PMFBY: Working Group set up

The Central Government has set up a working group, with the aim of rolling out an overhauled Pradhan Mantri Fasal Bima Yojana (PMFBY) from kharif season 2022.

Key Points

• This working group has been constituted comprising of officials from Centre, top executives of public sector insurance companies and key crop-producing states.
• Working group will suggest “sustainable, financial and operational models.”
• It was constituted after several states quit the scheme, which in turn defeats the objective of protecting income of farmers.

Function of working group

This working group is expected to address the demand of alternative model, in order to achieve sustainable capacities of insurers as well to achieve rationalised premium pricing in order to cut subsidy burden on the government. It will submit its report in next six months.

Why this group was set up?

The working group will be set up as centre identified a hardening of premium market, inadequate underwriting capacity of insurers and lack of sufficient participation in tenders as major issues, impacting PMFBY during implementation of the scheme.

Premium under the scheme

Under the scheme, premium that farmers are required to fix is 1.5% of the sum insured for rabi crops while 2% for Kharif crops. It is 5% for cash crops under PMFBY. Rest of the premium is split between the Centre and states.

State’s demand

Some of the states have demanded to cap their share of the premium subsidy at 30%, while some states are demanding the Centre to bear entire subsidy.

Which states have exited the scheme?

Gujarat, Telangana, Andhra Pradesh, West Bengal, Jharkhand and Bihar have exited the scheme, till date. Punjab did not implement the crop insurance scheme. Bihar, Andhra Pradesh and West Bengal have launched their own schemes under which farmers do not pay any premium, however they receive a fixed compensation amount in case of crop failure.

Month: Current Affairs - October, 2021