Fasal Bima: No big drop in enrolment despite voluntary option

February 8, 2021 2:15 AM

An FE analysis of state-wise data show that more non-loanee farmers opt for the scheme in Maharashtra and Tamil Nadu. In TN, the share of non-loanee farmers in total enrolment increased to 88% this year from 77% last year.

As many as 74 lakh farmers in Gujarat, Andhra Pradesh, Telangana and Jharkhand had enrolled in 2019-20.As many as 74 lakh farmers in Gujarat, Andhra Pradesh, Telangana and Jharkhand had enrolled in 2019-20.

By Prabhudatta Mishra

Contrary to expectations, farmers’ interest in crop insurance schemes hasn’t ebbed much after the enrolment was made voluntary for loanee farmers effective 2020-21 crop year (July-June). A total of 5.96 crore farmers joined either of the two schemes — PMFBY and RWBCIS — in 2020-21 compared with 6.1 crore in 2019-20, down just 2.4%.

This is despite the fact that the schemes were not rolled out in 2020-21 crop year (July-June) in Gujarat, Andhra Pradesh, Telangana and Jharkhand.
Many analysts had predicted the subscriptions to drop by at least a quarter in 2020-21, owing to the voluntary choice introduced and the reluctance showed by many states.

“There has been high levels of participation from Rajasthan, Odisha, Chhattisgarh and Tamil Nadu (over 92 lakh additional enrolments on year), that offset the decline in other states,” a government official said. Madhya Pradesh, which was initially reluctant to launch the scheme and missed the deadline for enrolment, joined later.

As many as 74 lakh farmers in Gujarat, Andhra Pradesh, Telangana and Jharkhand had enrolled in 2019-20.

In the crop insurance business, PMFBY has about 90% share while the other scheme, RWBCIS, has the remaining 10%. The pan-India ratio of loanee and non-loanee farmers under crop insurance used to be 6:4 in the previous years and it was around the same level during 2020-21 as well. However, in absolute numbers, while enrolment of loanee farmers was at the same level of last year’s 3.8 crore, there was a drop of about 15 lakh in non-loanee category to 2.1 crore.

An FE analysis of state-wise data show that more non-loanee farmers opt for the scheme in Maharashtra and Tamil Nadu. In TN, the share of non-loanee farmers in total enrolment increased to 88% this year from 77% last year.

Aimed at addressing the key challenges in PMFBY implementation and making it more pragmatic, the Centre in February last year announced changes in guidelines, making enrolment of loanee farmers voluntary, effective kharif 2020. To prevent any drastic fall in number of enrolment, the government also had allowed an ‘opt out’ clause for loanee farmers meaning default banks would ensure all are covered unless farmers themselves inform in writing to ‘opt out’ of it. There is no ‘opt in’ provision for loanee farmers to enrol for PMFBY/RWBCIS.

Other changes in the guidelines included that the Centre would foot the PMFBY subsidy bill to the extent of its formulaic share so long as gross premium level is up to 30% of the sum assured in non-irrigated areas and 25% in irrigated areas. The onus is on the states if they want to implement the scheme even if insurers quote any premium above 25-30%. The government also allowed insurers an option to sign the contract period for three years from the earlier one year at same premium.

Under PMFBY, farmers’ premium is fixed at 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 split equally between the Centre and states.

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