Farmers opt out of PM Fasal Bima Yojana; these 2 reasons likely made centre’s crop insurance less attractive

The total number of applications under single crop or multiple holdings scheme has fallen from 3.81 crore and 23.46 lakh in kharif 2019 to 2.75 crore and 3.07 lakh in the ongoing season.

Even as the Modi government steps up efforts to boost the agriculture sector, the farmers are rapidly opting out of the centre’s crop insurance scheme. The Pradhan Mantri Fasal Bima Yojana (PMFBY) has seen a sharp drop in the number of farmers covered and sums insured in the current kharif cropping season, reported The Indian Express. As on Monday, only 1.12 crore farmers had enrolled under PMFBY and another 2.45 lakh under the Weather Based Crop Insurance Scheme (WBCIS) during this kharif season, compared to 1.87 crore and 15.23 lakh, respectively, in 2019. The total number of applications under single crop or multiple holdings scheme has also fallen from 3.81 crore and 23.46 lakh in kharif 2019 to 2.75 crore and 3.07 lakh in the ongoing season.

Two major reasons that may have led to a sharp decline in PMFBY enrollment are higher premium subsidy, which is to be borne by the state government; and crop insurance being made optional. The report added that under both PMFBY and WBCIS, farmers pay premium rates amounting to just 2 per cent of the sum insured on kharif crops, while 1.5 per cent in rabi, and 5 per cent for annual horticultural crops.

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Eventually, the gap between these and the higher actuarial premiums, which are payable to insurance companies are to be met by the government subsidy on a 50:50 centre-state sharing formula. In 2019-20, gross premiums (kharif plus rabi) totaled Rs 27,298.87 crore, out of which farmers paid Rs 3,786.72 crore, while the rest came from the centre (Rs 11,275.92 crore) and state governments (Rs 12,236.24 crore), according to the paper.

Also, till 2019-20 rabi, all farmers taking seasonal agricultural operations or Kisan Credit Card loans from banks were covered compulsorily under PMFBY/WBCIS, with their premium contributions automatically deducted and remitted to insurance companies, but now, even so-called loanee farmers can opt-out by submitting the requisite declarations to the banks sanctioning the short-term crop loans.