Contending that bearing the huge state share of premium subsidy under Pradhan Mantri Fasal Bima Yojana (PMFBY) is “unaffordable”, Tamil Nadu Chief Minister M K Stalin on Thursday wrote to Prime Minister Narendra Modi asking him to remove the Centre’s capping and revert to 49:49:2 ratio premium share.
In his letter, Stalin said Pradhan Mantri Fasal Bima Yojana (PMFBY), one of the flagship schemes that provide a “handholding support” to the farmers at the time of any unforeseen eventualities, is successfully implemented by Tamil Nadu.
Tamil Nadu 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, he said, adding that the state’s share of the premium subsidy has increased at a Compound Annual Growth Rate of 28.07 per cent in the last 5 years.
“This has stymied the very purpose of the scheme as the Government of Tamil Nadu is finding it difficult to sustain the continuance of the scheme due to increasing financial liability, that too during this pandemic period,” he said.
The scheme has become a “heavy liability” to the states over the years and 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.
“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 is 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,” Stalin wrote.
He also said there is no doubt that the capping of the Central share of the premium subsidy has been a major detrimental factor for the implementation of Pradhan Mantri Fasal Bima Yojana which has been introduced to ensure social security for farmers.
“I, therefore, request you to take necessary action urgently 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,” he said.