The Ministry of Agricultural Development (MoAD) has sought an additional Rs 60 million from the Ministry of Finance (MoF) to extend subsidy on premium of crop, livestock and fowl insurance schemes.
The ministry has demanded the additional sum, as Rs 120 million allocated by the MoF at the beginning of this fiscal year is not likely to be sufficient to extend subsidy on premiums.
“We recently wrote to the MoF demanding the additional amount, as the amount allocated for this financial year is not going to be sufficient,” an official of the MoAD said.
High subsidy extended by the government on premium of crop, livestock and fowl insurance has rapidly raised demand for these schemes.
The government has been extending 75 per cent subsidy on insurance premium to farmers to insure crop, livestock and fowl since fiscal 2013-14.
According to the Ministry of Agricultural Development, farmers have insured crops, livestock and fowls worth Rs 3.67 billion in the first nine months of the current fiscal year.
To provide cover to these assets, farmers bought insurance policies worth Rs 167.15 million during the review period. Since 75 per cent of this premium cost is borne by the state, the government needs to release Rs 125.36 million to 17 non-life insurers.
Of this amount, a total of Rs 80 million has already been released to insurance companies via Insurance Board in first and second quadrimesters.
The MoAD has Rs 40 million left for the last quadrimester, however, the premium subsidy amount has exceeded the allocation by the end of the ninth month of the fiscal.
The MoAD had released Rs 21 million outstanding dues of premium subsidy from fiscal 2014-15 in this fiscal. As the total allocation for premium subsidy witnessed shortfall of Rs 5.36 million till the ninth month of the fiscal, the MoAD has sought an additional Rs 60 million from the Ministry of Finance to extend premium subsidy.
Insurers in fiscal 2014-15 had collected Rs 142.4 million in premium from crop, livestock and foul insurance and settled claims worth Rs 61.6 million, according to Kundan Sapkota, deputy director of the Insurance Board. During the first quadrimester of this fiscal, 17 non-life insurers settled claims worth Rs 21 million on crops, livestock and fowl insurance.