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To woo insurance companies and rationalize premiums, the government is preparing to reform the Pradhan Mantri Fasal Bima Yojana (PMFBY).
The Center is planning to rationalize premium rates and revamp the program to encourage insurers’ participation in the government-run Pradhan Mantri Fasal Bima Yojana (PMFBY) amid reports of some insurers making profits. .
According to sources, potentially significant changes in the scheme will be implemented from the 2023-24 crop year (July-June) after the approval of the cabinet.
The Pradhan Mantri Fasal Bima Yojana (PMFBY), launched in February 2016, aims to provide financial assistance to farmers suffering crop loss or damage due to natural calamities.
Under this scheme, the maximum premium payable by farmers is two per cent for all food and oilseed crops grown in Kharif (summer) season while 1.5 per cent for similar crops grown in Rabi (winter) season and commercial and horticulture crops. 5 percent for crops.
The difference between the premium payable by the farmers and the rate of insurance fee is paid equally by the Center and the states.
The scheme was last amended in the year 2020 to ensure voluntary participation of farmers and to prepare crop loss reports within 72 hours in any case.
According to official sources, the government felt the need for more reforms in the PMFBY scheme because the risk of insurance companies was decreasing in this. Experts believe that due to lack of competition, existing insurers have started charging higher premium rates.
Insurance companies for Pradhan Mantri Fasal Bima Yojana are empaneled for three crop years through a tender process. Around 18 insurance companies were empaneled for the period 2019-20 to 2022-23. However, eight of them dropped out later and ten companies are now participating in the scheme.