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Rise in crude prices poses risk to India's current account deficit: Report

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Crude oil prices may rise further in the coming months, following which India's current account deficit will be around 2.4 percent in 2018-19, says a Goldman Sachs report. According to the global financial services major, the rise in international crude prices poses risks to India's current account deficit.

"Our commodities team expects oil prices to continue to rise over the course of this summer, before moderating slightly at the end of the year. We recently increased our 2018-19 current account deficit (CAD)forecast to 2.4 percent of GDP (from 2.1 percent of GDP earlier)," Goldman Sachs said in a research note.

CAD widened to 2 percent or USD 13.5 billion in the October-December quarter of 2017, up from 1.4 percent, or USD 8 billion, in the corresponding period a year ago.

Globally, brent broke through the USD 80 a barrel mark yesterday for the first time since November 2014.

"The recent spike in oil prices following the withdrawal of the US from the Iran nuclear deal poses additional upside risks to our headline inflation forecast. We estimate that a 10 percent increase in crude oil prices leads headline inflation to rise by 10 basis points," the report noted.

Goldman Sachs forecasts 2018-19 headline CPI inflation to average 5.3 percent.

On RBI's policy stance, the report said, a more hawkish stance by the central bank is likely following a weaker currency (the rupee has depreciated by 6.6 percent against the US dollar year-to-date) and concerns over a rising current account and fiscal deficit.

The Reserve Bank will announce its second bi-monthly monetary policy on June 6.

"We expect RBI to keep policy rates on hold at its meeting on June 4-6, but shift to a hawkish tone," it noted.

The first bi-monthly monetary policy meeting of 2018-19 was held on April 4-5 and the panel had decided to maintain status quo on the interest rate citing inflationary concerns.

Private sectors of India, US and Japan have key role in development of Indo-pacific: Official

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The private sectors from India, the US and Japan have a key role to play in the development of infrastructure in the Indo-Pacific which has "vast opportunities" for the companies of the three countries to be the "pioneers" in the region, a senior American diplomat has said.

Acting Deputy Assistant Secretary for South Asia Thomas Vajda said the private sector played a central role in developing the connectivity and networks that promote prosperity.

Vajda welcomed the recent initiative of US Chambers of Commerce to create Indo-Pacific Infrastructure Trilateral Forum, which brings together private sector companies from India, the US and Japan for building infrastructure in the region.

"In addition to the work of governments, it is essential to remember the central role the private sector plays in developing the connectivity and networks that promote prosperity and bring us closer together," Vajda told PTI.

"There are vast opportunities for our companies to be pioneers in this area," he said after US India Business Council (USIBC) and US Japan Business Council (USJBC) the two international wings of US Chambers of Commerce - launched Indo-Pacific Infrastructure Trilateral Forum early this week.

"We are grateful that USIBC and USJBC are leading the charge by hosting engagements such as the Indo-Pacific Infrastructure Trilateral Forum, which help support quality, best value, and sustainable infrastructure development in the Indo-Pacific region," he said.

As one of the primary architects of the region's security and economic systems, the US has a strong interest in seeing the Indo-Pacific continues to thrive, Vajda said.

"We firmly believe that upholding a free and open Indo-Pacific begins with working alongside our like-minded partners to ensure the freedom of the seas and skies, promote market-based economics, support good governance and liberty and insulate sovereign nations from external coercion," he said.

"We remain committed to this region because its success is, and has always been, collectively, our success," he said.

Recognising the massive and pressing need for infrastructure investment in the Indo-Pacific, the State Department in February hosted delegations from Japan and India in Washington for an inaugural Trilateral Infrastructure Working Group meeting, he added.

Subsequently, the Acting Assistant Secretaries from the South Asian and East Asian Bureaus travelled to New Delhi in April for a successful US-India-Japan Trilateral Dialogue.

First crude oil cargo from Abu Dhabi departs for Mangalore's strategic crude oil reserve

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The first consignment of 2 million barrels of crude oil from the UAE for India's strategic petroleum reserve at Mangalore is en-route to India and will help it deal with supply side disruptions, Minister for Petroleum and Natural Gas Dharmendra Pradhan has said.

The cargo is the first under an agreement between Abu Dhabi National Oil Company (ADNOC) and the Indian Strategic Petroleum Reserves Ltd (ISPRL), an Indian government-owned company mandated to store crude oil for strategic needs.

The loading of approximately 2 million barrels of ADNOC crude oil was witnessed by Pradhan and Sultan Ahmed Al Jaber, UAE Minister of State and ADNOC Group CEO, at a ceremony in Abu Dhabi yesterday.

Speaking on the occasion, Pradhan said: "The UAE is the first country to invest in India's Strategic Reserves Programme. This important partnership will further strengthen the close energy cooperation that exists between India and the UAE and builds on the historic acquisition of a stake in the Lower Zakum offshore concession by Indian companies."

In February, ONGC Videsh Ltd and its partners had acquired a 10 percent in the Lower Zakum offshore oilfield in Abu Dhabi for USD 600 million.

"The strategic reserve will provide a boost to India's energy security and help us deal with supply side disruptions. While part of the stored oil will be used for commercial purposes by ADNOC, the major part will be purely for strategic purposes.”

Al Jaber said that the strategic reserve project represents an important new energy partnership with India that leverages the UAE and ADNOC's expertise and oil resources. "With this partnership, new market opportunities will open up for ADNOC, as we not only help to ensure the energy security of the UAE's largest trading partner, but also gain greater access to one of the fastest-growing markets for high-quality crude oil. Our increased presence in India, will also catalyse demand for our own refined and petrochemical products," he said.

Indian energy demand is forecast by the International Energy Agency (IEA) to grow by more than any other country in the period to 2040, propelled by an economy that will grow to more than five-times its current size and by population growth that will make it the world's most populous country.

India's energy consumption is expected to more than double by 2040, accounting for 25 per cent of the rise in global energy, and the largest absolute growth in oil consumption.

India is 82 per cent dependent on imports to meet its crude oil needs, eight per cent of which is supplied by the UAE.

NINL records highest ever pig iron production

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Neelachal Ispat Nigam Limited (NINL) has recorded its highest ever single-day pig iron output since its inception with production of 2,772 ton of pig iron on May 12.

The Kalinga Nagar-based integrated steel plant, with production of 2,965 ton of hot metal on the same day, also recorded its highest ever single-day hot metal production since its inception in 2002, a company release said.

The earlier highest single-day pig iron production of 2,605 ton had been achieved a day before on May 11, 2018, while the previous best hot metal production at 2801 ton was recorded on October 26, 2009, the release said.

Vice-Chairman and MD of NINL S S Mohanty has congratulated the NINL collective for the feat.

The NINL aims to produce more than 3,000 ton hot metal per day and has immediate plans to resume steel billet production with maximum capacity utilization of the steel melting shop.

The NINL has lined up several activities this financial year to strengthen its bottom line which includes steel billet production and operations of its captive mines.

EXCLUSIVE: Would like to continue as transport minister if NDA wins 2019 elections, says Gadkari

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The Modi-government is expected to open two key infrastructure projects this month. On May 26, the much-awaited Eastern Peripheral Expressway (EPE), envisioned to decongest the National Capital, is likely to be inaugurated by the Prime Minister.

The day on which the government completes four years in power will also see the first phase of Delhi-Meerut expressway being opened to the public.

He named Zojila bypass tunnel, costing Rs 6,000 crore, and Indian ports making profits to the tune of Rs 7,000 crore as other infrastructure achievements.

Talking about achieving the target of building 41 km of highways per day, the Union Minister said at present we are doing 28 km per day and before March-end, we will complete 40-45 km per day which will fulfill the target.

In another important highway project that will connect the National Capital, Delhi, to the financial capital, Mumbai, Gadkari said the government is making the highway with a new alignment that will help save Rs 16,000 crore on land acquisition and reduce the Delhi-Mumbai distance by 125 km. The Vadodara to Mumbai phase of the project is expected to start within 15 days costing about Rs 45,000 crore.

“Alignment is now in the final stage, we will start the land acquisition, but for the other package, we will start the work. It is not my commitment, but my target is to complete this project within three years,” he said.

While Gadkari is confident of commencement of commercial operations of seaplanes by December-end, on the Clean Ganga front, he said by March 2019, at least 80 percent of Ganga will be clean.

The minister claims at least 1 crore direct and indirect jobs have been created by his ministry.

Keeping 2019 general elections in mind, he said if the NDA returns to power, he would like to continue as the transport and highways minister, but the decision would rest with the Prime Minister.

Edited excerpts:

Q. What has been the biggest achievement of your ministry and the government, overall?

A. As far as my ministry is concerned, on May 26, the Prime Minister is going to open the two express highways of the country. One part is of Delhi-Meerut, between Delhi and Dasna. That is a 14-lane road, where 2.5 meters on both sides are reserved for a cycle track. At the same time, we are now inaugurating the Delhi Ring Road, which is the eastern peripheral, which is going to reduce 50 percent traffic jam and pollution of Delhi because the people coming from Kashmir, Punjab, Haryana, Himachal, Uttarakhand, Rajasthan, Uttar Pradesh…going from one state to another state, you have to go through Delhi. So now, they do not need to come to Delhi. So, this is going to reduce 50 percent pollution and the traffic jam of Delhi.

Then we have a state-of-the-art project in Arunachal Pradesh, a big bridge, already inaugurated by the Prime Minister. Then a big tunnel between Jammu and Srinagar, 9.5 km. And on May 19, Prime Minister is going to have a big function in Ladakh that is for Zojila bypass tunnel of Rs 6,000 crore. So, these are the achievements of my ministry. But there are a lot of achievements. All our ports are in good profits — this year, our profit will be Rs 7,000 crore; the first year, it was Rs 3,000 crore, the second year it was Rs 4,000 crore, the third year was Rs 5,000 crore and the fourth year, this is Rs 7,000 crore. And we increased the efficiency by two times.

Q. You just said that the Prime Minister is going to inaugurate the first phase of the Delhi-Meerut Highway. By when can we see the completed project? From Delhi to Meerut was the promise.

A. This is the first package we are going to inaugurate, but the other part, it will take at least one year more. Work is going on very fast and presently it takes three-and-half hours from Meerut to Delhi. It will take 40-45 minutes.

Q. When you took over the ministry, you had set a target of building 41 km of highways per day. What has been the record? And what do you intend to achieve in the last year in power?

A. Presently, at the end of March, we are at 28 km per day. Next year, before March-end, we will complete 40-45 km per day. So my 40-km declaration, the target, 101 percent we are going to fulfill that target next year.

Q. What has been the most difficult challenge or constraint in building highways in India?

A. In India, there are all kinds of constraints. But I always have a philosophy that there are some people who convert problems into opportunities and there are some people who convert opportunities into problems. My problems are good opportunities for me. And it is the success of my department. It is not only my success, it is a team success. My secretary, my engineers, my chief engineers, National Highways Authority (NHAI) people, National Highways & Infrastructure Development Corporation Limited (NHIDCL) people, those who are working hard day and night. So, it is a success of collective team spirit that we have fantastic results.

Q. You have talked about building a new Delhi-Mumbai Highway in a new alignment bypassing the current highway that passes through Rajasthan and Gujarat. Can you elaborate on that?

A. The most interesting thing is this is the highway which is going from the backward area of Rajasthan, Haryana, Madhya Pradesh, Gujarat, and Maharashtra. This will start from Delhi. It goes to Jaipur Ring Road; from the Ring Road, it goes to Alwar, from Alwar to Sawai Madhopur. Sawai Madhopur to Vadodara in Gujarat. And Vadodara to Mumbai.

The first time, the land acquisition cost, just for example, from Mumbai to Delhi, the present road is Ahmedabad, Surat, Vadodara. We calculated that cost comes to Rs 7 crore per hectare. But now, because of this new alignment, the cost is coming to Rs 70-80 lakh per hectare. We save Rs 16,000 crore on land acquisition and we are going to reduce the Delhi-Mumbai distance by 125 km. Out of which, Vadodara to Mumbai, all packages, already we tendered and giving appointment dates. So, projects of Rs 45,000 crore within 15 days, we will start. So, alignment is now in the final stage, we will start the land acquisition, but the other package, we will start the work. It is not my commitment, but my target is to complete this project within three years. Let us see what happens.

Q. So effectively, by 2021 if all goes well, we should be able to travel by road from Delhi to Mumbai in 12 hours?

A. Yes.

Q. You had also been pushing for electric mobility but the Niti Aayog had a completely different view. Where are we in the plan?

A. First of all, we do not have any differences with Niti Aayog. Actually, we are on the same line. We have started charging stations. In my own constituency in Nagpur, we have 200 electric cars and we have 20 charging stations. Now, electric bus, electric bike, electric auto rickshaw, everywhere the production is in very fast mode. And I am confident in due course of time, India will have bio-fuel, can be ethanol bike, ethanol auto rickshaw, ethanol buses, electric buses, then methanol biodiesel and bio-CNG. Now in Ganga, we have 100-125 biodigester where we get methane. And from methane, bifurcate methane from CO2, we get bio-CNG. So we are going to sign an agreement with Indian Oil to start making bio-CNG in every project and to run buses on bio-CNG.

Q. I will take you to a different topic now. In December, in Gujarat, the Prime Minister disembarked from a seaplane and it has been one of your pet projects. By when can we expect seaplanes to start commercial operations in India?

A. The airport authorities have to finalise the rules and regulations and they are in the final stages. After their decision, we will immediately call tenders.

Q. Your ministry calls it a seaplane and the Aviation Ministry has given another name for it. Who will be framing the regulations?

A. At present, the Aviation Ministry is preparing the rules and regulations. After that, there will be a joint coordination between the two ministries and we will start this project.

Q. Staying on this topic, an amphibious bus that was brought into Mumbai actually ran into serious opposition from environmentalists.

A. I don’t understand as a committee is there. Actually in Mumbai, due to traffic, a lot of pollution is there. By using the sea route, we can reduce the pollution. All over the world, there are all types of the catamaran, hovercraft, and seaplanes being used. I don’t understand why people are opposing it. Amphibious buses are being used in Vancouver, USA, Stockholm, Sweden, and Singapore.

Q. Can we expect seaplanes top start operations by December?

A. Yes, before December ends, we will start this venture and I am confident about it meeting this deadline.

Q. Which rivers or water bodies are you targeting to start operations?

A. There are a lot of opportunities in Ganga and Brahmaputra. We have 7,500 km of the seafront and 20,000 km of river length. There are also many dams and we can use all these. We can make a river or seaport and I feel there is a lot of untapped potentials there.

Q. You had also said that by March 2019, around 80-90 percent of the Ganga will be cleaned up. But if you travel to various parts of Uttar Pradesh and Bihar, it comes across as a very ambitious target. How confident are you about your goal?

A. For this reason, I decided to call a press conference on Ganga. Out of 189 projects, 47 projects are already completed. Only 5-10 projects may be there facing hurdles but they are in the process. So I am confident that by March 2019, at least 80 percent of Ganga will be clean.

Q. Including stretches like Kanpur?

A. In Kanpur, we are doing nine projects and in Patna, we are doing 11 projects. In Varanasi, we are doing 4-5 projects. Work is going on in all these projects.

Q. After the Dhola-Sadiya bridge, we also hear about a new 1,000 km expressway along the Brahmaputra’s north bank. Is it at DPR (detailed project report) stage. Any recent update on that project?

A. Yes, it is in process. We have already sanctioned projects worth than Rs 1.5 lakh crore for the North East. We have specially established the North East Road Construction Corporation and we are working at a brisk pace on it. There are some problems but we are giving highest priority for development of infrastructure in North East.

Q. You are also piloting the Rs 8 lakh crore Bharatmala project. Any major development on that front?

A. Up to the end of December, more than 50 percent of work will be done. Probably the first phase is of 24,000 km, with an estimated cost of Rs 7.5 lakh crore and I am confident that 50 percent of the project will be completed before the end of December.

Q. And the Sagarmala project?

A. In Sagarmala, we are expecting investment to the tune of Rs 16 lakh crore. Around Rs 4 lakh crore has been earmarked for port-road connectivity, port-rail connectivity, modernisation and mechanisation of port. We have completed a project worth Rs 1.3 lakh crore and are developing industrial clusters where there will be automobile cluster, petroleum cluster, furniture cluster, chemical clusters, five smart cities, etc. We are expecting investment to the tune of Rs 12 lakh crore, out of which we have started work more than Rs 1.5 lakh crore. Things are moving at a fast pace where we are expecting industrial investment in the port sector. It will be a great boost for employment generation in the country.

Q. This government has been battling criticism on the jobs creation front and all kinds of figures are being thrown around. Going by the implementation of infrastructure projects that you have listed out, by the sheer definition of infrastructure projects having strong multiplier effects of creating jobs, enough jobs should have been created in the infrastructure space. Do you have some data to share?

A. The construction equipment manufacturing industry has doubled its production and we have already awarded construction projects worth more than Rs 10 lakh crore. So we are creating jobs and I feel that at least 1 crore direct and indirect jobs have been created by my ministry.

Q. These jobs created over the last four years in various infrastructure projects have not been captured by the jobs data that has been put out by various agencies, isn't it?

A. We have already given all the details to the various agencies and have one report from IIT. When there is an investment of Rs 1,000 crore, it creates temporary jobs for one lakh people directly and indirectly. We are creating jobs for the youth and I am confident that my department will create at least one crore jobs.

Q. Your contribution in building the Mumbai-Pune highway is well known. In this context, which project would you like to be most remembered for?

A. The Delhi-Mumbai Express Highway is a big project and it is the first of the express highways in the country which entailed an investment of Rs 1 lakh crore. This project will benefit 5-6 states and it will be a great achievement for me. I can only give you the assurance that we will start work on this project before December-end.

Q. Assuming the NDA government gets a second term, would you like to continue with the same portfolio?

A. It is the privilege of the Prime Minister. But if he asks me, I will give my priority for this department because I have to fulfill my dreams.

Net profit rose 82% due to reduction in claims, increase in investment income: Shriram General MD

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Private general insurance company Shriram General Insurance posted an 82 percent rise in its net profit at Rs 400 crore for FY18.

What led to the 82 percent jump in profits for FY18?

Our net profit has risen mainly due to increase in the investment income and reduction in the loss ratio. The investment income rose from Rs 580 crore in FY17 to Rs 744 crore in FY18 while the incurred claims came down to 94 percent from 103 percent. Also, we saw a 10 percent increase in the net earned premium to Rs 1855 crore.

Majority of your business continues to be from the motor insurance space. Will there be a shift in strategy this year?

Motor is still majority of the portfolio and even in that, there is a higher share of the commercial vehicle business. We are not focusing on the non-motor business, because of the heavy discounting prevailing in the market. We believe that it is not sustainable in the longer term. It is not possible to play in that space and hence we are not interested.

How will your diversify your portfolio?

Diversification not just means entering newer segments but also expanding within the existing areas. We are diversifying within motor business where losses can be managed.

In the commercial vehicles space, there are heavy commercial vehicles (HCV), intermediate commercial vehicles and light commercial vehicles. We are looking at which segment among these are performing well and will be pushing those products.

Do you believe that the recent third party premium hikes by the insurance regular is adequate?

The heavy commercial vehicles have seen a lot of claims. While the insurance regulator has implemented hikes based on claims, losses are high in some segments. We believe that on the HCV space, there will be further hikes in the future.

You do not have large bank partners to sell products. What will be the distribution strategy in this fiscal?

While we are not aggressive on the bancassurance front, we tied-up with some regional rural banks. These partnerships should start producing results. Also, we are in talks with some large banks and are hopeful of getting a few on board as corporate agents.

Among the other channels, agency is seeing a positive growth and we have seen the number of agents crossing 10,000 in FY18.

You also offer passenger insurance for rail travellers. Have there been large claims?

The IRCTC passenger insurance scheme has seen a positive claims experience. While we are not making huge profits, the losses have been contained. Through this initiative, we have been able to help the brand reach the masses.

Wheat procurement in Haryana at 81.49 lakh MT, crosses last year's level

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Wheat procured by state agencies in Haryana has touched 81.49 lakh metric tonnes (MT) so far, compared to 74.25 lakh MT last year, an official said today. While state agencies have procured over 81.49 lakh MT, the traders have procured 485 MT of wheat, a spokesman of the Haryana Food, Civil Supplies and Consumer Affairs Department said here.

Giving details of the wheat procured by government agencies, he said over 32.80 lakh MT has been procured by Haryana State Co-operative Supply and Marketing Federation Limited (HAFED), whereas Food, Civil Supplies and Consumer Affairs Department has purchased more than 24.50 lakh MT.

Food Corporation of India has purchased over 9.81 lakh MT while Haryana Warehousing Corporation has procured 14.35 lakh MT.

The spokesman said district Sirsa was leading in wheat arrival with over 10.84 lakh MT of the crop procured, followed by district Karnal at more than 8.77 lakh MT.

Two years of Pradhan Mantri Fasal Bima Yojana: Coverage improves for crops, but some gaps still to be filled

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The central government’s two-year old crop insurance scheme, Pradhan Mantri Fasal Bima Yojana (PMFBY) has seen 47.5 million hectares of gross cropped area being covered in 2017-18. Even as the Centre plans to increase coverage to 50 per cent of crop area in FY19, some gaps need to be filled to ensure timely release of claims to the end beneficiary, the farmer.

The agriculture ministry’s data showed PMFBY had a sum insured amount of Rs. 1.9 lakh crore and a premium volume of Rs 24,351 crore in FY18. This was lower than 2016-17 when over 57 million hectares of gross cropped area was covered for a sum insured of Rs 2.05 lakh crore and premiums of Rs 21,500 crore.

This made it the third largest line of insurance in the country after motor and health. Incidentally, India also ranks as the third largest crop insurance market globally, behind United States of America and China.

The Scheme

PMFBY compensates farmers if any of the notified crops fail due to natural calamities, pests and diseases. The scheme seeks not just to just to insulate farmers from income shocks, but also encourage then to adopt modern agricultural practices.

Unlike previous schemes, PMFBY is open for both farmers who have taken loans as well as those who have not. It covers food crops (cereals, millets and pulses), oilseeds as well as horticultural crops.

“Earlier, only claims for certain crops were paid and that too limits were imposed. All those have been removed, even though the government bears a heavy subsidy burden,” said the head of crop insurance segment at a large public sector insurer.

It has a uniform premium of two percent to be paid by farmers for all Kharif crops and 1.5 per cent for all Rabi crops. For commercial and horticultural crops, the farmers’ premium is five percent. The rest of the premium is paid equally by the Centre and state government.

The scheme also mandates use of new technology include remote sensing and drones to measure crop yields. A total of 18 insurance companies, private and public sector have been empanelled for the scheme.

PMFBY benefits

The insurance scheme says that each state has to conduct a certain number of crop cutting experiments (CCEs) to get basic estimates about crop yields in each area. This data is then submitted to the insurance company within a time limit. This information is crucial, because it gives the insurance company an idea of how much crop is estimated to be produced in each region for the Kharif and Rabi seasons.

The earlier crop insurance schemes had a limit on the government subsidy that was payable. However, PMFBY has done away with it. In this, even if the balance premium is 90 per cent, it will be borne by the government. So, the farmers will get claim against the full insurance amount that they have taken.

The loss assessment for crop losses due to climatic conditions is done for each area. If there is a situation where majority of crops in one area could not be planted due to bad weather, farmers can claim 25 per cent of sum assured. However losses due to localised perils (like hailstorm, landslide & inundation) and post-harvest losses due to specified perils (cyclone, unseasonal rains) will be assessed at the affected field of the farmer, who had taken the insurance cover.


Delay in claims has been one of the key concerns under PMFBY. A committee appointed by the agriculture ministry has said that with substantial claims payable in Chhattisgarh, Haryana, Madhya Pradesh, Maharashtra, Odisha, the Kharif 2017 claim ratio is expected to be upwards of 90 percent.

The report, “Strategy for Doubling Farmers' Income by 2022”, by the  Committee on Doubling of Farmers' Income, Ministry of Agriculture said that states should promote availing of crop insurance facility without waiting for completion of sowing.

The head of underwriting of a mid-size private general insurance company said while drones and GPS were to be used, the usage has been minimal so far. “Since the claims are paid based on crop yield, technology is critical to minimise fraudulent claims,” he added.

On one hand while claims settlement has been growing at healthy pace, the government panel report said that the states have to make sure that the tender process for selection of insurance companies and premiums should be done before the crop season starts. During 2016 and 2017, the last tender for Kharif went into August, depriving the non-loanee farmers an opportunity to enroll.

The report also added that by 2018-19, potentially there could be coverage of over Rs 3.5 lakh crore of sum insured, requiring over Rs 30,000 crore premium subsidy.

“This is best realised if the transparency, reliability and sustainability issues are taken care of in administering the programme. Also, with huge premium subsidy bill, the government needs to sense that there is a value for the funds,” the report released on April 28 said.

Due to heavy claims in the Kharif season, insurers including ICICI Lombard General Insurance have reported an underwriting loss in their crop portfolio. This meant that there was a gap between premiums collected and claims paid out. To ensure that the business is viable, further tweaks in the premiums during the upcoming tender processes may have to be considered.

Way forward

The centre has also allowed states to set up their own specialised insurance companies for the implementation of the PMFBY. A PTI report had said that the agriculture ministry has allowed this, subject to participation in bidding process.

Further, as more players enter this process, not only will the pricing be improved, claims will also be settled in a timely manner.

Also, as the government panel suggested, deployment of technology, that can remove human biases and generate accurate and real time data in an efficient manner will be beneficial. As additional crop area and number of farmers covered is increased this financial year, the emphasis will be on how much time is taken to settle the claims and if there is a need to increase premiums.

Subsidies under various crop insurance schemes by government

YearFarmers PremiumPremium SubsidyGross PremiumTotal Claims Paid
2017-18**4013.6820338.0324351.71Not reported
Grand Total       14522.3642560.7257091.4242208.62

Note: All figures in Rs crore * Against approved claims of Rs. 14433.36 crore, an amount of Rs. 12948.98 crore has already been paid **Tentative Source: Government reply to Rajya Sabha question on March 9, 2018

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