Overdue claims on crop insurance hit all-time high level

December 24 2019

When the Pradhan Mantri Fasal Bima Yojana (PMFBY), the country’s flagship crop insurance scheme was launched in June 2016, the idea was to replace complicated, multiple insurance schemes running simultaneously with one simple plan for the whole country. Any farmer with a crop loan gets enrolled automatically and pays between 1.5% and 2% of the premium, while the rest is shared 50:50 by the Centre and states.

Three years down the line, PMFBY has run into many of the old problems. The one most troubling issue for farmers is a continuous delay in payouts. The average delay in payment of claims, according to official data, is more than a year from the date of harvest.

Outstanding amounts owed by insurance companies to farmers have now reached nearly ₹3,000 crore until December 15, according to official data reviewed by HT. On October 31, the outstanding amount was ₹2,511 crore from the kharif, or summer-sown 2018 crop, season alone.

Delay in payouts can have domino effects. It leaves farmers short of funds to invest in their next sowing cycle. It also disrupts their ability to service their agricultural loans, pushing them closer to default. 

 

This news has not been edited by Apni Kheti staff but has been published by various news feeds

Source: The Economic Times