Rising Premium Rate Under PMFBY Scheme A Blow To Farmers And Govt

Insurers say changing guidelines under the scheme have led to a rise in costs.

- Rajalakshmi Nirmal

With insurance companies increasing premium rates every year, farmers and the government (State and the Centre) are coughing up more under the Pradhan Mantri Fasal Bima Yojana scheme (PMFBY).

Sample this: In 2016-17, the premium rate was 10.75 per cent of the sum insured (SI). This increased to 12.36 per cent in 2017-18 and to 12.60 per cent in 2018-19. For 2019-20, the rates have gone up further during kharif, and is likely to be around 15 per cent for the full year.

The increase in premium rates has led to higher premium outgo, despite the minimal change in the gross cropped area covered under the scheme.

In 2018-19, the total premium paid to insurers under PMFBY was ₹29,429.6 crore, up from ₹25,480.8 crore in 2017-18 and ₹22,008.1 crore in 2016-17.

Given that a large portion of the premium under PMFBY is paid by the government, the higher premium outgo is pinching it year after year.