Farmers opting for flagship farm insurance scheme at record high

According to official data, the number of farmers’ applications grew 33.4% and 41% year-on-year during 2022-23 and 2021-22 respectively

The number of farmers opting for the Modi government’s flagship farm insurance scheme has seen a jump for two years in a row, along with an improvement in other indicators, a review by the farm ministry shows, pointing to a rebound in a programme that has long been hobbled by large inefficiencies.

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 (HT)

A review of the PMFBY (Pradhan Mantri Fasal Bima Yojana) by the farm ministry, up until the current kharif or summer-sown season 2023 (until November 2023), showed a 28.9% increase in the number of cultivators who enrolled at 79.1 million, the most in six years.

Besides, the total area insured, another key indicator, stood at 30 million hectares, representing a growth of 24%, according to official data. Premium rates in the kharif or summer-cropping season also dipped by 32%, which has saved ₹10,500 crore, a sign of the scheme maturing.

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.

Launched in June 2016, the PMFBY replaced a web of complicated, multiple farm insurance schemes, all running simultaneously, with a single countrywide plan. Yet, the scheme’s biggest drawback has been delays in payment of insurance claims to farmers, the most important consideration for cultivators.

An official attributed an improvement in the scheme’s functioning to better monitoring, revisions in the scheme’s operational guidelines, integration of land records and introduction of digital technologies. “To process claims in a timely manner, the government now uses satellite-based advanced technologies to assess crop damage,” the official said.

To be sure, farmers still complain long delays in compensation payouts, mainly due to administrative issues. In a key revamp of operational guidelines of the scheme, the Centre now releases its share of premium even if the states don’t. Earlier, the Centre would disburse its share of premiums only after state governments released theirs. This change, the Centre hopes, will help to quicken settlements, an official said.

According to official data, the number of farmers’ applications grew 33.4% and 41% year-on-year during 2022-23 and 2021-22 respectively.

The improvement in these markers came after two years of poor performance marked by exit of farmers in 2020 and 2021. In 2020, the number of farmers enrolled had dropped 23% at 23.7 million. The following year, 2021, the number of participating farmers plunged by 10% at 16.3 million.

“Outstanding dues are still a problem. According to data presented in Parliament in July last year, claims worth ₹2761.10 crore were still pending till 2021-22. If farmers don’t get paid for crop losses in time, they can’t meet cultivation costs for the next season,” said Ravi Duggal, an independent farm expert.