Under the flagship Pradhan Mantri Fasal Bima Yojana, the Centre has appointed two separate groups of experts to suggest suitable working models with cost-benefit analysis that will lower crop insurance premiums and technology in crop yield estimation (PMFBY). This follows the withdrawal of several states from the scheme, including Gujarat, Andhra Pradesh, Telangana, Bihar, and West Bengal, citing high premiums.
"There are now two subcommittees that will submit their report to the working group, which was formed in September to examine alternate risk management mechanisms for rationalizing premiums," a government official said. On November 29 & December 2, the two subcommittees were formed.
According to the official, a ten-member committee led by Indian Space Research Organisation (ISRO) scientist KR Manjunath will investigate the feasibility of adopting 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.
Use of Drones
According to the NRSC, regular temporal intervals of satellite data enable monitoring of natural resources for effective management. However, the government has been considering the use of drones to capture yield data, as satellite images are also deemed ineffective in the presence of fog or cloud.
The other subcommittee, led by Saurabh Mishra, joint secretary in the Ministry of Finance, will conduct a cost-benefit analysis of all "accepted models – agriculture insurance pool, cup, and cap 80-110 percent and co-insurance 20-80%" as well as any profit-loss sharing model. The committee was also tasked with developing financial projections for the next five years, with corresponding assumptions in each model.
Apoorva Tatia of Reliance General, Alok Shukla of Munich Re, Azad Mishra of HDFC Ergo, and Siddhesh Ramasubramanian of AIC is also on this panel
In September, the government established a working group led by PMFBY CEO to investigate alternative risk management mechanisms and to propose financial and operational models with sustainable underwriting capacities and rationalized premium pricing. The working group has been given until March 13, 2022, to submit its report.
The balance premium is split equally between the Centre and the States under PMFBY after farmers pay a fixed premium-1.5 percent (of the sum insured) in the rabi season, 2% in the Kharif season, and 5% for cash crops. The premium is calculated using quotes from insurance companies in a cluster. The Centre has set the maximum premium at 30% in unirrigated areas and 25% in irrigated areas.
