The government is likely to offer a host of insurance products such as personal, life and for tractors and cash for medical emergencies to farmers who benefit from the highly subsidised Pradhan Mantri Fasal Bima Yojana (PMFBY), as part of a plan to make it more attractive to the target population.
Sources told FE that through a ‘convergence’ model, intermediaries or agents of insurance broking firms will be added into the category of entities who can provide crop insurance to farmers.
However, the new products would be market-determined, and won’t involve any government subsidy.
Currently, only banks, post offices and common services centres (CSCs) are allowed to enrole farmers for the crop insurance scheme where a major chunk of premium is borne by the Centre and state governments.
In July, the agriculture ministry had launched intermediary enrolment (AIDE) mobile application which bring enrolment of farmers into crop insurance to the doorstep of farmers.
“In addition to crop insurance, farmers may also opt for some other insurance products which are not subsidised and the platform aims to provides all related insurance products,” an official said.
The official said that discussions are on even to bring in livestock insurance products into the crop insurance platform.
According to the agriculture ministry’s projection, coverage under the crop insurance is projected to touch a record 40 million farmers in 2023-24, which is an increase of 27% from the 31.5 million farmers enrolled in the previous year.
In terms of area, coverage of heavily subsidised PMFBY is likely to touch 60 million hectare in 2023-24, which is an increase of around 21% from the 2022-23.
Officials said that several states Gujarat, Andhra Pradesh, Telangana, Jharkhand, West Bengal and Bihar had exited the scheme, because of ‘higher cost of premium subsidy’ to be borne by them.
Subsequently Andhra Pradesh has rejoined the scheme and sources said that Jharkhand has shown willingness to come on board of PMFBY.
Under the PMFBY which is currently being implemented in 22 states and union territories, the premium to be paid by farmers is fixed at just 1.5% of the sum insured for rabi crops and 2% for kharif crops, while it is 5% for cash crops.
The balance premium is equally shared amongst the Centre and states and in case of North-Eastern states, the premium is split between the Centre and states in a 9:1 ratio.
Several states including Andhra Pradesh, Maharashtra, Odisha, Meghalaya and Puducherry have opted for universalisation of crop insurance scheme which implies that state government bears the cost farmers’ premium
The claim-premium ratio which was 99% in 2018-19 has declined to 68.2% in 2021-22; the claims for FY23 are still being settled.
Since the launch of the PMFBY in Kharif 2016, the gross premium collected has been around Rs 2 trillion till the end of FY23, against reported claims of Rs 1.5 trillion. The farmers’ share in premium so far has been Rs 29,235 crore.
It is optional for the farmers to opt for PMFBY. The centre has provided Rs 13,625 crore in the current fiscal for implementation of crop insurance scheme
Several insurance companies both the public and private sectors, are implementing crop insurance launched in 2016.