Pradhan Mantri Fasal Bima Yojana: Crop insurance plan to entail Rs 8.8K cr outgo

Under the scheme, farmers will pay 2 per cent of premium fixed by insurance firms for kharif crops and 1.5 per cent for rabi crops.

By: Express News Service | New Delhi | Published:January 14, 2016 1:59 am

The Union Cabinet on Wednesday approved the launch of Pradhan Mantri Fasal Bima Yojana (Prime Minister Crop Insurance Scheme) in which the premium rates to be paid by the farmers have been brought down substantially so as to enable more farmers avail insurance cover against crop loss on account of natural calamities. The scheme will come into effect from the upcoming kharif season.

Under the new scheme, farmers will have to pay a uniform premium of two per cent for all kharif crops and 1.5 per cent for all rabi crops. For annual commercial and horticultural crops, farmers will have to pay a premium of 5 per cent. The remaining share of the premium, as in previous schemes, will continue to be borne equally by the Centre and the respective state governments.

With farmers having been required to pay a premium share of as high as 15 per cent in several areas in the country, there has been a long-standing discussion on the need to bring down these rates. The Centre’s move to bring down and cap these interest rates is being viewed as a major government policy outreach towards the farmers.

The Centre currently has a bill of Rs 3,100 crore on account of its share of the premium for the 23 per cent crops that are currently insured in the country. Once 30 per cent of the crop comes under insurance cover, the Centre’s financial liability is estimated to go up to Rs 5,700 crore. This financial liability is expected to touch a whopping Rs 8,800 crore once the target of bringing 50 per cent crop under insurance is achieved in three years, officials said. As the Centre’s financial liability goes up, the bill of the states where the scheme gets implemented will also go up correspondingly.

Share This Article
Share
Related Article

Under PMFBY, there will no upper limit on government subsidy and even if balance premium is 90 per cent, it will be borne by the government. “Earlier, there was a provision of capping the premium rate which resulted in low claims being paid to farmers.

This capping was done to limit government outgo on the premium subsidy. This capping has now been removed and farmers will get claim against full sum insured without any reduction,” the government said. “The use of technology will be encouraged to a great extent. Smart phones will be used to capture and upload data of crop cutting to reduce the delays in claim payment to farmers. Remote sensing will be used to reduce the number of crop cutting experiments,” the government said. The new Crop Insurance Scheme will also seek to address a long standing demand of farmers and provide farm level assessment for localised calamities including hailstorms, unseasonal rains, landslides and inundation.

Calling it a “historic” decision, Union home minister Rajnath Singh said that this scheme will act like a “safety shield” for the farmers and will protect them against the vagaries of nature. “This new crop insurance scheme will have the lowest premium for farmers in the history of independent India. The new scheme has taken care of the anomalies in the existing two schemes and added new provisions,” Singh said.

Agriculture minister Radha Mohan Singh called it a “amrit yojana” and added that the scheme will also cover post-harvest losses.

For all the latest Business News, download Indian Express App

    Live Cricket Scores & Results