india

Updated: Nov 27, 2018 08:10 IST

The Union government has introduced several norms tightening the Pradhan Mantri Fasal Bima Yojana (PMFBY), its flagship farm insurance scheme. One of the new rules taking effect on November 30, reviewed by Hindustan Times, says that claims of farmers not cleared by insurance firms within two months of harvest will be “automatically approved”.

As with any insurance policy, claims need to be approved by insurance firms for policyholders to get compensation.

The new rule means insurance firms will not be able to verify claims or carry out further checks to ascertain the validity of claims of farmers if they don’t do it within two months.

“Beyond the two-month deadline, all claims will be auto approved by the PMFBY portal (website),” an official said, requesting anonymity.

With this new “auto approval” guideline, the government hopes to deal with what a major reason of farmer angst concerning the scheme: delayed payments.

If farmers don’t get insurance payouts for one season in time, it affects their ability to invest in crops for the next season.

A centralized website governing the farm-insurance programme has been updated with an in-built feature to make this “auto approval feature” operational.

Among key changes to the politically important scheme, participating insurance companies will now have to spend 0.5% of the gross premium collected on raising “awareness about the scheme among farmers”.

State governments will have to devote 2% of their annual budget to a slew of measures tied to the farm insurance programme.

These include administrative expenses to speed up processing of claims. This 2% share will also go towards meeting expenses for yield and loss assessment, crucial for timely payouts.

The 2% share from the budget will also be used for purchase of smart phones through which yield losses need to be estimated via an android app developed for the purpose. Other expenses include setting up of state technical support teams.

According to Ashok Gulati, an economist with the think-tank ICRIER, if the Pradhan Mantri Fasal Bima Yojana scheme is to achieve its most critical goal — timely payouts to farmers — it can’t fly without a raft of highend technological fixes, from drones to even a new constellation of satellites for accurate crop damage assessments.

In an earlier round of changes, the government had decided to slap a 12% interest on insurance firms (to be paid to farmers) for delay of more than 2 months in claim settlement.

Moreover, a 12% interest must be paid by states too for delay of more than 3 months in releasing their state of subsidy. Under the Pradhan Mantri Fasal Bima Yojana, farmers have to pay between 1-2% of the total premium. The rest is shared between the Centre and states equally.