The Union Cabinet on Wednesday extended two crop insurance schemes — the Pradhan Mantri Fasal Bima Yojana (PMFBY) and the Restructured Weather Based Crop Insurance Scheme (RWBCIS) — by one more year till 2025-26 to align their implementation with the 15th Finance Commission period.
The total outlay for PMFBY and RWBCIS has been increased to Rs 69,515 crore for 2021-22 to 2025-26, from Rs 66,550 crore for FY21 to FY25.
The cabinet committee on economic affairs also created a separate fund for innovation and technology (FIAT) of Rs 824.77 crore for technology infusion in the implementation of these flagship schemes.
“FIAT will help in the use of technology for faster assessment of crop damage, claim settlement and lesser disputes. It will also help in using digital technologies for easier enrolment and greater coverage,” information and broadcasting minister Ashwini Vaishnaw told the press after the cabinet meeting.
The agriculture ministry said the special fund will be utilised towards funding technological initiatives as well as research and development studies.
Agriculture minister Shivraj Singh Chouhan said the insurance companies will have to pay a penalty of 12% to farmers on the claims if there is a delay in claim settlement beyond the stipulated period under the PMFBY.
Insurance claims of Rs 1.7 lakh crore have been paid to farmers against Rs 34,000 crore premium paid under PMFBY since its launch in 2016, according to agriculture ministry data. Participation in PMFBY is optional for farmers. PMFBY is currently implemented in 23 states and Union territories.
Under the scheme, comprehensive risk coverage for crops against all non-preventable natural risks — from pre-sowing to post-harvest stages of crops — is provided at a highly subsidised premium rate for the farmers.
Farmers pay a fixed premium of 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 between the Centre and states. For North-Eastern states, the premium is split in a 9:1 ratio between the Centre and states.
In FY24, enrolment under PMFBY crossed a record 4 million, and it is projected to increase significantly in the current fiscal.
An official said the crop insurance scheme is gradually moving towards a subscription-based model rather than a loan-based scheme. “More than 55% of farmers who are enrolled under the crop insurance are those who had not availed loans from the banks in FY24,” the official said.
For PMFBY, the finance ministry has allocated Rs 15,000 crore for FY25, while the revised estimate for FY24 stands at Rs 14,600 crore. Twenty insurance companies, both in public and private sectors, are implementing the crop insurance scheme.
PMFBY is the third-largest insurance scheme globally in terms of premium.