Hyderabad: Insurance major Life Insurance Corporation (LIC) and the state government locked horns over the payment of insurance premium for Rythu Bima (insurance scheme for farmers) for the last two months.

LIC, the official agency to disburse the insurance amount under the scheme, rejected the government’s plea to allow it to deposit the premium in installments, citing there was no such provision to pay the amount in parts in the scheme. As a result, over 200 applications from the farmers' families seeking the insurance benefit were kept pending.

The government was supposed to pay around Rs 1,300 crore for the renewal of the scheme this year, officials said, adding that financial constraints could be the main reason for the delay in the payment of the amount for renewable of the scheme in a single installment.

Under the Rythu Bima scheme, the state government provides a life insurance cover of Rs 5 lakh each to 45 lakh farmers. More than 1.10 lakh families of farmers already availed the scheme benefit ever since its launch in 2018. The implementing agency distributed around Rs 5,700 crore till the end of the financial year 2024-25. Earlier, the government used to pay the entire premium amount to the LIC every year at one ago. But this time, the state government has requested LIC to allow it to make the payment in installments in the wake of financial constraints. Top officials said that state Agriculture and Finance wing officials held several rounds of meetings with the LIC to convince the agency to accept the premium payment in installments, but the public sector insurance major did not give any positive response so far.

“The LIC made it clear that the norms and guidelines prescribed in the agreement entered with the state government clearly stated that the entire premium amount should be paid at one go to renew the scheme every year. But the government had put forth a new proposal to pay the premium in installments. But LIC has not accepted it,” officials said, adding the Agriculture Department informed the LIC’s reluctance to renew the scheme for this year to the Chief Minister’s Office and was awaiting a response. Officials say that the Finance Department must address this issue immediately to avoid any disruption to the implementation of the popular scheme. The LIC already made it clear to the government that the insurance scheme can be scrapped anytime if the state government fails to solve the issue before the end of the first quarter of this financial year in June.