Context: 13th January 2021 marks the completion of five years of the successful implementation of the Pradhan Mantri Fasal Bima Yojana (PMFBY).
More on the news:
- By launching the scheme in 2016 the Government of India took a historic step towards strengthening risk coverage of crops for farmers of India.
- The average sum insured per hectare has increased from ₹15,100 during the pre-PMFBY Schemes to ₹40,700 under PMFBY.
- Launched by: It is a flagship crop insurance scheme launched by the Ministry of Agriculture and Farmers Welfare, Government of India in 2016.
- It replaced the previous 2 crop insurance schemes - National Agricultural Insurance Scheme (NAIS) and Modified NAIS.
- To provide insurance coverage and financial support to the farmers in the event of failure of any of the notified crops as a result of natural calamities, pests & diseases.
- To stabilise the income of farmers to ensure their continuance in farming.
- Salient features:
- It provides for a uniform premium to be paid by farmers at 2% for all Kharif crops, 5% for commercial and horticultural crops and 1.5% for rabi crops.
- The government removed the capping against the claims of farmers. Now farmers will get a claim against full sum insured without any reduction.
- It encourages the use of technology, such as Smartphones, to capture and upload data of crop cutting to reduce the delays in claim payment to farmers and Remote sensing to reduce the number of crops cutting experiments.
- It is compulsory for Farmers in the notified area, who possess a Crop Loan account or KCC account.
- The public sector company, Agriculture Insurance Company (AIC) of India along with other public and private insurance companies are participating in the new crop insurance scheme.
- The government (both Central and State) must release a 50 percent share of premium subsidy to insurance companies, in the beginning of every crop season and settle the balance of actual premium subsidy for the season as soon as final figures are submitted by the insurance company.
- Risks covered:
- Yield losses (standing crops, on notified area basis)
- Post harvest losses (individual farm basis)
- Localised calamities: Loss or damage resulting from occurrence of identified localized risks i.e. hailstorm, landslide, and Inundation affecting isolated farms in the notified area
- Achievements of PMFBY:
- Overall area insured: Has increased marginally by 6.5 percent (from 53.7 million ha in 2015-16 to 57.2 million ha in 2016-17).
- The number of farmers insured: Has increased by 20.4 percent.
- Premium paid: Has increased by 298 percent (from Rs 5,491.3 crores to Rs 21,882 crores).
- Criticisms of the PMFBY:
- Poor coverage: The PMFBY, like previous schemes, is primarily covering only loanee farmers. As per reports, there is 28 per cent growth in loanee farmers under crop insurance, compared to 3 per cent growth in non Loanee farmers.
- Delay in payments due to reasons like:
- delayed transmission to yield data,
- dispute raised by Insurance Companies on yield data,
- reconciliation of individual farmer data on portal by bank branches,
- late release of their share in premium subsidy by some States and NEFT related issues.
- Coverage of PMFBY in North-east regions: Four north-eastern States - Arunachal Pradesh, Nagaland, Manipur, and Mizoram are not covered under the scheme at all.
- Way ahead:
- Increase coverage: The Centre should intervene and increase the number of farmers under the scheme and ensure that it covers the entire country.
- Ensure profitability of insurance companies: If the farmer base spreads to new places, companies can earn enough to remain in the scheme.
- Reduce time between assessment and payment: It is important that remote sensing technology is used that could reduce the time between assessment of crop damage and payment of claim amount.
- Increase awareness: About the benefits of the scheme among farmers through government agencies, insurance companies and banks is required. Farmers should be informed through an aggressive media campaign.
Make use of the JAM trinity: By linking land records of farmers with their Aadhaar numbers and bank accounts.