After Andhra Pradesh, Telangana too rejoins crop insurance scheme

Earlier this month, the Andhra Pradesh government announced its decision to re-join the PMFBY, effective kharif 2022, after the Centre agreed to the state government’s proposal of universalising the scheme for all the farmers.

After Andhra Pradesh, Telangana too rejoins crop insurance scheme
Sources told FE that the Centre has agreed to the Telangana government's demand for ‘universal coverage’ of farmers under the scheme.

Telangana, which had opted out of the Pradhan Mantri Fasal Bima Yojana (PMFBY) citing ‘highest cost of premium subsidy’, is likely to re-join the crop insurance scheme.

Sources told FE that the Centre has agreed to the Telangana government’s demand for ‘universal coverage’ of farmers under the scheme.

Telangana is likely to implement PMFBY from rabi 2023.

Six states -– Andhra Pradesh, Telangana, Bihar, Jharkhand, West Bengal and Gujarat –- dropped out of the scheme citing the high cost of premium, which had led to delays in release of their share of premium subsidy. Delayed premium caused issues of claim settlement by the insurance companies.

Earlier this month, the Andhra Pradesh government announced its decision to re-join the PMFBY, effective kharif 2022, after the Centre agreed to the state government’s proposal of universalising the scheme for all the farmers.

A delay by the Telangana government in releasing its share of premium under the PMFBY, in 2018-19 and 2019-20, led to the Centre stopping the release of its component of a matching sum, thus leading to delay in claim settlement for the farmers. Subsequently, the Telangana government stopped implementing the PMFBY from the 2020 kharif season.

As per the revised guideline for the PMFBY issued since kharif 2020, the Centre had stipulated that in case of non-payment of the state’s share of premium, subsidy within the prescribed timelines would lead to disqualification of the state government from implementing crop insurance from the next season.

Under the heavily-subsidised PMFBY, the premium to be paid by farmers is fixed at just 1.5% of the sum insured for rabi crops and 2% for kharif crops, while it is 5% for cash crops. The balance premium is equally shared among the Centre and states and in the case of the northeastern states, the premium is split between the Centre and states in a 9:1 ratio.

In recent years, claims by farmers under the PMFBY have been on the decline. The ratio, which was 93.9% in kharif 2018, has come down to just 41.9% in kharif 2021, as per provisional data. Similarly in rabi 2017, the claim to premium ratio was 106.9%, which declined to 47.1% in 2021.

In February 2020, the government made the PMFBY voluntary for farmers; previously, it was mandatory for farmers to take insurance cover under the scheme.
The scheme is currently being implemented in 21 states/Union territories. The Punjab government hasn’t adopted the PMFBY since its 2016 launch.

According to agriculture ministry estimates, there are around 140 million farmer families in the country. Enrolment under the PMFBY has not crossed 20 million in the last three years.

A working group, set up by the ministry of agriculture and farmers’ welfare to review the PMFBY, has recommended a higher claim-premium cap of 130% from 110% now, in a move aimed at infusing fresh life into the scheme.

According to an analysis by the working group, since 2016, PMFBY premium has increased by more than six-fold, which has led to an increase in subsidy liability of the government.

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