total loan amount in one season thus showing total area in one season and as such creating discrepancy between sown area & insured area.
Lending Banks often include the area where the crop is sown but not germinated (known as beejmari) while declaring the insured area in their proposals / declarations.
Sometimes, errors are committed by bank personnel in reporting the details of area insured.
Reasons Causing Area Discrepancy
contd… In September, 2013, GOI entrusted the responsibility to suggest measures to minimize/overcome the problem of area discrepancy with Dr. P.K. Mishra, Ex Agriculture Secretary.
Committee submitted its report in May, 2014 and made various suggestions / recommendations in this regard.
Most of suggestions / recommendations have been considered and accordingly provisions have been incorporated in PMFBY which has been operationalized from Kharif 2016.
Constitution of Committee to identify
loopholes & Suggest Measures to GOI for
Preventing / Minimizing Area Discrepancy
Suggested to use technology to address problem of area discrepancy, instead of application of area correction factor. A web portal as developed for Gujarat by NIC may be developed for other States for making land records and other data / information on crop insurance accessible to all stakeholders.
Suggested use of GPRS-enabled mobile phones to capture and transmit photographs of standing crops once or twice to a server during season for verification of crops sown on particular land through matching of GPS coordinates.
Committee’s Major Recommendations to
Prevent / Minimize Area Discrepancy
Suggested that Insurance companies and Banks should undertake verification relating to area sown and area insured at periodic intervals during crop season especially in districts with a history of large area discrepancy.
Suggested that Government officials concerned, representatives of insurance agencies and banks should have coordination meetings at state and district level on a quarterly basis in order to monitor area sown vis-à-vis area insured.
Committee’s Major Recommendations to
Prevent / Minimize Area Discrepancy
Sum Insured is equal to Scale of Finance of notified crops for all type of farmers.
Removal of Nodal Bank system to reduce the error in reporting by consolidation of information of various branches.
Option to farmers has been given to change their insured crop within 30 days before the cutoff date. This will facilitate the farmers to insure their crops based on actual sown.
Obtaining layered information of insured farmers
Provision of integration of land records of insured farmers
Use of better technology such as RST / Satellite Imagery / drones / Smart mobile phones etc. for verification &
estimation of crops & yields thereof.
Provisions in PMFBY to Prevent / Minimize Area
Discrepancy
Wherever the ‘acreage discrepancy’ is likely, the acreage insured at IU level shall be compared with average planted acreage of past three years, and the difference is treated as ‘excess’ insurance coverage after taking into account sown area data of the Revenue authority.
Sum insured is scaled down in the proportionate ratio the average of three years’ actual planted acreage bears to the insured acreage for the given crop.
Claims shall be calculated on the scaled down sum insured
Premium (farmer share and Central and State Government Subsidy) shall be refunded back to Government of India for the portion of sum insured scaled down and the amount may be utilised for improvement of technology/ research/ Impact assessment etc.
Provisions in PMFBY to Prevent / Minimize Area
Discrepancy
DAC&FW is developing a Crop insurance portal to integrate all concerned stakeholders on single IT platform to ensure better administration, coordination and transparency for getting real time information and monitoring in a phased manner in consultation with Ministry of Finance.
This integrated IT solution would facilitate to speed up service delivery, unify fragmented databases, achieve a single view of data, eliminate manual processes and thus provide insurance services to farmers faster than before.
This IT driven system is envisaged to address the issues which affect the current system of program administration including duplication of beneficiaries, area discrepancies etc.
Provisions in PMFBY to Prevent / Minimize Area
Discrepancy
WBCIS Rabi 2012-13 - RAJASTHAN
Area Discrepancy –
Churu district – Gram CROP
Area Insured – 5.38 Lakh Ha
Area Sown – As per Revenue Dept. – 1.27 Lakh Ha
Area Sown as per Satellite Image – 2.34 Lakh Ha
Area Sown as per Satellite Image – Tehsil wise
WBCIS RABI 2012-13 - RAJASTHAN
AREA DISCREPANCY – CHURU DISTRICT – GRAM CROP
TEHSIL AREA IN HECTARE Rajgarh 82,997
Taranagar 65,097
Churu 31,760
Ratangarh 9,081 Sujangarh 18,046 Sardarsahar 27,315
TOTAL 234,296
WBCIS RABI 2012-13 - RAJASTHAN
AREA DISCREPANCY – CHURU DISTRICT – GRAM CROP
Steps Involved
WBCIS RABI 2012-13 - RAJASTHAN
AREA DISCREPANCY – CHURU DISTRICT – GRAM CROP
Determination of area discrepancy factor
The sown area report of Revenue dept. was contested
A satellite Imagery survey was conducted by SKYMET
The said survey estimated the sown area for Gram crop in Churu district as 2.34 lakh hectare against the sown area of 1.27 lakh hectare submitted by revenue dept.
This 2.34 lakh hectare was compared Tehsil -wise against the insured area of 5.38 lakh hectare and tehsil -wise area
discrepancy factor was calculated and applied
WBCIS RABI 2012-13 - RAJASTHAN
AREA DISCREPANCY – CHURU DISTRICT – GRAM CROP
20
