States owe staggering sums towards crop insurance subsidy: Centre tells Parliament

Delay in paying compensation for crops ruined by weather shocks and payment of subsidies can push millions of farmers into poverty, leaving them with little money for the next sowing season.
Farmers who opt for crop insurance have to pay 2% for kharif or summer-sown crops and 1.5% for rabi-sown food crops and oilseeds. (HT PHOTO.)
Farmers who opt for crop insurance have to pay 2% for kharif or summer-sown crops and 1.5% for rabi-sown food crops and oilseeds. (HT PHOTO.)
Published on Dec 01, 2021 09:14 PM IST
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Several large states have yet to pay thousands of crores towards their share of subsidy for premiums under the flagship farm insurance programme, the Pradhan Mantri Fasal Bima Yojana, delaying payouts to cultivators amid rising climate risks to farming.

Subsidy state governments owe over the past three financial years in a row stood at 4,744 crore as on November 24, 2021, according to figures revealed by agriculture minister Narendra Singh Tomar in Parliament in a written reply.

Premiums under the crop insurance premium are arrived at through a bidding process, depending on the nature of risks, cropping season and agro-climatic zones.

Farmers who opt for crop insurance have to pay 2% for kharif or summer-sown crops and 1.5% for rabi-sown food crops and oilseeds. For commercial and horticultural crops, cultivators have to pay 5% of the fixed premium. The balance is paid by the central and state governments, shared on a 50:50 basis. The share is 90:10 in case of north-eastern states.

Delay in paying compensation for crops ruined by weather shocks and payment of subsidies can push millions of farmers into poverty, leaving them with little money for the next sowing season. Also, payment delays hamper farmers’ ability to service their agricultural loans, pushing them closer to the brink of default.

For 2020-21, Maharashtra had the highest pending amount of 1,345.86 crore, the figures showed. Tamil Nadu owed the next highest sum of 879 crore, followed by Rajasthan’s 246 crore. The total pending amount for the year by states stands at 2,863.79 crore.

“Some states have not released their share of premium subsidies for certain seasons, however, any specific reasons for such default have not been communicated,” the minister said in his written reply.

For 2019-20, the total amount owed by states towards premium subsidy stood at 1,558.28 crore. Gujarat owes the highest amount at 858.72 for that year, followed by Telangana’s outstanding of 320.64 crore. For 2018-19, the total due pending from states stood at 321 crore.

The premium rate of crops depends on the risks and the total liability of the state depends on actuarial premium rate, sum insured of crops, the total area insured and the number of crops notified by the states.

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  • ABOUT THE AUTHOR

    Zia Haq reports on public policy, economy and agriculture. Particularly interested in development economics and growth theories.

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