This Kharif season, PMFBY sees sharp fall in farmers covered, sums insured

The total number of applications – a farmer may avail insurance on more than one crop or for multiple holdings – under the two schemes have also fallen from 3.81 crore and 23.46 lakh in kharif 2019 to 2.75 crore and 3.07 lakh in the ongoing season. There have been similar declines in the aggregate sum insured (the maximum amount insurance companies would pay in the event of crop damage), area covered and gross premiums compared to the last two kharif seasons (see table).

“The figures won’t increase much, as the deadline for farmers to apply for insuring their crop was July 31 (kharif sowings are almost over by then). Although banks are given another 15 days to complete uploading of data on our national crop insurance portal, the total insured farmers this time will, at best ,be 70 per cent of last year,” admitted an official.

He gave two reasons for the lower numbers.

The first was the decision by the Telangana and Jharkhand governments to formally opt out of the Centre’s crop insurance schemes from this kharif. Gujarat and MP have also seemingly followed suit; neither has issued the notifications for their implementation this season and it’s too late now. AP chose not to join from the 2019-20 rabi season, while West Bengal and Bihar discontinued even earlier – from kharif 2019 and kharif 2018, respectively. Punjab had never participated in PMFBY right from its launch in kharif 2016.

The states that have registered the highest coverage under PMFBY and WBCIS this season are Maharashtra (Rs 21,219.52 crore of sum insured and 53.08 lakh hectares area), Rajasthan (Rs 20,167.71 crore and 72.07 lh), Chhattisgarh (Rs 8,064.90 crore and 20.56 lh), Haryana (Rs 6,012.23 crore and 7.70 lh) and Uttar Pradesh (Rs 5,431.78 crore and 10.69 lh). Interestingly, the first three are Opposition-ruled.

A major factor behind states pulling out is said to be the cost they incur on premium subsidy. Under both PMFBY and WBCIS, farmers pay premium rates amounting to just 2% of the sum insured on kharif crops, while 1.5% in rabi and 5% for annual horticultural crops. The gap between these and the higher actuarial premiums, based on statistical risk assessment, payable to insurance companies is to be met by government subsidy on a 50:50 Centre-State sharing formula. In 2019-20, gross premiums (kharif plus rabi) totaled Rs 27,298.87 crore, out of which farmers paid Rs 3,786.72 crore, while the rest came from the Centre (Rs 11,275.92 crore) and state governments (Rs 12,236.24 crore).

The second reason for farmer enrollment falling, the official explained, had to do with crop insurance being made optional with effect from this kharif season. Till 2019-20 rabi, all farmers taking seasonal agricultural operations/Kisan Credit Card loans from banks were covered compulsorily under PMFBY/WBCIS, with their premium contributions automatically deducted and remitted to insurance companies. But now, even so-called loanee farmers can opt out by submitting the requisite declarations to the banks sanctioning the short-term crop loans a week before the enrolment cut-off date.

“Since the schemes have become voluntary, many farmers chose not to avail their benefits, which reflects in the numbers,” the official added.