Centre Planning to Make Crop Insurance Voluntary to All Farmers

A senior government official on 15^th July 2019 said that the government is planning to make some changes to the Pradhan Mantri Fasal Bima Yojana (PMFBY). The key changes will include making crop insurance voluntary to all farmers, giving flexibility to states to provide customised add on products,  removal of high premium crops, etc.

The official said that the agriculture ministry has also proposed to Set-up State Level Corpus Fund & migration of savings to a National-level Insurance Risk Pool to suppress public view that insurance firms are making profits from the scheme. It has also recommended a premium ceiling for coverage under the scheme at 25% (to be revised every year) if the irrigated area within a crop is over 5%. A premium ceiling at 30% has been proposed if irrigated area within a crop is less than 50%, the official told.

PMFBY that was launched in April 2016 provides comprehensive crop insurance starting from the pre-sowing till the post-harvest period against non-preventable natural risks at very low premium rate of 2% for kharif crops, 1.5 % for rabi crops & 5 % for horticulture and commercial crops.

Among key changes, government has proposed making the scheme voluntary to all cultivators including loanee farmers too. It has suggested a two-step process of assessing crop yields essential for calculating the extent of crop damage. The first is elimination based on weather & other triggers, while the second step is crop cutting experiments (CCEs) in affected regions. At present, plots for carrying out CCEs are selected randomly leading to discontent among stakeholders.                      

In addition, the ministry has recommended migration to smart sampling and optimisation of crop cutting experiments in the short run & adoption of direct yield estimation via technology for all major crops, according to the official. As the district crop combinations with constantly high risk lead to rise in overall premium rates, the agriculture ministry has advised removing high premium crops from the ambit of crop insurance & suggested a premium ceiling at 25% if irrigated area within a crop is more than 50% and 30% premium limit if irrigated area within a crop is less than 50 %.

To deal with the delay in payment of state governments’ share of subsidy, the official told that the ministry has proposed deduction of overdue state subsidy from the central transfer to the states.

The ministry also proposed 3-year compulsory allocation of work to insurance companies to prevent repeated tendering process that delays completion of the scheme. It has also recommended migration of crops with inconsistent yield data to weather-based insurance scheme.