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The 2017-18 subsidy bill for the states and the Centre due to the Pradhan Mantri Fasal Bima Yojna (PMFBY) is set to increase 10-15 per cent as the scheme enters the second year. The farmers’ coverage is expected to increase by 10-15 per cent. In several states, insurers have raised premium quotations by five-seven per cent. In 2016-17, the central government had shelled out around Rs 8,867 crore and states Rs 9,056 crore to subsidise the PMFBY, which gives farmers crop insurance at low premiums and higher coverage. “This year, there has been a 10-15 per cent increase in coverage area,” said an official of a public sector insurance firm. “In addition, in some western states, the premium has also increased by about 10-15 per cent on the basis of last year’s claim experience.” This year, insurers have mostly raised premium quotations by around 10 per cent in some western states, such as Gujarat and Rajasthan. In states such as Karnataka and Tamil Nadu, the increase has been around five-seven per cent. In eastern states, where the insurers had better claim ratio last year, the premium has come down by around five per cent, said insurers. “There has been a rise in premium in western states. In southern states, too, there has been a moderate rise in premium,” said an official from a private sector insurance firm. Premium collection in 2016-17 was Rs 22,337 crore and claims were about Rs 13,500 crore. The sum assured was about Rs 2,02,551 crore, covering nearly 57.10 million farmers and about 55.50 million hectares. Last year, data discrepancy had led to disputes about claim settlement in several states. According to insurers in several states, crop cutting experiments (CCE) were not properly conducted. CCE data at harvest helps assess yield loss.
But collecting the data requires substantial manpower. At present, state governments have the responsibility to conduct the experiments.In some cases, the experiments were not conducted on the date intimated to the insurers. In other states, data presented by the state government did not match ground realities. For example, in Gujarat, despite a bumper production of groundnut, the claim ratio determined by the state government has been as high as 200 per cent. In Rajasthan, crop cutting experiments were affected last year due to a strike by government-appointed accountants. In Tamil Nadu, the insurers had one of the highest claim ratios, exceeding 300 per cent, due to one of the worst droughts in the past 140 years. The PMFBY is based on actuarial calculations and rates are based on risk perception. Thus, premiums differ, based on crops and regions. However, a farmer pays only a flat two per cent premium; the rest is provided by the central and state governments. On an average, the premium comes to around 12 per cent, with the state and central governments bearing five per cent each.