Remove cap on Union govt’s share in PMFBY, TN CM Stalin urges PM Modi

Tamil Nadu Chief Minister MK Stalin has urged Prime Minister Narendra Modi to remove the cap on the Union government’s share of premium subsidy under the Pradhan Mantri Fasal Bima Yojana (PMFBY) and revert to the old formula. Under the PMFBY scheme, the crop insurance premium was first shared in the ratio of 49:49:2 (49% each by the Union and the state governments and 2% by the farmers). "Now, the Union government’s share has been capped at 25$ for irrigated area and 30% for rain-fed area which leads to a large increase of the state share of premium subsidy by 12% (totally 61%)," Stalin said.

According to him, in money value, as per the revised sharing formula, Tamil Nadu's share of premium subsidy, which was only Rs 566 crore in 2016-17, has mounted by 239% to Rs 1,918 crore during 2020-21. "This has further increased to Rs 2,500 crore during 2021-22 due to exorbitant Actuarial Premium Rates (APR) quoted by the insurance companies empanelled by the Government of India. Thus, the financial implications on the state are causing a lot of concern," Stalin said.

The intention of capping the subsidy to bring down the APR has not happened in reality as insurers are continuing to quote exorbitant APR citing reasons like high loss ratio, inadequate financial capacity, and lack of support from reinsurers, he added. "The states are coerced to tweak the existing guidelines and adopt new co-insurance models increasing the risks to the states. Otherwise, the insurance companies refrain from bidding," Stalin said.

In the letter, Stalin mentioned that it is proposed to present a separate budget for agriculture during 2021-2022 for the first time in Tamil Nadu with three visions. The visions are increasing the area under cultivation, doubling the area cultivated more than once and achieving high productivity in food grains.