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Farm insurance scheme rejigged for fast payouts
Claimants can get partial payouts proportionate to the Centre’s share on time while earlier guidelines stipulated that central funds were to be released only when states release theirs
The Union government has rejigged operational guidelines for the Pradhan Mantri Fasal Bima Yojana (PMFBY), the flagship subsidized farm insurance scheme, under which the Centre will release its share of premium even if the states don’t. The Centre hopes this will help to quicken settlements, an official said.
Claimants can get partial payouts proportionate to the Centre’s share on time while earlier guidelines stipulated that central funds were to be released only when states release theirs. Under the old framework, claims could only be settled once both the Centre and states released their subsidy shares in full.
The PMFBY is the country’s main subsidized crop insurance scheme, where farmers pay between 1.5% and 2% of the premiums depending on crop cycles. The remaining premium is shared 50:50 between the Centre and state governments. In case of northeastern states, the Centre pays 90% of the premium subsidy.
The agriculture ministry has also launched app-based enrolments of farmers from this kharif season. Using the AIDE app, authorized intermediaries will be able to enrol cultivators. Since July 1, nearly 31,000 applications have been processed insuring nearly 23,000 hectares, the official said.
From this year, the government will move to advanced digital technologies developed by the Indian Space Research Organisation to assess crop damage and yield losses to speed up settlements. The application, called YES-TECH, has been used for trials and pilot studies for two years before being standardised for the PMFBY by the Mahalanobis National Crop Forecasting Centre.
Many states have opted out of the scheme in recent years, swamped by delayed payments that make them politically unpopular. Assessment of crop damage is a time consuming process. Among many issues, disagreements over the claim to premium and claim settlements ratios are reasons for delayed payments to cultivators.
Two states, with significant impacts of heatwaves and high claims, which had opted out of the PMFBY, are back in. Andhra Pradesh, which sees dire hot spells in summers, rejoined in the PMFBY in 2022 and Punjab agreed to run the insurance scheme again from this year’s kharif or summer-sown season primarily to mitigate weather risks.
“The delinking of release of central share with states’ share will speed up settlements because some claims can be fully or partially settled from the Centre’s share,” the official said, seeking anonymity.
The changes in the financial guidelines follow after long-drawn discussions between states and the Centre to set up a joint corpus of funds for premium payouts, over which consensus could not be achieved.
Launched in June 2016, the PMFBY replaced a web of complicated, multiple farm insurance schemes, all running simultaneously, with a single countrywide plan.
“The reasons for delays were two-fold,” an insurance-provider executive said. One, assessing crop damage itself is a time consuming process, involving physical cutting and weighing of dried damaged crops to determine yield losses, technically called “crop-cutting experiments”. Secondly, fiscally burdened states often lagged deadlines for releasing their share of premium.
