The Telegraph
Thursday , February 28 , 2013
Since 1st March, 1999
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In times of blight, govt falters on insurance
- Off-budget expenses drain cash needed to pay premium for scheme for potato farmers

Calcutta, Feb. 27: The cash-strapped state government has defaulted on paying its share of premium for a potato crop insurance, putting farmers in a spot at a time blight has infected the vegetable in large parts of West Midnapore and Burdwan.

Senior finance department officials pointed to off-budget spending by the agriculture department that made paying the insurance premium, a budgeted expense, difficult.

This is the first time the state government has defaulted on premium payment for a crop scheme.

Senior government officials said the state was supposed to deposit Rs 38.92 crore to bring potato farmers cultivating the rabi (winter) crop in three districts under the centrally sponsored Modified National Agriculture Insurance Scheme (MNAIS).

A rough estimate of the state agriculture department reveals that a premium of Rs 91.9 crore had to be paid to give potato farmers insurance coverage of Rs 574 crore.

“The last date of releasing the state’s share of the premium was December 31. We had sent two proposals to the finance department seeking its approval to release the funds. But we did not get any response,” said a senior agriculture department official.

“After the state pays its share, the Centre’s portion is deposited as a central government agency insures farmers under the MNAIS,” he added.

The Agriculture Insurance Company of India Ltd, the central agency that insures farmers under the MNAIS, had extended the state’s deadline by a month, but still the government could not pay the premium.

“The situation is critical. The farmers had deposited their share of the premium in the notified banks and the Centre was ready to release its share. But the farmers who suffered crop loss will not get the compensation as the state did not even issue notification to release its share,” the official said.

A senior finance department official said: “The plan size of the agriculture department was fixed at Rs 315 crore. The department was allotted 75 per cent of the amount like other departments. But it spent the major portion of the money in off-budget expenditure.”

Asked about the off-budget expenses, an agriculture department official gave the example of a Rs 100-crore special plan to give direct subsidy to farmers for procuring farm machinery, including power tillers, and getting electricity connections for pumps. He said the schemes had been announced by the chief minister in December last year.

“We spent without hesitation on these schemes but the insurance premium could not be given even though a sum of Rs 78 crore was allotted under the plan head for this purpose,” the official said.

Another official said the department could have asked for more money from the finance department citing the example of the sports department, which was allotted Rs 10 crore more after most of its plan funds were exhausted in giving doles to clubs.

The problem intensified after many farmers complained to the agriculture department that blight had hit the crop in large parts of Burdwan and West Midnapore this year.

Agriculture minister Malay Ghatak told The Telegraph: “I was not kept in the loop on this particular issue. Had I been informed, I would have taken up the issue with the finance department.”

He added that non-payment of the insurance premium would not affect the farmers. “I don’t think farmers will require any insurance coverage this year because of a bumper production of potato,” Ghatak said.

Agriculture department officials, however, said primary reports from the two districts suggested that compensation claims would cross Rs 50 crore.

“Although the exact amount of damage is yet to be ascertained, it appears the amount would not be less than Rs 50 crore. Last year, when a record production was reported, claims of Rs 44 crore was settled, giving relief to nearly 30,000 of the 2.57 lakh farmers insured,” the official said.