On the first day of the New Year, the Union Cabinet announced two major sops for farmers. The Cabinet approved continuation of the flagship crop insurance scheme PM Fasal Bima Yojana until 2025-26. Also dousing all speculations of a likely increase in retail price of Di-Ammonium Phosphate (DAP), the Cabinet approved a one-time special package of ₹3,850 crore to maintain the rate at current level of ₹1,350 per bag of 50 kg.

The Cabinet also allowed creation of Fund for Innovation and Technology (FIAT) with a corpus of Rs 824.77 crore for large scale technology infusion in implementation of the crop insurance scheme, potentially helping the government to increase transparency in claim calculation and settlement.

In another decision, also related to farmers, the Cabinet allowed export of 1 million tonnes of white rice to Indonesia through the National Cooperative Export limited (NCEL), said Union Agriculture Minister Shivraj Singh Chouhan.

Briefing media after the Cabinet meeting, Chouhan said the extension of the PMFBY scheme until next financial year is as per recommendations of the Expenditure Finance Committee and accordingly, the Budget has been approved for the five-year period starting from 2021-22. But the scheme will continue even beyond 2025-26, he added.

Official sources said that Cabinet in 2020 had approved Rs 66,550 crore under PMFBY from 2020-21 to 2024-25. However, the EFC in 2023 had recommended enhanced outlay of Rs 69,515.71 crore and also changed the period from 2021-22 to 2025-26.

Chouhan also said the Cabinet exempted the 10 per cent mandatory expenditure of the PMFBY scheme for the North-Eastern States by allowing them to utilise the unspent amount elsewhere if they need due to low gross cropped area (2.7 per cent of total gross cropped area of country) and community land holding in the region. 

On the other decision on DAP price, the Minister said farmers would continue to get 50-kg bags of DAP at ₹1,350 as was committed earlier. The current approval will help the government facilitate timely import of the fertiliser for the next Kharif season. There have been reports of acute shortage of DAP in current Rabi season forcing farmers to pay more than double the market price. Police action was reportedly initiated in some places against farmers who wanted to buy the fertiliser.

“Without the subsidy, farmers might have to pay Rs 2,435/bag for DAP. The government is sensitive to the farmers’ issues and so has decided to provide additional subsidy,” Chouhan said. The Cabinet, in July 2024, approved a one-time special package on DAP beyond the NBS subsidy of ₹3,500 per MT from April 1, 2024, to December 31, 2024, with an approximate financial implication of ₹2,625 crore.

• Also read: Centre acts to boost DAP availability, blames global suppliers

Vaishnaw also warned that legal action will be taken against retailers if they collect more than ₹1,350 from farmers.

The Fund for Innovation and Technology (FIAT) corpus of ₹824.77 crore will help fund the technology initiatives under the PMFBY scheme. The corpus will be built from the savings from excess premium (already accumulated), sources said. It will be administered by an Advisory Committee constituted by Government and will be a non-interest bearing fund, the sources said.