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The Centre has appointed two separate groups of experts to suggest suitable working models with cost benefit analysis that will lower crop insurance premium and technology in crop yield estimation under the flagship Pradhan Mantri Fasal Bima Yojana (PMFBY). This follows the exit of several States including Gujarat, Andhra Pradesh, Telangana, Bihar and West Bengal from the scheme, citing high premium.
“There are now two sub-committees which will submit their report by January 10 to the working group, constituted in September to examine alternate risk management mechanisms for rationalising the premiums,” a government official said. The two sub-committees were formed on November 29 and December 2.
A ten-member committee under scientist KR Manjunath of Indian Space Research Organisation (ISRO) will explore the feasibility of adoption of various technology-based approaches developed through pilot projects by ISRO and its arm National Remote Sensing Centre (NRSC) as well as Mahalanobis National Crop Forecast Centre (MNCFC) of the Union Agriculture Ministry, the official said.
Using drones
According to NRSC, satellite data at regular temporal interval enables monitoring of the natural resources for their effective management. However, the government has also been considering to utilise drones to capture yield data as satellite images are also considered not effective in case of fog or cloud.
The other sub-committee, headed by Saurabh Mishra, joint secretary in Ministry of Finance, will conduct cost benefit analysis of all “accepted models – agriculture insurance pool, cup and cap 80-110 per cent and co-insurance 20-80 per cent” as well as any profit-loss sharing model. The committee has also been tasked to provide financial projections for next five years with corresponding assumptions in each model.
Other members of this panel include Apoorva Tatia of Reliance General, Alok Shukla of Munich Re, Azad Mishra of HDFC Ergo, Siddhesh Ramasubramanian of AIC.
In September, the government had formed the working group under PMFBY CEO to examine alternate risk management mechanism and suggest financial and operational models with sustainable underwriting capacities and rationalised premium pricing. The working group has been asked to submit its report by March 13, 2022.
Under PMFBY, the balance premium is split equally between the Centre and States after farmers pay a fixed premium – 1.5 per cent (of sum insured) in rabi season, 2 per cent in kharif and 5 per cent for cash crops. The premium is arrived at based on quotations from insurance companies in a cluster. The Centre has capped maximum premium at 30 per cent in un-irrigated areas, 25 per cent in irrigated areas.
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