The claims paid to the farmers under the Pradhan Mantri Fasal Bima Yojana (PMFBY) against crop damage, since its launch eight years back, has crossed Rs 1.59 trillion against the cumulative premium payment of Rs 32,329 crore, according to an official note.
This implies that for every 100 rupees of premium paid by farmers under the heavily subsidised crop insurance scheme, they have received about Rs500 as claims, the note says. Farmers have reported claims of Rs 1.62 trillion.
The number of farmers under the subsidised insurance cover reached a record 40 million last fiscal, up 27% from the previous year, official sources said. The increase in the number of PMFBY beneficiaries is expected to be as high in the current year.
“The farmer enrollment in the current fiscal is expected to increase sharply due to states rejoining the scheme and more farmers recognising the shield it provides against crop loss or damage arising from unforeseen weather events,” an official told FE.
The official said that the crop insurance scheme is gradually transitioning towards a subscription-based model rather than a loan-based scheme. More than 42% of the enrolled farmers last fiscal had not availed loans from banks, the official added. In terms of area, coverage of the heavily subsidised crop insurance scheme crossed 61 million hectares last fiscal, marking a 21% increase from 2022-23.
The PMFBY which was launched in 2016, is currently implemented in 22 states and UTs. 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. Participation in PMFBY is optional for farmers.
Officials said that Jharkhand and Telangana have decided to join the crop insurance scheme while Gujarat and Bihar, which had earlier exited the scheme citing ‘high cost of premium subsidy,’ are in discussions to rejoin soon.
Additionally, several states including Andhra Pradesh, Maharashtra, Odisha, Meghalaya, and Puducherry have opted for the universalisation of the crop insurance scheme, wherein the state government bears the cost of farmers’ premiums.
According to official data, the claim-premium ratio, which was 99.5% in 2018-19, declined to 67.6% in 2021-22. In FY23, the ratio was 77.8%.
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. Several insurance companies, both in the public and private sectors, are implementing the crop insurance scheme. The PMFBY is the third largest insurance scheme globally in terms of premium and shields farmers from crop losses or damage arising out of unforeseen events.