Government Increase Coverage under PMFBY
As the Fasal Bima Yojna allocation is raised to Rs. 13,240 crores next fiscal, from Rs. 5,500 crores now, general insurance companies are in for a bumper revenue growth next year.
Under Pradhan Mantri Fasal Bima Yojana, for the next financial year the government announced increasing coverage to Rs 13,240 crore. The scheme will target to cover 40% of the crop area next year and 50% year after.
Under crop insurance for both Rabi and Kharif products, the government had allotted Rs 5,500 crore as per the current scheme and there is no capping the premium rate and farmers will get claims against the full sum insured, without any reduction.
As farmers rushed to cover their crops for both the season after having seen huge claims in the previous two years due to rainfall, the industry saw big push from the government. The government also expects agriculture to grow at 4.1%.
Farmer’s contribution towards premium has been decreased to as low as 2% to be paid by farmers for kharif crops, and 1.5% for rabi crops making it possible to include the small and medium farmers to avail crop insurance under the Fasal Bima Yojana. The premium for annual commercial and horticultural crops is 5% and non-loanee farmers such as share-croppers are included under the scheme.
The empanelled group of insurers is Agriculture Insurance Company of India (AIC) and 10 other organisations including ICICI-Lombard General Insurance, HDFC-ERGO General Insurance, IFFCO-Tokio General Insurance and SBI General Insurance.
Many states like Andhra Pradesh, Jharkhand, Odisha, West Bengal, Himachal Pradesh, Uttarakhand and Andhra Pradesh gives the positive responses and have awarded contracts to the insurance companies to provide crop insurance coverage to farmers.
Maharashtra has allocated Rs 1,855 crore in the state budget of 2016-17 for drought-hit, so many drought-hit states have increased fund allocation under PMFBY significantly.