INSURANCE
Centre’s PMFBY scheme sees 15% decline in coverage
Aug-07-2018

Pradhan Mantri Fasal Bima Yojana (PMFBY), the Centre’s flagship crop insurance scheme has reported a 15% fall in coverage of farmers in its second year i.e. 2017-18 on account of the loan waiver announced by several states last year. Data on the crop insurance scheme, showed that farmers’ enrolment declined from 57.3 million in 2016-17 to 48.8 million in 2017-18 with Karnataka, Rajasthan, Uttar Pradesh, Bihar and Maharashtra reporting substantial decline.

Out of these five states, Karnataka, Rajasthan, UP and Maharashtra announced loan waiver schemes last year, affecting the footprint of the PMFBY scheme in 2017-18. Records showed that UP, Maharashtra and Karnataka announced their loan waiver schemes before the cut-off date for farmers to enrol for insurance for kharif crops under PMFBY in 2017. Similarly, Rajasthan had announced it before the rabi sowing season last year. The fall in coverage in Bihar, however, can be explained by the state’s resistance to PMFBY. Though it had opted for it in 2016-17, it developed cold feet the next year after facing delay in disbursal of claims in the first year of the scheme.

Meanwhile, the overall premium and claims under PMFBY Scheme increased in 2017-18 compared to 2016-17 despite decline in enrolment. Gross premium (shares of farmers, central government and state governments) increased from Rs 165 billion in kharif 2016 to Rs 195 billion in kharif 2017 while approved claims increased from Rs 104 billion to Rs 137 billion during the period. However, payment of claims did not increase at the same pace. Insurance companies had paid nearly Rs 102 billion to farmers as against the approved claims of Rs 104 billion for kharif 2016. But for kharif 2017, only Rs 118 billion has so far been paid to farmers against approved claims of Rs 137 billion, a clear indication that delay in disbursal has become the biggest bottleneck in successful implementation of PMFBY.

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