Cabinet approves fresh ₹69,515-crore outlay for crop insurance schemes

New Delhi: The union cabinet has cleared a ₹69,515-crore outlay for India’s crop insurance schemes and promised to keep prices of di-ammonium phosphate (DAP) fertiliser stable at ₹1,350 per 50 kg bag with additional support of up to ₹3,850 crore.

While approving the continuation of the to the Pradhan Mantri Fasal Bima Yojana (PMFBY) and the Restructured Weather Based Crop Insurance Scheme (RWBCIS) until FY26 and the crop-insurance outlay, the government also announced the creation of a Fund for Innovation and Technology (FIAT) worth ₹824.77 crore.

The outlay for enhancing the PMFBY and RWBCIS will be used for technological integration to ensure faster settlement of claims and easier enrollment of farmers, said union minister for information and broadcasting Ashwini Vaishnaw.

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To date, crop insurance has been provided to four crore farmers, the minister said, adding that 88% of these are small and marginal farmers. About ₹1.7 trillion has been disbursed as insurance payouts under the scheme in the past eight years, Vaishnaw added.

On the issue of delays in these disbursements, he said, “There are penalties imposed on insurers who delay the disbursal of claims, and a significant amount has been collected through penalties.”

The union and state governments will fund these schemes in a 50:50 ratio, except in Himalayan and north-eastern states, where the union government will provide 90% of the funding, the minister said. “All efforts are made and will continue to be made to saturate all farmers of northeastern states on priority. To this extent, the centre shares 90% of premium subsidy with northeastern states,” a government press release read.

DAP fertiliser package

The fertiliser package will be used to ensure sustainable availability of DAP at affordable prices to farmers by keeping the price of the fertiliser constant for them, with the surcharge on every bag being borne by the government. “The price of DAP fertiliser above ₹1,350 per 50 kg bag will be borne by the government,” Vaishnaw said. The allocation was in response to fluctuating prices of the fertiliser in international markets owing to global uncertainties and supply-chain disruptions.

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The package will be provided until further orders, and is over and above the approved nutrient-based subsidy (NBS), said a government press release. NBS is provided in a union government scheme for phosphatic and potassic fertilisers. In July 2024 the union cabinet approved a ₹2,625-crore package for a DAP fertiliser subsidy above and beyond the NBS. This package was operational until 31 December, 2024.

Vaishnaw said the price of a 50 kg bag of DAP fertiliser rose above ₹3,000 because of last year’s Red Sea Crisis, as transportation costs rose with cargo vessels travelling via the Cape of Good Hope in Africa. This one-time package has an outlay of up to ₹3,850 crore as fertiliser costs will be subsidised as and when necessary, since demand is seasonal, he added.

Vaishnaw also implored state governments to take legal action against anyone found selling DAP fertiliser to farmers for more than ₹1,350 per 50 kg.

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