PM Crop Cover Vaults India Into No. 3 Slot

Mumbai: India has emerged as the third-largest market for crop insurance worldwide, largely due to the Pradhan Mantri Fasal Bima Yojana (PMFBY). The programme has resulted in crop insurance becoming the largest line of business for national reinsurer GIC Re.
The US, with premium income of $12 billion, is the largest crop insurance market in the world followed by China, which generates $7 billion premium from farmers. Meanwhile, India’s premium income of Rs 27,000 crore translates into $3.8 billion.

The PMFBY scheme, which was launched in 2016, has given a big boost to the non-life industry. GIC, which generated nearly half its premium from overseas insurers, started getting 70% of its premium from India due to the PMFBY scheme.

According to GIC chairman Alice Vaidyan, the corporation was reducing the amount of risk it took on from domestic insurance companies, allowing foreign insurers to increase their share. GIC’s share, which was 52% in the first year, declined to 46% in the previous year and to 40% currently. While the claims on account of crop insurance were close to the premium income, Vaidyan said that the profitability of a business could not be judged by a year’s performance.

Responding to charges that claims were not being settled in time, Vaidyan said that the dispute was largely because states were not sending their share of premium in time, which in turn delayed settlement of claims. Under the scheme, the premium for the crop cover is paid by both the farmer and the state government.

The PMFBY scheme envisaged a flat premium of 2% for Kharif crops and 1.5% for Rabi crops and 5% for horticultural crops to be paid by the farmer. The difference between the market rates and the rates paid by the farmer would be borne by the government.

Vaidyan said that the PMFBY scheme is more sophisticated than the earlier schemes as it used drones and satellite imagery for determining yields. Also there is an online process for filing claims and hardly requires any manual intervention. “The coverage under the scheme started with 30% and is expected to go up to 50% of all farmers,” she said.

While there has been a delay in the monsoon this year, GIC officials are optimistic that there would not be major losses as a normal monsoon has been forecast.

Source: ToI

Image Courtesy: Narendra Modi