Pradhan Mantri Fasal Bima Yojana (PMFBY)

In January earlier this year, in a move aimed at reducing the recurrence of agricultural distress without having to effect hefty hikes in the Minimum Support Prices (MSP), Narendra Modi led National Democratic Alliance government had announced a crop insurance scheme named Pradhan Mantri Fasal Bima Yojana (PMFBY).

Being implemented from Kharif season of 2016, the premium paid by farmers had been reduced to 2% of the insured value for the more rain-dependent kharif crop and 1.5% for the rabi season, compared with 3.5-8% charged for the two earlier schemes:

• National Agricultural Insurance Scheme (NAIS)
• Modified National Agricultural Insurance Scheme (MNAIS)

In the case of horticultural crops, farmers’ premium burden will be 5% of the sum assured or 50% of the total premium.

National Agricultural Insurance Scheme (NAIS) and Modified National Agricultural Insurance Scheme (MNAIS) have been discontinued from Kharif 2016, but the ongoing Weather Based Crop Insurance Scheme (WBCIS) and Coconut Palm Insurance Scheme would continue to operate while premium to be paid under WBCIS has been brought on a par with PMFBY.

New crop insurance scheme would provide a solution for the farmers problems in times of difficulty. Care had been taken to eliminate the shortcomings of previous crop insurance schemes, and create trust among farmers with regard to crop insurance. Technology would be used extensively with this scheme to ensure early settlement of claims, and exhorted farmers to take benefit of this scheme.

Under the PMFBY, there would be no upper limit on government subsidy on premium provided by centre and state governments. Even if the balance premium (after farmers’ contribution) is 90%, it will be borne by the government. In the earlier schemes, there was a provision of capping the premium rate which resulted in low claims being paid to farmers. This capping on premium was done to limit the government outgo on the premium subsidy. This would ensure that farmers get the full sum insured without any reduction or hassles from the 11 designated insurance companies if natural calamities ravage their crops. The crop insurance coverage is set to rise from 45 million hectares or 23% of the area under cultivation at present to 50% of the crop area by 2018-19.

Another benefit to farmers under the new crop insurance scheme is that losses incurred by them at any stage of the farming activity — from the sowing to the post-harvest season — would be covered. Earlier, only post-harvest losses can be offset by the insurance facility under the two existing schemes. Also, even those farmers who haven’t taken bank loans will be eligible for insurance cover under PMFBY.

Features:

• The new scheme will increase farmers income and resultant increase in rural demand.
• The subsidy would be borne by the Centre and the state government concerned equally.
• The use of technology which would be encouraged to a great extent.
• Smart phones will be used to capture and upload data of crop cutting to reduce the delays in claim payment to farmers.
• Remote sensing will be used to reduce the number of crop cutting experiments.
• In case there is crop loss to a loanee farmer who is not insured, the bank will have to make good the losses.

PMFBY if implemented properly across the country would mitigate farm distress to a large extent especially when the erratic climates have become a norm rather than exception.