Tamil Nadu

Stalin urges PM to remove the cap on Central share in crop insurance scheme

M.K. Stalin  

Tamil Nadu Chief Minister M.K. Stalin on Thursday wrote to Prime Minister Narendra Modi urging him to take necessary action urgently to remove the capping of Central share of premium subsidy under the Pradhan Mantri Fasal Bima Yojana (PMFBY) and revert to 49:49:2 ratio premium share for the welfare of the farming community in the State. Its financial implications on Tamil Nadu were causing a lot of concern, he contended.

Though the pattern of sharing in 2016-17 was 49:49:2 (i.e., Central, State and farmer’s share respectively), the Central share has been capped at 25% for the irrigated area and 30% for the rain-fed area, which leads to a large increase of the State share of premium subsidy by 12% (totally 61%), he pointed out in his letter to the Prime Minister. A copy of the communication was shared with the media.

“In money value, the State share of premium subsidy which was only ₹566 crore in 2016-17 has mounted by 239% to ₹1,918 crore during 2020-21, after the capping of the Central share of premium subsidy. This has further increased to ₹2,500 crore during 2021-22 due to exorbitant Actuarial Premium Rates (APR) quoted by the insurance companies empanelled by the Government of India. Thus, the financial implications on the State are causing a lot of concern,” Mr. Stalin underlined.

Though it was launched with the noble intention of mitigating the economic losses of farmers at the time of natural calamities, the PMFBY has become a heavy liability to the States over the years. The intention of capping the subsidy to bring down the APR has not happened in reality as the insurance companies are continuing to quote exorbitant APR citing reasons like high loss ratio, inadequate financial capacity and lack of support from reinsurers, the Chief Minister pointed out.

“The States are coerced to tweak the existing guidelines and adopt new co-insurance models increasing the risks to the States. Otherwise, the insurance companies refrain from bidding. As the State is already reeling under a severe financial crunch due to the COVID pandemic, the onus of bearing a huge State share of premium subsidy under PMFBY is unaffordable,” Mr. Stalin contended.

The capping of Central share of the premium subsidy, no doubt has been a “major detrimental factor” for implementation of the PMFBJ, he contended and went on to urge the PM to take necessary action urgently to remove the capping of the Central share of premium subsidy under PMFBY and revert to 49:49:2 ratio premium shares.

Mr. Stalin added that the State’s share of the premium subsidy has increased at a compound annual growth rate of 28.07% in the past five years. “This has stymied the very purpose of the scheme as the Government of Tamil Nadu is finding it difficult to sustain the continuance of the scheme due to increasing financial liability, that too during this pandemic period.”


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Printable version | Sep 17, 2021 10:43:03 AM | https://www.thehindu.com/news/national/tamil-nadu/stalin-urges-pm-to-remove-the-cap-on-central-share-in-crop-insurance-scheme/article35603175.ece

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