Chennai: Tamilnadu Chief Minister M K Stalin has urged Prime Minister Narendra Modi to remove the capping of Central share of premium subsidy under PMFBY and revert to 49:49:2 ratio premium share for the welfare of the farming community in the State.
In a letter to Modi, copies of which were released to the media here, Stalin said the state government has been taking a slew of measures to uplift the economic status of farmers by implementing farmer oriented welfare schemes with a comprehensive vision.
He said the ‘Pradhan Mantri Fasal Bima Yojana’ (PMFBY), which is one of the flagship schemes that provides a handholding support to the farmers at the time of any unforeseen eventualities, is successfully implemented by Tamilnadu, which has witnessed a huge growth in terms of area insured and farmers’ enrolment due to the sincere efforts and best practices adopted by the State under the scheme.
However, the State’s share of the premium subsidy has increased at a Compound Annual Growth Rate of 28.07 per cent in the last five years.
This has stymied the very purpose of the scheme as the State government is finding it difficult to sustain the continuance of the scheme due to increasing financial liability, that too during this pandemic period, the Chief Minister said.
Stalin said initially the pattern of sharing in 2016-17 was 49:49:2 (i.e., Central, State and farmer’s share respectively). Now, the Central share has been capped at 25 per cent for irrigated area and 30 per cent for rain-fed area which leads to a large increase of the State share of premium subsidy by 12 per cent (totally 61%).
“In money value, the State share of premium subsidy which was only Rs 566 crore in 2016-17 has mounted by 239 percent to Rs 1,918 crore during 2020-21, after the capping of Central Share of premium subsidy. This has further increased to Rs 2,500 crore during 2021-22 due to exorbitant Actuarial Premium Rates (APR) quoted by the insurance companies empanelled by the Union,” he said, adding, this financial implications on the State are causing a lot of concern.
The PMFBY scheme launched with the noble intention of mitigating the economic losses of farmers at the time of natural calamities 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, he said.
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 was already reeling under severe financial crunch due to Covid pandemic, the onus of bearing a huge State Share of Premium Subsidy under PMFBY is unaffordable.
There is no doubt, that the capping of Central share of the premium subsidy has been a major detrimental factor for implementation of thw PMFBY scheme which has been introduced to ensure a social security for farmers.
Stalin said his government has proposed to present a separate budget for agriculture during 2021-22 for the first time in Tamilnadu with three broad visions — increasing the area under cultivation, doubling the area cultivated more than once and achieving high productivity in food grains as to reinvigorate the agriculture sector.
Eventually, the State government is also bringing in a robust climate resilient cropping system to prevent the farmers from incurring any loss due to weather aberrations, he said.
