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New Crop Insurance Scheme to Help Farmers
Jan 16, 2016

The Union government approved the much-talked about new crop insurance scheme (Pradhan Mantri Fasal Bima Yojna) in which it has kept the premium amount for farmers at a maximum of two per cent for foodgrains and oilseeds while capping it up to five per cent for horticulture and annual commercial crops.The new scheme is being perceived as first significant move to address rural hardship.

Key Features

  • This scheme will replace the existing National Agricultural Insurance Scheme (NAIS) as well as the modified NAIS. 

  • The scheme will be implemented from the Kharif season this year.

  • The farmer’s share of premium has been substantially reduced and the government will provide subsidy on premium.

  • Government’s liability on premium subsidy would be shared by the Central and State governments on a 50:50 basis.

  • The scheme will have a uniform premium of only two per cent to be paid by the farmers for all Kharif crops and 1.5 per cent for all Rabi crops. 

  • In case of annual commercial crops such as cotton and horticultural crops, it will be only five per cent.

  • The premium rates to be paid by farmers are kept very low and the balance premium will be paid by the government to provide full insured amount to the farmers against crop loss on account of natural calamities.

  • Even if the balance premium is 90 per cent, it will be borne by the government.

  • There will be no provision of capping the premium rate so as to ensure farmers get a higher claim against the full sum insured. 

  • At least 25 percent of the likely claim will be settled directly on farmers' bank account.

  • The Centre will provide Rs 8,800 crore annually to make up for almost all of the premium for the crop insured

  • The definition of disaster has been expanded to include aspects like flooding of crop and damage after harvest.

  • The government will use remote sensing and smartphone and other modern technologies for accurate and quicker crop yield estimations.

  • The new scheme will cover yield loss of standing crops, prevented sowing/planting risk, post-harvest losses and localised risks, including inundation.

  • There will be one insurance company for the entire state, farm-level assessment of loss for localised risks and post-harvest loss.

  • Private insurance companies, along with the Agriculture Insurance Company of India Ltd, will implement the scheme.

The government expects the scheme to help increase the insurance coverage to 50 per cent of the total crop area of 194.40 million hectares from the existing level of about 25-27 per cent crop area.


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