- The Centre has decided to restrict its premium subsidy in its flagship crop insurance schemes to 30% for unirrigated areas and 25% for irrigated areas (from the existing unlimited)
- To make enrolment of farmers in the Pradhan Mantri Fasal Bima Yojana (PMFBY) and Restructured Weather Based Crop Insurance Scheme (RWBCIS) voluntary from the 2020 Kharif season.
- The government has given flexibility to states/UTs to implement PMFBY and RWBCIS, and given them the option to select any number of additional risk covers/features like prevented sowing, localised calamity, mid-season adversity, and post-harvest losses.
- At present, under PMFBY and RWBCIS, farmers pay a premium of 2% of the sum insured for all foodgrains and oilseeds crops of Kharif; 1.5% for all foodgrains and oilseeds crops of Rabi; and 5% for all horticultural crops.
- The difference between actual premium rate and the rate of insurance premium payable by farmers, which is called the Rate of Normal Premium Subsidy, is shared equally between the Centre and the states.
- During 2018-19, about 5.64 crore farmers are enrolled with PMFBY for an insured sum of Rs 2,35,277 crore, and 30% of the gross cropped is insured.
- When the government approved PMFBY four years ago, it was described as a path-breaking scheme for farmers’ welfare” under which there was no upper limit on government subsidy.
- Bring down the rates of overall premium as the state governments
- It will make these schemes less attractive for farmers.
- One interpretation of this decision is that the burden of premium subsidy will go up for the states.
- The state has to bear the entire burden of the premium subsidy in cases where the rate of premium goes beyond the threshold of 30%.
- Another interpretation is that the Centre may stop supporting insurance of certain crops in certain areas where the rate of premium is more than 30%.
- The Department of Agriculture, Cooperation and Farmers Welfare in consultation with other stakeholders/agencies will have to prepare State specific, alternative risk mitigation programme for crops/areas having high rate of premium.
- The states are already defaulting on their share, and the Centre’s new cap will put an additional financial burden on them.
- Madhya Pradesh has not paid its share of premium even for Kharif 2018, which comes to Rs 1,500 crore. As a result, farmers have not got their claims.
- That move will lead to a rise in the rates of premium, as the area covered under insurance and the number of enrolled farmers is expected to come down significantly.
- Rate of premium of certain crops in some areas may go beyond 30%.
- Flagship Crop insurance schemes of Central government are:
- RWBCIS -Restructured Weather Based Crop Insurance Scheme
- PMFBY – Pradhan Mantri Fasal Bima Yojana
- Launched in 2016 after rolling back the earlier insurance schemes viz. National Agriculture Insurance Scheme (NAIS) and Modified National Agricultural Insurance Scheme (MNAIS).
- Premium: Farmers need to pay uniform premium of only 2% of insured amount for Kharif crops, 1.5% for Rabi crops and 5% for horticulture crops.
- During 2018-19, about 5.64 crore farmers are enrolled with PMFBY for an insured sum of Rs 2,35,277 crore, and 30% of the gross cropped is insured.
- During 2018-19, an amount of Rs 29,105 crore was collected as gross premium under PMFBY and RWBCIS, which included farmers’ share of Rs 4,918 crore and share of Rs 12,034 crore each by Centre & States
- Restructured Weather Based Crop Insurance Scheme (RWBCIS) was launched in 2016 and is being administered by the Ministry of Agriculture and Farmers Welfare.
- It aims to mitigate the hardship of the insured farmers against the likelihood of financial loss on account of anticipated crop loss resulting from adverse weather conditions relating to rainfall, temperature, wind, humidity etc.
- Reduced Share of the Centre
- Voluntary Enrollment
- Flexibility to Select Risk Cover
- Cut-off Dates for State to Release its Share
- Compulsory Serving Time Period for Insurance Firms
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