The state is considering rolling out its own insurance programme for farmers
Maharashtra may follow several other big states and opt out Pradhan Mantri Fasal Bima Yojana (PMFBY), the Narendra Modi government’s much-vaunted crop insurance scheme. India’s second-most populous state may replace the central scheme with its own — a step already adopted by states like West Bengal.
Farmer groups have already flagged irregularities in PMFBY at a February 1, 2022 meeting with Maharashtra agriculture minister Dadaji Bhuse and department officials. They demanded a new state-level programme.
The ministry is considering their views, he said, adding:
The department officials are studying all models running in other states which have opted out. We will talk to their agriculture officials on their experience and the farmers’ response.
The government is in an agreement with insurance companies under PMFBY, which will end by next year, he noted. “The state government can take steps then.”
PMFBY insures farmers against all non-preventable natural risks from pre-sowing to post-harvest. Farmers have to pay a maximum of 2 per cent of the total premium of the insured amount for kharif crops, 1.5 per cent for rabi food crops and oilseeds as well as 5 per cent for commercial / horticultural crops.
The balance premium is shared by the Union and state governments on a 50:50 basis and on a 90:10 basis in the case of northeastern states. Claims are worked out on the basis of shortfall in actual yield, vis-a-vis the threshold yield in the notified area.
However, despite the severity of crop loss due to extreme weather events increasing in recent years, the number of farmers opting for crop insurance has been declining. Andhra Pradesh, Jharkhand, Telangana, Bihar, Gujarat, Punjab and West Bengal — all predominantly agriculture states — have already opted out of the scheme. Some of these states have their own insurance schemes.
The two major issues on which the Maharashtra government is thinking of opting out are denial and delay of claims along with a huge subsidy burden on state governments.
Subsidy share is a financial burden on the government, the official said. “About Rs 3,000 crore goes as the state government’s share under PMFBY. The farmers are facing a problem with timely claim settlement.”
Moreover, the revamped guidelines on premium share have increased the burden. The full central share in the premium subsidy will be applicable only up to actuarial premium rate (APR) of 25 per cent and 30 per cent for irrigated and rainfed areas/district respectively, according to the guidelines in 2020.
This means that for a particular irrigated crop, if the premium rate is above 25 per cent for irrigated area and above 30 per cent for unirrigated or rainfed areas, the state has to contribute over and above that part.
Ravikant Tupkar, a leader of the Swabhimani Shetkari Sanghatana, who attended the Feb 1 meeting, said while the insurance companies are profiting from the scheme, farmers are not getting their due claims after they lose their crops to extreme weather events.
Tupkar said:
Instead of paying subsidies under this, the state government should invest that money in a new insurance model. If the PMFBY scheme was working fine, then why are states like Gujarat out of it?
The model of crop insurance in place in Maharashtra’s Beed district is also being studied by a central government panel set up to suggest suitable working models for PMFBY.
In the Beed model, there is a cap on the profit of the insurance companies. If the claims exceed the insurance cover, the state government pays the bridge amount. If the claims are less than the premium collected, the insurance company keeps 20 per cent of the amount as handling charges and reimburses the rest to the state government.
“The Beed model will reduce the state’s subsidy burden but we have to see if it is benefitting the farmers,” stated the agriculture official.
However, Tupkar said, the issues of delay in claim settlement and getting a fair amount still remains for farmers under the model.
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