Insurance companies are likely to pay farmers heavy compensation as dry weather in June and floods in September damaged crops particularly in Maharashtra, where the outgo may be more than Rs 10,000 crore, agriculture ministry officials said.
Total claims for this year’s summer-sown, or kharif, season are estimated to be about Rs 18,000 crore, which is close to the previous fiscals’ approved claims of a little over Rs 19,000 crore, which included the winter crop also, a government official said.
Payment for damaged rice, cotton, oilseeds, pulses, sugarcane and horticulture crops will be paid under the Pradhan Mantri Fasal Bima Yoja (PMFBY) launched in 2016 in which a farmer contributes only 1.5% to 2% of the insurance cost and the balance is shared by the Centre and states.
Apart from Maharashtra, where farmers may get Rs 10,000 crore to Rs 11,000 crore, officials have estimated payout of Rs 4,000 crore in Madhya Pradesh, and Rs 1,000 crore to Rs 1,200 crore each in Karnataka and Andhra Pradesh. Compensation in other states would not be big as crop losses are estimated to be low, officials estimate.
“Surveys for the assessment of losses are on in these states. Preliminary surveys have indicated large scale of damages and huge estimated payouts. The picture will become more clear when claims settle by February-end. Insurance companies will have to take a major hit,” said a senior agriculture ministry official, who deals with crop insurance.
According to latest data from agriculture ministry, 22.8 million farmers from these four states have been covered under PMFBY, comprising 57.5% of the total 39.65 million insured farmers across the country in this kharif season.
“This year, we have paid a premium of over Rs 20,000 crore for the risk cover of crops worth Rs 1.3 lakh crore. As per the estimations of the quantum of crop losses, we expect a claim payment of over Rs 18,000 crore,” the official said.
This year, the incurred claim ratio, which refers to the claims paid as against the premiums earned, is also likely to be highest ever.
“It will be in excess of 92%. Earlier, the claim ratio was 76% in 2016 followed by 86% in 2017 and 75% in 2018,” the official said.
Source – https://economictimes.indiatimes.com