Agrarian state Punjab, which has never implemented the Pradhan Mantri Fasal Bima Yojana (PMFBY) launched in 2016, is all set to join the scheme, seeking to compensate farmers against crop losses due to extreme weather events.
Sources told FE the state government had maintained that most of its agrarian land has irrigation facilities thus erratic rainfall does not impact the crop production.
However, unusually high temperatures that prevailed prior to harvesting of wheat crop last year and frequent unseasonal rains that caused losses to crops in two successive years have forced the state to pay around Rs 1,500 crore to paddy and cotton farmers as compensation.
Currently the Punjab cabinet is working out details prior to a formal announcement of joining PMFBY soon. Initially the state would opt to cover cotton and soybean growing farmers and subsequently other crops will be added.
Agriculture minister Narendra Singh Tomar recently said while Andhra Pradesh has joined back the scheme, Punjab will be joining back the scheme soon.
States like Gujarat, Andhra Pradesh, Telangana, Jharkhand, West Bengal and Bihar exited the scheme because of ‘higher cost of premium subsidy’ to be borne by them. Many states have asked for capping of premium subsidies under PMFBY.
An agriculture ministry official told FE that they have approached Telangana, Gujarat, Bihar, West Bengal and Jharkhand to rejoin the crop insurance scheme.
“Telangana and Jharkhand have indicated their willingness to rejoin the scheme ,” the official said.
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 amongst the Centre and states and in case of North-Eastern states, the premium is split between the Centre and states in 9:1 ratio.
In February 2020, the government made the PMFBY voluntary for the farmers while previously it was mandatory for the farmers to take insurance cover under the scheme.
Currently 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 has given its nod for it and a formal notification expected soon.
Under the new model, the insurance companies would have to pay claim to farmers between 60%-130% of the gross premium.
If the claims are below 60% of gross premium, the companies would refund the premium amount to the government and claims exceeding 130% of premium the government would compensate the companies.
Since inception of the scheme in 2016-17 till 2021-22, Rs 25,183 crore have been paid by farmers as the premium, wherein `1.3 trillion have been paid to the farmers against their claims, according to a recent statement by the agriculture ministry.
PMFBY is currently being implemented in 20 states/union territories and the government has allocated Rs 13,625 crore for implementation of PMFBY in 2023-24. Ten insurance companies both the public and private sectors, are implementing the crop insurance scheme.