New Delhi: The government’s farm insurance scheme is in for a revamp just about one year after launch, with the focus now on increasing competition among insurers, lowering the average premium and widening the scope of cover to include losses due to natural disasters.
There is tremendous potential to improve the Pradhan Mantri Fasal Bima Yojana started last year and a high-level team has asked to make it more holistic in coverage and a win-win proposition for all parties, a senior government official working closely on revamping the scheme told ET.
“There is a need to make agriculture insurance more competitive. This can be done by increasing competition among insurance companies, which in turn will lower the premium charged and thus make it more attractive for farmers,” the official said on condition of anonymity. Under the existing scheme, farmers pay 1.5 per cent to 2 per cent as premium for most crops compared with the average of 11 per cent charged by insurance companies, and the remainder is equally divided and paid by the Centre and the state.
The official said coverage under the insurance scheme may be widened to include damage and loss to housing and property in the event of a natural disaster. So far, such damage was covered by the National Disaster Response Fund.
The government estimates farmers have paid premium of Rs 2,000 crore, while claims worth Rs 8,000 crore have been paid and another Rs 2,000 crore are in pipeline for settlement.
The scheme now covers 30 per cent of the gross cropped area. Prime Minister Narendra Modi had tasked think tank Niti Aayog with suggesting ways to improve the government’s flagship farm insurance scheme, which has faced criticism for tardy implementation and being skewed in favour of insurers. The Niti Aayog, under member Ramesh Chand, has prepared a blueprint to make the scheme more robust and wide ranging.
Launched on August 5, 2016, the farm insurance scheme was the first of its kind in the country, aimed at providing farmers with an inexpensive option of sustaining cultivation even if yield is damaged. The agriculture sector in the country is under pressure with rising input costs, failing crops and falling prices adding to the debt burden of farmers. Many states have seen unrest by farmers, even leading to suicides, forcing state governments to waive loans, a measure that critics say is a stop-gap arrangement and not a solution.
There is tremendous potential to improve the Pradhan Mantri Fasal Bima Yojana started last year and a high-level team has asked to make it more holistic in coverage and a win-win proposition for all parties, a senior government official working closely on revamping the scheme told ET.
“There is a need to make agriculture insurance more competitive. This can be done by increasing competition among insurance companies, which in turn will lower the premium charged and thus make it more attractive for farmers,” the official said on condition of anonymity. Under the existing scheme, farmers pay 1.5 per cent to 2 per cent as premium for most crops compared with the average of 11 per cent charged by insurance companies, and the remainder is equally divided and paid by the Centre and the state.
The official said coverage under the insurance scheme may be widened to include damage and loss to housing and property in the event of a natural disaster. So far, such damage was covered by the National Disaster Response Fund.
The government estimates farmers have paid premium of Rs 2,000 crore, while claims worth Rs 8,000 crore have been paid and another Rs 2,000 crore are in pipeline for settlement.
The scheme now covers 30 per cent of the gross cropped area. Prime Minister Narendra Modi had tasked think tank Niti Aayog with suggesting ways to improve the government’s flagship farm insurance scheme, which has faced criticism for tardy implementation and being skewed in favour of insurers. The Niti Aayog, under member Ramesh Chand, has prepared a blueprint to make the scheme more robust and wide ranging.
Launched on August 5, 2016, the farm insurance scheme was the first of its kind in the country, aimed at providing farmers with an inexpensive option of sustaining cultivation even if yield is damaged. The agriculture sector in the country is under pressure with rising input costs, failing crops and falling prices adding to the debt burden of farmers. Many states have seen unrest by farmers, even leading to suicides, forcing state governments to waive loans, a measure that critics say is a stop-gap arrangement and not a solution.