Punjab Soon to Join PMFBY As Erratic Weather Wreaks Havoc on Crops

According to sources, The state government maintained that because most of its agrarian land is irrigated, erratic rainfall has no effect on crop production. However, unusually high temperatures that prevailed prior to wheat crop harvesting last year, as well as frequent unseasonal rains that caused crop losses in two consecutive years, have forced the state to pay around Rs 1,500 crore in compensation to paddy and cotton farmers.

The Punjab cabinet is currently working out details before making a formal announcement about joining PMFBY. Initially, the state would cover cotton and soybean farmers, with other crops being added later. Agriculture minister Narendra Singh Tomar recently stated that while Andhra Pradesh has rejoined the scheme, Punjab will do so soon.

States such as Gujarat, Andhra Pradesh, Telangana, Jharkhand, West Bengal, and Bihar withdrew from the scheme due to the 'higher cost of premium subsidy' that they would have to bear. Many states have requested that premium subsidies under PMFBY be capped.

According to an agriculture ministry official, Telangana, Gujarat, Bihar, West Bengal, and Jharkhand have been approached to rejoin the crop insurance scheme. "Telangana and Jharkhand have expressed interest in rejoining the scheme," the official said.

Farmers' premiums under the heavily subsidized PMFBY are set at 1.5% of the sum insured for Rabi crops, 2% for Kharif crops, and 5% for cash crops.

The balance premium is shared equally by the Centre and the states, except in the case of the North-Eastern states, where the premium is split 9:1 between the Centre and the states.

The government made the PMFBY voluntary for farmers in February 2020, after previously making insurance coverage under the scheme mandatory.

The government is currently restructuring the PMFBY through measures such as the use of artificial intelligence (AI)-based technologies for timely crop yield data assessment for prompt claims settlement and the implementation of competitive bidding for premium quotes from insurers. According to sources, the expenditure finance committee has approved it, and a formal notification is expected soon.

Under the new model, insurance companies would be required to pay farmers' claims ranging from 60% to 130% of the gross premium.

If the claims are less than 60% of the gross premium, the companies will refund the premium amount to the government, and if the claims are greater than 130% of the premium, the government will compensate the companies.

According to a recent statement by the agriculture ministry, farmers have paid a total of Rs 25,183 crore as premium since the scheme's inception in 2016-17 until 2021-22, with a total of Rs 1.3 trillion paid to farmers against their claims.

PMFBY is currently being implemented in 20 states/union territories, with the government allocating Rs 13,625 crore for its implementation in 2023-24. The crop insurance scheme is being implemented by ten insurance companies, both public and private.