‘Opt out’ choice: Fasal Bima enrolment to fall 25%

A lower-than-anticipated fall in expected coverage will help insurance companies roll out their plans when the bids for premium will be invited after the lockdown.

By Prabhudatta Mishra

The government is expecting only a 25% drop in enrolment under the Pradhan Mantri Fasal Bima Yojana (PMFBY) in the next crop year even after the scheme was made voluntary by providing a choice to about 60% of farmers enrolled every year to ‘opt out’.

A lower-than-anticipated fall in expected coverage will help insurance companies roll out their plans when the bids for premium will be invited after the lockdown.

The ratio of loanee and non-loanee farmers under PMFBY last year was 6:4, and there will be no fall in enrolment of non-loanee farmers under both PMFBY and the weather-based crop insurance plan, a government official said. Even if there is a drop among loanee farmers, at least two-thirds who enrolled in this crop year (July-June) will not opt out. Overall, there may be 20-25% lower coverage while the earlier estimate was a 50% drop, the official added.

However, experts and private sector insurers said there may be only around a 10% fall as most farmers are unaware of the new clause. “By default, the banks will ensure all loanee farmers are covered unless farmers themselves inform in writing to ‘opt out’ of it. There is no ‘opt in’ provision for loanee farmers to enrol for PMFBY,” an insurance company official said.

Since the next season will be the first one after guidelines were changed and the enrolment may start next month, there is little time left to make farmers aware for the kharif crop, Skymet CEO Yogesh Patil said. The private weather forecaster is engaged in crop cutting experiment, which is the process to determine the yield of crops, by using satellite images and weather stations set up across the country.

There were about 5.38 crore enrolments under PMFBY and about 0.31 crore under the Weather-Based Crop Insurance Scheme during both kharif and rabi seasons of 2019-20. In total enrolments under both, the ratio of loanee and non-loanee farmers was 62:38. In WBCIS, loanee farmers constitute 77%.

Aimed at addressing the key challenges in PMFBY implementation and making it more pragmatic, the Centre in February made enrolment of loanee farmers voluntary, while putting ceilings of 30% and 25% on premiums against sum insured for its subsidy to be available for non-irrigated and irrigated areas, respectively, and extending the contract period for insurers to 3 years from 1 year, effective kharif 2020.