The Indian central government has asked state governments to set up their own insurance companies for better implementation of the crop insurance scheme, Pradhan Mantri Fasal Bima Yojna (PMFBY).
In a debate this week in the Lok Sabha, the lower house of Parliament, Agriculture Minister Radha Mohan Singh said there are implementation issues in the government’s flagship farm insurance scheme, which was launched in 2016.
“While assessing the first year’s implementation of PMFBY, we decided to allow states to set up their own insurance companies to implement the scheme,” he said.
He added that Gujarat and Punjab have already shown interest in this, reported the Indo-Asian News Service.
Mr Singh's comments echoed remarks he had made last week on Facebook Live. He said then: “Some states have said the premium amount is too much, which is putting pressure on them. So we asked them to form their own companies. Form companies and let there be competition.”
PMFBY is aimed at expanding coverage of farm insurance. Farmers pay 1.5% of the premium for winter crops, 2% for monsoon crops and 5% for commercial crops. The central government and the states pay equal amounts of the remaining premium. At present, several government owned and privately held insurers offer the PMFBY in a number of states.
As an indication of the burden of the scheme on public coffers, in the financial year ended March 2017, the central government had to drastically increase the subsidies to run the PMFBY from an original estimate of INR55 billion (US$854 million) to INR132.4 billion.
Crop insurance has emerged as the third largest line of business after motor insurance and health insurance in India following the implementation of the PMFBY. General insurance companies collected gross premiums of around INR194.25 billion under the PMFBY in the financial year ended March 2017 while claims were about INR168.1 billion.