Punjab to join crop insurance scheme | The Financial Express

Punjab to join crop insurance scheme

Telangana, Jharkhand, Bihar, Gujarat too rejoining PMFBY

Punjab to join crop insurance scheme
Agricultural development will always remain an integral part of our nation’s overall economic development.

The Punjab government is set to join Pradhan Mantri Fasal Bima Yojana (PMFBY) from the next crop year (2023-24). What prompted the state government, which hasn’t adopted the scheme launched in 2016, to change its stance is large-scale damage to crops in the last two seasons due to adverse weather conditions and past attack.

The agrarian state had steadfastly refused to join the scheme, citing assured irrigation of the state’s agriculture fields.

Punjab’s move comes after several states such as Telangana, Bihar, Jharkhand and Gujarat, which had dropped out of the crop insurance scheme citing the high cost of premium, have initiated discussion with the Centre to roll out PMFBY by next year.

Gurvinder Singh, Director, Department of Agriculture, Punjab said that in the last two years the state government has paid around Rs 1000 crore to the farmers as compensation because of damage to cotton crop from pink bollworm pests and unseasonal rains.

We are currently working out the modalities for joining the crop insurance scheme,” Singh told FE. He said that through joining the scheme, the financial burden for providing compensation to the farmers could be reduced.

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.

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In July, 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.

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.

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.

Meanwhile, the government is considering a slew of proposals to revamp PMFBY by next year, following a sharp drop in claims to premium ratio, rise in premium rates pushing subsidy liability of the government. Sources said consultations with all the stakeholders are currently in progress and the revamped PMFBY will help widen the crop insurance cover for farmers.

Among the likely changes are a higher claim-premium cap of 130% from 110% now – a move aimed at infusing fresh life into the scheme.

According to an analysis by a working group set up by the agriculture ministry, 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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First published on: 12-11-2022 at 03:00 IST