With a few states including Jharkhand and Telangana opting to rejoin the Pradhan Mantri Fasal Bima Yojana (PMFBY), the number of farmers under the subsidised insurance cover touched a record 40 million last fiscal, up 27% on year. Official sources said the PMFBY beneficiaries would increase at a similar pace in FY25 too.
According to agriculture ministry officials, Gujarat and Bihar which had earlier exited the scheme, citing ‘high cost of premium subsidy,’ are discussing modalities to rejoin soon.
Punjab had earlier agreed to roll out crop insurance for cotton only.
“The farmer enrolment in the current fiscal would increase sharply because of the state rejoining the scheme and more farmers realising the shield it provides from crop loss or damage arising out of unforeseen weather events,” an official told FE.
The official said the crop insurance scheme is gradually moving towards a subscription-based model rather than a loan-based scheme. More than 42% of farmers who are enrolled are those who had not availed loans from the banks, the official said.
In terms of area, coverage of heavily subsidised crop insurance scheme last fiscal has crossed 61 million hectare in, which is an increase of around 21% from the 2022-23.
In addition, many states Andhra Pradesh, Maharashtra, Odisha, Meghalaya and Puducherry have opted for universalisation of crop insurance scheme which implies that the state government bears the cost farmers’ premium.
Under the PMFBY, which is currently being implemented in 22 states and union territories, 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 a 9:1 ratio. It is optional for the farmers to opt for PMFBY.
The claim-premium ratio, which was 99% in 2018-19, has declined to 68.7% in
2021-22. In FY23, the ratio was 76.7%. According to an official note, since the launch of PMFBY in 2016, Rs 31,139 crore was paid by farmers as their share of premium, against which claims of around Rs 1.56 trillion have been paid to them. “For every Rs 100 of premium paid by farmers, they have received about Rs 500 as claims,” it noted.
For PMFBY, the finance ministry has made a provision of Rs 15,000 crore for FY25, while as per the revised estimate, Rs 14,600 crore has been provided for the crop insurance scheme.
Several insurance companies, both in the public and private sectors, are
implementing crop insurance launched in 2016. The agriculture ministry has stated that the PMFBY is the third largest insurance scheme globally in terms of premium,