Revamped crop insurance scheme brings single peril risk cover, flexibility to be tested in Punjab, Haryana and western UP

NEW DELHI: For the first time, the Centre has come out with customised crop insurance (single peril insurance cover) for states by factoring in one specific natural disaster. Such insurance will first be made available in Punjab, parts of Haryana and western Uttar Pradesh where farmers are not generally hit by droughts or floods but have to suffer due to hailstorms.
This model, having low premium due to risk coverage against single extreme weather event, will be available to other states or Union Territories (UTs) as well under the existing Prime Minister Crop Insurance Scheme (PMFBY).
“States/UT can offer specific single peril risk/insurance cover under PMFBY even with or without opting for base cover,” said Ashish Kumar Bhutani CEO (PMFBY) and joint secretary in agriculture ministry on Friday.
Bhutani told TOI that the move, part of the revamped PMFBY as decided by the Union Cabinet, would help farmers in states like Punjab, Haryana and western UP where farmers generally do not face other risks such as drought due to assured irrigation facilities. “Farmers in such states have generally been victims of hailstorms. They may now voluntarily like to go for this low premium customised cover,” he said.
This model of providing cover against single extreme weather event may increase the footprints of the crop insurance scheme. Other states may opt for it by analysing impact of region-specific disaster without going for base cover which attracts higher premium.
The Centre will in due course provide more flexibility to states/UTs as a new separate scheme is in the pipeline, exclusively for farmers in 151 highly water stressed districts in Maharashtra, Rajasthan, Uttar Pradesh, Telangana, Tamil Nadu, Madhya Pradesh, Odisha and Jharkhand.
“Since the PMFBY is now made voluntary for all farmers, a separate scheme will provide effective risk mitigation tools in 151 districts. The existing scheme will continue till we come out with alternative risk mitigation programme,” said Bhutani.
The revamped PMFBY will also provide flexibility to states/UTs to implement the Scheme with option to select any or many of additional risk covers/features like prevented sowing, localised calamity, mid-season adversity, and post-harvest losses.
Under the revamped scheme, the Centre has not slashed its share of premium by 25% or 30% as interpreted by certain political parties and farm activists. The Centre has simply put ceiling of 30% and 25% on premium against sum insured for its subsidy for unirrigated and irrigated districts, respectively.
The move will not increase any burden on farmers as they will continue to pay premium rate of 2% for kharif (summer sown) crops, 1.5% for rabi (winter sown) crops and 5% for horticulture and commercial crops. The remaining premium amount, subject to the ceiling, will continue to be shared equally as subsidy between Centre and respective states.
States will have to pitch in with more only if premium breaches the 30% or 25% ceiling. New provisions will lead the states to work on mitigating risk factors so that the crops do not attract high premium. It will also prevent arbitrarily jacking up of premium of certain crops.
Officials believe that premium of certain crops in selected districts are currently high due to wrong choice of crops. “You should not go for paddy or other water guzzling crops in water stressed districts. This will jack up premium. The move of putting ceiling on premium will also help in crop diversification and rationalisation in such districts in due course,” said an official.
The revamped scheme will now make inroads to north-eastern states as it has increased the central share in premium subsidy to 90% for such states from the existing sharing pattern of 50:50. Arunachal Pradesh, Mizoram and Nagaland had not participated in the PMFBY as they could not even afford to provide premium subsidy under 50:50 share.