Lok Sabha Question No. 423 (UNSTARRED), answered on 2019-11-19
Subject: Changes in PMFBY
Ministry: AGRICULTURE AND FARMERS WELFARE
Asked by: Sudheer Gupta, Bidyut Baran Mahato, Sanjay Sadashivrao Mandlik, Gajanan Chandrakant Kirtikar

## GOVERNMENT OF INDIA MINISTRY OF AGRICULTURE AND FARMERS WELFARE DEPARTMENT OF AGRICULTURE, COOPERATION AND FARMERS WELFARE

## LOK  SABHA UNSTARRED QUESTION NO.423

TO BE ANSWERED ON THE  19 TH  NOVEMBER, 2019

## CHANGES IN PMFBY

423.   SHRI SUDHEER GUPTA: SHRI BIDYUT BARAN MAHATO: SHRI SANJAY SADASHIV RAO MANDLIK: SHRI GAJANAN KIRTIKAR:

Will the Minister of AGRICULTURE AND FARMERS WELFARE कृ ष एवं कसान कयाण मंी be pleased to state:

- (a) whether  the  Government  is  considering  some  major  changes  to  its  flagship  farm insurance  scheme,  the  Pradhan    Mantri    Fasal    Bima    Yojana,  including  an  entirely  new model of agricultural insurance in the country;
- (b) if  so,  the  details  thereof  and the objectives behind this move along with the time by which the scheme is likely to be implemented;
- (c) whether the Union Government has sought the views of State Governments in this regard, if so, the details thereof and the response of the State Governments in this regard;
- (d) whether the Government is planning to create a 'risk pool' giving the Government a far greater control of key variables from fixing premiums to payouts and if so, the details thereof;
- (e) whether the Government proposes to put penalties on insurance companies for delay in payment to farmers in case of damage to crops and if so, the details thereof; and
- (f) whether  the  Government  proposed  to  set  up  an  agency  with  the  help  of  State Governments to take the work of pool and sort out all problems relating to insurance and if so, the details thereof?

## ANSWER

## MINISTER OF AGRICULTURE AND FARMERS WELFARE

कृ ष एवं कसान कयाण मंी ( SHRI NARENDRA SINGH TOMAR)

(a) to (f): The  amendment/revisions  in  the  crop  insurance  schemes  is  a  continuous process  and  decisions  on  it  are  taken  from  time  to  time  after  consultation  with  various stakeholders. However, during the implementation of the Pradhan Mantri Fasal Bima Yojana (PMFBY) various challenges have been faced despite the best efforts put in by States and other stakeholders.  Keeping this in view,  Operational  Guidelines of  the  scheme have been

revised  with  effect  from  Rabi  2018-19  season.      Reqeusts/representations  are  also  being received from various quarters including farmers' organizations, States etc. to further revise the  scheme.  In  view  of  this,  State  Agriculture  Ministers'  Conference  was  organized  on  8 th July, 2019 under the Chairmanship of Hon'ble Minister of Agriculture & Farmers Welfare at New Delhi to deliberate on the existing challenges in the scheme and way forward to address these challenges.  A detailed format containing the challenges and possible solutions was shared with the States and NITI Aayog for their comments.  A copy of the same is Annexed .

Some of  the  States  have  furnished  their  views/comments  on  proposed  changes  in favour of the proposed solutions.   But some have not agreed to all the solutions.  Based on the comments of States/NITI Aayog further deliberations are going on with all stakeholders.

A Provision of Penalties for insurance companies i.e. 12% interest rate per annum to be paid by the Insurance Company to farmers for delay in settlement claims beyond 10 days of prescribed cut off date for payment of claims has already made in the revised Operational Guidelines  of  PMFBY.      Similarly,  State  Government  have  to  pay  12%  interest  rate  to insurance company for delay in release of State share of Subsidy beyond three months of prescribed cut off date/submission of requisition by Insurance Companies.

Department of Agriculture,  Cooperation and Farmers Welfare has formed Technical Support  Unit  (TSU)  to  provide  technical  assistance  to  Crop  insurance  schemes.  TSU  has provided supporting analysis to several States helping them understand the quantified risk assessment of their respective States. TSU has also provided bid analysis support to State Govt.  of  Haryana,  Maharashtra,  Odisha,  Uttar  Pradesh  and  Chhattisgarh  helping  them  to review the bidded premium rates with insurance companies. Operational Guidelines of the scheme also provides for establishment of State TSU by the State Governments to ensure proper implementation of the scheme.

## Annexure

PMFBY -  Challenges and possible solutions as circulated to States/NITI Aayog

| Challenges in implementation of PMFBY                                                                                                                                                                                  | Proposed Solutions                                                                                                                                                                                                                                                                                                                                               |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Plots for conduct of CCEs are selected randomly leading to dissatisfaction among Stakeholders                                                                                                                          | 2 Step process for assessment of Yield  First step is elimination based on weather & other triggers  Second step is CCEs in affected areas                                                                                                                                                                                                                     |
| Plots for conduct of CCEs are selected randomly leading to dissatisfaction among Stakeholders                                                                                                                          | Migration to Smart Sampling and Optimization of CCEs in the short run                                                                                                                                                                                                                                                                                            |
| Plots for conduct of CCEs are selected randomly leading to dissatisfaction among Stakeholders                                                                                                                          | Adoption of direct yield estimation through technology for all major crops - By 2023                                                                                                                                                                                                                                                                             |
| District Crop combinations with consistently high risk leads to increase in overall premium rates                                                                                                                      | Removing "High Premium Crops" from the ambit of Crop Insurance e.g.  Irrigated areas within a crop in a district is more than 50% - Premium Ceiling for Coverage under PMFBY at 25% (to be revisited every year).  Irrigated areas within a crop in a district is less than 50% - Premium Ceiling for Coverage under PMFBY at 30% (to be revisited every year) |
| Compulsory enrolment of loanee farmers leads to dissent                                                                                                                                                                | Making the Scheme Voluntary for loanee farmers                                                                                                                                                                                                                                                                                                                   |
| Single Product type does not suffice needs of all beneficiary farmers                                                                                                                                                  | Provision of basic product available to all farmers with flexibility to States to provide customized add-on products to farmers                                                                                                                                                                                                                                  |
|  Savings are retained by insurance companies as profit leading to public perception that insurance companies are making profits from the Scheme  Demands from States to have their own Corpus Fund for management of | Migration to National-Level Insurance Risk Pool                                                                                                                                                                                                                                                                                                                  |
|  Savings are retained by insurance companies as profit leading to public perception that insurance companies are making profits from the Scheme  Demands from States to have their own Corpus Fund for management of | Creation of State Level Corpus Fund                                                                                                                                                                                                                                                                                                                              |
| Delay in payment of State Share of Subsidy - Amendment in OGs with a provision of penalty on States                                                                                                                    | Deduction of overdue State Subsidy from Central Transfer to States                                                                                                                                                                                                                                                                                               |
| Delay in approval of data on CCE app/Sharing of CCE yield data with Insurance Companies by State Governments                                                                                                           | Technology based claims settlement in case of delay in sharing of yield data/non-usage of CCE-agri app after cut-off date                                                                                                                                                                                                                                        |
| Low Investment by Insurance Companies in terms of accessibility and outreach due to short contract durations and repeated tendering process delays the overall implementation of crop insurance in States              | Compulsory 3-year allocation of work to ICs by States                                                                                                                                                                                                                                                                                                            |
| Inconsistencies in yields of many crops across geographies leading to high premium rates                                                                                                                               | Migration of crops with inconsistent yield data to Weather- Based Crop Insurance Scheme                                                                                                                                                                                                                                                                          |

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