Consumer rights: Implement welfare schemes properly
A recent order of the apex consumer court holding an insurance company and a bank accountable for their carelessness in implementing a crop insurance scheme under the Pradhan Mantri Fasal Bima Yojana highlights how lapses in the implementation of welfare schemes defeat their very purpose.
Pointing out the blunders committed by the financial institutions, the National Consumer Disputes Redressal Commission said both were responsible for the denial of crop insurance to 10 farmers, and therefore had to fully indemnify their losses. I wish the Commission had also asked the institutions to identify the officials responsible for the omissions and recover the claim amount from them. That would have sent a warning to all those enforcing welfare schemes. In the Lucknow Development Authority vs MK Gupta case, the Supreme Court had suggested a similar course of action.
To farmers affected by crop failures on account of unforeseen events, crop insurance offers a lifeline. Effective implementation can not only help farmers cope with huge losses caused on account of crop failure, but also prevent farmers’ suicides.
In this case, the financial institutions entrusted with the enforcement of the PMFBY scheme were either blind to the consequences of their negligence on the livelihood of farmers, or were indifferent to the distress caused to farmers by their careless attitude.
The case revolves around the denial of insurance claims of 10 farmers of Khandwa district of MP. Having taken bank credit to grow soya bean crop, the farmers were financially in a tight corner when 44 per cent of the crop failed during the kharif season of 2017 due to inclement weather. They were, however, consoled by the fact that they had crop insurance but were heartbroken when the Agriculture Insurance Company of India repudiated their claim, saying their crops were not insured.
Since crop insurance was mandatory for farmers who availed of agricultural loans from financial institutions and optional for those who did not, all these farmers who had taken the loan had paid the policy premium, which was 2 per cent of the sum insured or the actuarial rate. The rest of the premium was to be paid as a subsidy equally by the state and the Centre. The bank, Bank of Baroda in this case, had the responsibility of not only collecting the proposals and premiums from the farmers, but also submitting it, along with a consolidated proposal, to the insurance company. It also had to upload the details on the National Crop Insurance Portal (NCIP) of the Centre. The latter was mandatory for the insurance company to claim subsidy. Only those farmers whose data was uploaded on the NCIP, and their share of the premium paid to the insurance company within the prescribed time limit were eligible for insurance cover. Even though the bank paid the consolidated premium collected from 512 farmers, adding up to Rs 12,12,532 to the insurer, it did not upload within the time limit the details on the NCIP. Nor did it send the consolidated proposal within the stipulated time to the insurance company. Even when it finally sent it, barring one, all other proposals were either incomplete or had erroneous information on even basic facts like the culivation area, village, etc.
Holding the bank liable for negligence, the Commission pointed out that the insurance company too was equally responsible for not taking timely action regarding the details or getting the bank to rectify the inaccuracies. More importantly, it had received the premium of 512 farmers in August 2017 from the bank, but it was only in October 2021 that it returned the premium paid by all except one, saying those proposals were rejected. So, both were equally liable to indemnify the loss suffered by the farmers, the Commission concluded. (Bank of Baroda vs Vishnu Prakash, RP no. 1588 of 2022, decided on July 3, 2024).
Hopefully, such orders will force the implementing agencies to realise their responsibilities and the government to monitor the enforcement of these schemes better.
