The government is planning to expand the highly-subsidised crop insurance cover for farmers by extending the Pradhan Mantri Fasal Bima Yojana (PMFBY) benefit to tenant farmers, those engaged in animal husbandry and the holders of Kisan Credit Cards. The move is expected to include many millions more under the insurance cover, besides the widening the crop area insured.
“From the next season, we will be setting up escrow accounts with state governments for payment of compensation to farmers, so that the states pay their share of funds on time,” Devesh Chaturvedi, secretary, department of agriculture and farmers welfare, said on Friday at the national review conference of PMFBY.
Currently, 41 million of then country’s 140 million farmers are enrolled under PMFBY, and 40% of the gross cropped area is covered. About 40% of the cultivators do not own land and are engaged in tenancy farming.
There is also a plan to fix the dates for payment of compensation under crop insurance in line with PM – Kisan, where Rs 6000/year is transferred to 90 million farmers in three equal instalments.
Chaturvedi said delays in settlement of compensation to farmers for crop losses are because many states do not allocate funds on time. Sources said since the launch of the scheme nine years ago, claims settlement default by states has been around Rs 4,440 crore.
In terms of premium payment, the Centre, states and farmers have a share of 40%, 48% and 12% respectively.
On the inclusion of sharecroppers or cultivators into the scheme, Chaturvedi said that discussions are on to include them with the consent of the owner of the land using data from the unique farmers digital IDs so that their risks are covered.
Rajasthan, Madhya Pradesh and Maharashtra have more area covered under crop insurance compared to the national average while Uttar Pradesh, Odisha and Karnataka lag.
Using digital IDs of farmers, the agriculture ministry is aiming to include all the KCCs holders engaged in allied activities like animal husbandry and fisheries in the scheme. At present there are 77.1 million operational KCC holders, which include 4.4 million card holders for animal husbandry activities. .
The agriculture ministry is also discussing inclusion of paddy inundation for asserting crop losses and a committee has been set up to finalise modalities for covering crop losses due to wild animal attacks.
Over Rs 1.78 lakh crore has been paid to farmers under PMFBY between its 2016 launch and FY24 as compensation which was five times of total premiums of Rs 35,466 crore paid by them under the scheme. The bulk of the financial burden of the insurance cover is borne by the state and central government.
Earlier, six states had opted out of the scheme – Gujarat, Bihar, West Bengal, Andhra Pradesh, Telangana and Jharkhand – while Punjab, which at first declined to join the scheme citing secured irrigation and low indemnity level, later approved it for horticultural crops. However Andhra Pradesh, Telangana and Jharkhand have joined back and the Delhi government has agreed to come on board of crop insurance scheme.
Under PMFBY aims at providing comprehensive risk coverage from pre-sowing to post-harvest stages of crops, 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 with the exception of north-eastern states where the premium is split in a 9:1 ratio between the Centre and states.
Over 100 crops notified the crop insurance covers incidents including inundation, landslide, cyclone, hailstorm, drought and post-harvest losses.
Currently fourteen out of the 20 empanelled insurance companies, both in the public and private sector are implementing the scheme. The centre has incurred Rs 15,864 crore under PMFBY as per the revised estimate of FY25.