States Commit to Advance Premium Subsidy Under PMFBY
In a major development under the revised Pradhan Mantri Fasal Bima Yojana (PMFBY), states and Union Territories are now required to establish an Escrow Account to manage their share of the premium subsidy in advance. This new operational framework aims to streamline financial commitments and enhance the efficiency of the crop insurance program for farmers across India.
The revised operational guidelines stipulate that state governments must commit to their liabilities prior to each agricultural season. Specifically, they are required to release 50% of the advance premium subsidy based on the previous season’s data for each insurance company operating in their jurisdiction. This initial deposit is crucial, as it enables the services under PMFBY to be activated on the National Crop Insurance Portal (NCIP).
As of now, 20 out of the 24 states implementing PMFBY have successfully opened their Escrow Accounts. This move has allowed these regions to effectively deposit and disburse their respective shares of the premium subsidy since the Kharif season in 2025. The management of these accounts falls under the jurisdiction of the state’s Agricultural and Horticulture Departments, which work in cooperation with scheduled commercial banks or cooperative banks to facilitate the necessary financial transactions.
To ensure proper financial governance, state departments are also required to enter into multi-party agreements with the banks and insurance companies involved, which provides clarity on roles and responsibilities concerning the management of the Escrow Account. However, it is noteworthy that the Union Territories and states of Andaman & Nicobar Islands, Manipur, Mizoram, and Sikkim are yet to establish their Escrow Accounts under this scheme.
Given that the operationalization of the Escrow Account mechanism has only recently occurred with the Kharif 2025 season, no impact analysis is currently possible. This information was disclosed by Minister of State for Agriculture and Farmers Welfare, Shri Ramnath Thakur, in a recent written reply in the Rajya Sabha, highlighting the ongoing efforts to improve the PMFBY and support Indian farmers effectively.
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