With only about half of the states opening escrow accounts for depositing their shares of premium in advance under highly subsidised Pradhan Mantri Fasal Bima Yojana (PMFBY), the agriculture ministry has sent a missive to remaining states to expedite the process so that claim settlements against the crop losses are settled without delay in the forthcoming rabi season.
Sources told FE that only 11 states out of 24 currently implementing crop insurance have opened escrow accounts, which was made mandatory by the ministry from last kharif, 2025 season.
An official said the remaining states have been told about the importance of opening escrow accounts soon prior to farmers taking up crop insurance for rabi or winter crops.
Such measures were necessitated by reports of delays in claims settlement under the scheme because of states’ inability to pay their share of funds on time and delays in updating data on the dedicated portal.
PMFBY provides comprehensive risk coverage from natural disasters (droughts, floods), pests, and diseases, post-harvest losses due to local risks like hailstorms and landslides. The 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.
The government has delinked payment of central share of premium subsidy from that of the state so that farmers can get proportionate claims.
Earlier in the week, agriculture minister Shivraj Singh Chouhan has urged for investigation into reports of parltry payment to farmers under the crop insurance scheme. He stated that the scheme was a boon for farmers to protect their crops from natural disasters. “However, some issues have tarnished its reputation and turned it into a subject of ridicule,” Chouhn said according to an official statement.
In addition, for ensuring fair and accurate assessment of crop yield which would faster settlement of insurance claims, the ministry has introduced YES-Tech (yield estimation system based on technology) to enable gradual migration towards remote sensing-based crop yield estimation.
A record 41 million farmers of the country’s 140 million farmers were enrolled under PMFBY in 2024-25 while 61.7 million hectare were covered. Out of the total enrolled farmers, 21.8 million were non-loanee and 18.4 million farmers took loans from the banks.
Over Rs 1.86 lakh crore has been paid to farmers under PMFBY since its launch in 2016 as compensation of which was five times of the total premiums of Rs 35,887 crore paid by them so far, according to the agriculture ministry.
Since its launch in kharif, 2016, 27 states and union territories have implemented the scheme in several seasons. However, Bihar, Telangana, Andhra Pradesh, Jharkhand, West Bengal and Gujarat opted out of the scheme for factors including financial constraints. However, Andhra Pradesh and Jharkhand have re-joined it.
According to ministry data, over Rs 1.86 lakh crore has been paid to farmers under PMFBY since its launch in 2016 as compensation of which was five times of the total premiums of Rs 35,887 crore paid by them so far.
Over 100 crops notified the crop insurance covers incidents including inundation, landslide, cyclone, hailstorm, drought and post-harvest losses.
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.