The government is likely to allocate around Rs 16,000 crore for the implementation of Pradhan Mantri Fasal Bima Yojana (PMFBY) for the next financial year, the same as the Budget Estimate (BE) for 2022-23.
Sources said the anticipated expenses for the Centre for implementation of PMFBY in the current fiscal would be around Rs 18,500 crore against BE of Rs 15,500 crore, while there is Rs 3,000 crore of ‘unspent balance’ in the corpus of the scheme from the previous year.
“Allocation similar to the current year’s would be adequate for implementation of the crop insurance scheme in next fiscal year,” an official told FE.
The premium to be paid by farmers under the crop insurance scheme 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 equally shared among the Centre and states, which implies they bear most of the premium under the scheme. In the case of the north-eastern states, the premium is split between the Centre and states in a 9:1 ratio.
PMFBY is currently being implemented in 21 states/ Union territories. Ten insurance companies, both from public and private sectors, are implementing the crop insurance scheme.
In the last six years, Rs 25,186 crore have been paid by farmers as the premium, wherein Rs 1.26 trillion have been paid to farmers against their claims as on October 31, 2022, according to a recent statement by the agriculture ministry.
States such as Andhra Pradesh, Telangana, Bihar, Jharkhand, West Bengal and Gujarat had dropped out of the scheme because of the high costs. However, Andhra Pradesh re-joined from kharif 2022. Officials said that Telangana and Jharkhand are expected to re-join the scheme soon.
Sources said Punjab, which has not adopted the crop scheme launched in 2016, is in discussion with the agriculture ministry to launch the scheme for only two crops, cotton and soybean, this year.
The government is restructuring the PMFBY through measures including use of artificial intelligence (AI)-based technologies for timely assessment of crop yield data for prompt claims settlement and introduction of competitive bidding for premium quotes from insurers. Sources said the expenditure finance committee is reviewing the agriculture ministry’s proposal.
The claim-premium ratio, which was 99% in 2018-19, has declined to 50.3% in 2021-22, although claims for the last fiscal are still being settled.
Under the new model, the insurance companies may have to pay between 60%-130% or 80%-110% of the gross premium. The states would be allowed to choose the model. If the claims are below 60% of gross premium, the companies would refund the premium amount to the government, and for claims exceeding 130% of premium the government would compensate the companies.