New Delhi Insurance firms owe sums running into several thousands of crore to farmers under the Pradhan Mantri Fasal Bima Yojana (PMFBY), a flagship state-run crop insurance scheme, despite a series of steps to ensure timely compensation, Union agriculture minister Shivraj Singh Chouhan said in a written reply in Lok Sabha on Tuesday.
Claims totaling ₹5405 crore across several seasons, or nearly 6% of overall applications for payouts, were pending under the scheme until the kharif or summer-sown season of 2024, according data cited in reply to a question by Hanuman Beniwal, an MP from the Rashtriya Loktantrik Party.
Disputes between state governments and insurance firms participating in the crop insurance programme, incorrect or delayed insurance proposals by banks and late release of subsidy share by states are key reasons for the unpaid claims, according to the reply.
In a separate remark during the question hour in the lower house, the agriculture minister said land owners can now authorize tenant farmers and sharecroppers who don’t own land to receive insurance benefits, a longstanding demand by many farm activists.
The PMFBY is a subsidised crop insurance scheme, where farmers pay between 1.5% and 2% of the premiums depending on crop cycles. The remaining share is shared 50:50 between the Centre and state governments. In case of northeastern states, the Centre pays 90% of the premium subsidy.
{{/usCountry}}The PMFBY is a subsidised crop insurance scheme, where farmers pay between 1.5% and 2% of the premiums depending on crop cycles. The remaining share is shared 50:50 between the Centre and state governments. In case of northeastern states, the Centre pays 90% of the premium subsidy.
{{/usCountry}}Under the scheme’s provisions, insurance firms need to pay within 21 days of a claim being filed, failing which insured cultivators are eligible for payment of 12% of the claimed amount. Likewise, if a state government causes delay in paying claims, then it has to pay a similar rate of fine.
State governments select insurance companies through a bidding process and enroll farmers for the scheme. Assessment of crop yield or crop loss for calculating admissible claims are done by state governments or a joint committee of state governments and participating insurance firms. Disagreements on admissibility of claims by farmers between states and insurance firms have been a key reason for delayed payouts.
Launched in June 2016, the PMFBY replaced a web of complicated, multiple farm insurance schemes, all running simultaneously, with a single countrywide plan. Protection of farm incomes from increasing climate-change induced deviations in rainfall and rising frequency of heatwaves will require more and more farmers to have access to efficient and cheaper farm insurance, according to a 2019 study by the Indian Institute of Management, Ahmedabad.
The Union government has delinked its share of premium subsidy from that of state governments, meaning even if states encounter a delay in releasing their share of subsidy farmers, can still get claims proportionate to the federal share.