Centre allows states to have their own insurance agencies

The Centre has allowed states to establish their own insurance agencies to enrol farmers under Pradhan Mantri Fasal Bima Yojna. The decision in this regard was taken by the government after states raised their concern over the hefty amount being paid to insurance companies even if there is no crop loss.

The demand was raised by states during a review meeting of all agriculture ministers over the implementation of National Agriculture Market (NAM) and Soil Health Card.

The states raised the point that they are being 'compelled' to pay a huge amount as crop insurance premium to private companies registered under the Pradhan Mantri Fasal Bima Yojna.

"In case there is no loss of crop, the states wouldn't be 'forced' to pay the premium amount if they have their own insurance companies. So it would help in saving the public money, which could be utilised for other welfare schemes," an official said, who was present at the meeting.

The states, during the review meeting, stressed that they have been paying the insurance premium to private companies in crores for the last two years even when there is no crop loss. The hefty amount is turning out to be net profit for the ten registered firms, the states told the Centre.

Under the new crop insurance scheme, the private insurance companies have been paid Rs 17,184 as the premium amount in the year 2016 and out of that only Rs 6,804 crore was paid as the claim to farmers while remaining Rs 10,000 crore went into the coffers of insurance companies.

According to the official, when Union Agriculture Minister Radha Mohan Singh 'accepted' the state's demand, Rajasthan and Punjab announced setting up their own insurance agency during the review meeting.

The new crop insurance scheme was launched in April 2016 to enable farmers tide over chronic crop losses due to various calamities.