Lok Sabha Question No. 4492 (UNSTARRED), answered on 2023-03-28
Subject: Budget Allocation in PMFBY
Ministry: AGRICULTURE AND FARMERS WELFARE
Asked by: Lavu Sri Krishna Devarayalu

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

## LOK SABHA UNSTARRED QUESTION NO. 4492

TO BE ANSWERED ON THE 28 TH  MARCH, 2023

## BUDGET ALLOCATION IN PMFBY

4492.  SHRI LAVU SRI KRISHNA DEVARAYALU:

Will the Minister of AGRICULTURE AND FARMERS WELFARE कृ षि एवं ककसान कल्याण मंत्री be pleased to state:

- (a) the amount spent on Pradhan Mantri Fasal Bima Yojana (PMFBY) against the budget allocation of Rs. 15,989 crore in the year 2021-22;
- (b) whether  the  Government  is  aware  that  insurance  firms  earned  a  gross  profit  of  Rs 15,792 crore in just two years after the rollout of the scheme across the country and if so, the details thereof;
- (c) whether it is true that insurance claims of many farmers have been rejected on flimsy grounds;
- (d) if so, the details of rejected applications in the State of Andhra Pradesh thereof; and
- (e) the  steps  taken  by  the  Government  to  monitor  the  functioning  of  the  insurance companies  to  ensure  they  do  not  exploit  the  scheme  to  earn  unfair  profits  at  the  cost  of farmers?

## ANSWER

(SHRI NARENDRA SINGH TOMAR)

MINISTER OF AGRICULTURE AND FARMERS WELFARE कृ षि एवं ककसान कल्याण मंत्री

- (a) : Out of Rs. 15,989.39 crore allocated at Revised Estimates 2021-22, Rs. 13902.79 crore were  spent  during  2021-22.      Only  funds  allocated  for  North  Eastern  States  could  not  be utilized due to low coverage in the region.
- (b)  :  As  regards  profit  and  loss  of  insurance  companies,  most  of  the  general  insurance companies  except  Agriculture  Insurance  Company  of  India  Ltd.  (AIC)  are  doing  different types of businesses/policies.  Thus overall profit/loss of these companies is due to profit/loss in  overall  underwriting  business  of  the  company.    However,  crop  insurance  is a major risk

mitigation tool for the benefit of farmers. Insurance is all about spreading the risk spatially & temporally.    As  per  provisions  of  the  PMFBY/RWBCIS,  premium  from  farmers  alongwith Central and State Government share in premium subsidy is paid to the concerned insurance company  for  acceptance  of  risk  and  payment  of  claims.    Insurers  save  premium  in  good seasons/years and pay high claims, if any, in bad years from the savings made in the good years.

Further,  difference  between  premium  collected  and  claims  paid  may  not  be  the margin/profit for the insurance companies as there is a cost of reinsurance and administrative cost which generally range upto 10% to 12% of gross premium.  This cost  also has to be borne  by  the  Insurance  Companies.    Out  of  the  total  crop  insurance  business  under  the scheme  about  50%  is  shared  by  the  5  Public  Sector  insurance  companies,  including Agriculture Insurance Company of India Ltd.

(c) & (d) :   The PMFBY is mainly implemented on 'Area Approach' basis.   Admissible claims are worked out and paid directly to the insured farmer's account by the insurance companies based on the season-end yield data, furnished to the concerned insurance company by the concerned  State  Government  and  claim  calculation  formula  envisaged  in  the  Operational Guidelines of the scheme.   Thus insurance companies have very little role in computing of claims under the scheme.

However, losses due to localized risks of hailstorm, landslide, inundation, cloud burst & natural fire and post-harvest losses due to cyclone, cyclonic/unseasonal rains & hailstorms are  calculated  on  individual  insured  farm  basis.      These  claims  are  assessed  by  a  joint committee  comprising  representatives  of  State  Government  and  concerned  insurance company.

For more transparency in calculation and payment of claims, Government has decided for auto-calculation of claims on National Crop Insurance Portal (NCIP) and disbursement of claims to individual farmer's account through Public Finance Management System (PFMS) from Kahrif 2022 season.

Andhra Pradesh had discontinued the scheme from 2020-21 and rejoined the scheme only in Kharif 2022 season only. Similarly, the State of Punjab, which had never been a part of the Scheme was recently made a Budget Announcement to join it from Kharif 2023.  This is indicative of growing acceptance of the schemes amongst all stakeholders.

(e)  :  This  Department  is  regularly  monitoring  the  functioning  of  insurance  companies  and implementation  of  PMFBY  including  timely  settlement  of  claims  and  through  weekly  video conference of stakeholders, one to one meetings with insurance companies/States etc.   Also to monitor the claim disbursal process fully an end to end module by the name of 'DigiClaim Module' has been made operational on 23.03.2023.  Henceforth, all claims will be settled by all  Insurance  Companies  on  this  module  helping  in  timely  and  transparent  processing. Further, a detailed performance evaluation matrix for evaluation of implementing insurance companies, containing key performance indicators with assigned weightage has provided in the Operational Guidelines of the scheme. Various innovative technologies are also adopted to increase the timeliness for flow of requisite information/data amongst stakeholders.

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