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बेसिक इंग्लिश का दूसरा सत्र (कक्षा प्रारंभ : 22 अक्तूबर, शाम 3:30 से 5:30)
Pradhan Mantri Fasal Bima Yojana
Jul 29, 2017

[GS Paper III: (Major crops - cropping patterns in various parts of the country, different types of irrigation and irrigation systems; storage, transport and marketing of agricultural produce and issues and related constraints; e-technology in the aid of farmers)]

 Why in News? 

On 21st July, the Comptroller and Auditor general (CAG) presented a report in the Parliament which examined crop insurance schemes – the National Agriculture Insurance Scheme (NAIS), Modified NAIS and the Weather Based Crop Insurance Scheme (WBCIS) for the period  2011-12 to 2015-16.  The CAG report stated that the government-pushed insurance schemes have achieved little and only benefited insurance companies operating in the sector. 

Pradhan Mantri Fasal Bima Yojana (PMFBY) 

  • To help farmers cope with crop losses, the Government of India launched its flagship scheme Pradhan Mantri Fasal Bima Yojana (PMFBY), starting from the kharif season of 2016. 
  • PMFBY replaced the National Agricultural Insurance Scheme (NAIS) and Modified National Agricultural Insurance Scheme (MNAIS). PMFBY is designed to reduce the burden of crop insurance on farmers. 
  • The Weather-Based Crop Insurance Scheme (WBCIS) remains in place, though its premium rates have been made the same as in PMFBY. 
  • State governments have the authority to decide whether they want PMFBY, WBCIS or both in their respective states. 
  • The new Crop Insurance Scheme – PMFBY- is in line with ‘One Nation – One Scheme’ theme. 
  • It incorporates the best features of all previous schemes and at the same time, all previous shortcomings/weaknesses have been addressed. 

Key Features of PMFBY 

  • PMFBY fixes a uniform premium of 2% of the value of sum insured to be paid by farmers for all kharif crops, 1.5% of sum insured for all rabi crops, and 5% of sum insured for annual commercial and horticultural crops or actuarial rate, whichever is less.
  • The balance premium will be paid by the government to provide the complete insured amount to farmers against crop loss on account of natural calamities. 
  • The subsidy is divided equally between the state and the Central government. There is no upper limit on government subsidy for actuarial premium.
  • 25% of the likely claim will be settled directly in farmers account.
  • There will be one insurance company for the entire state.
  • The scheme also provides for coverage of post-harvest losses. The scheme will also cover localised crop losses like hailstones.
  • The use of technology like smart phones will be used to capture and upload data of crop cutting to reduce the delays in claim payment to farmers. 
  • Remote sensing, GPS, drones will be used to reduce the number of crop cutting experiments.
Note: Actuarial rate is an estimate of the expected value of future loss. Usually, the future loss experience is predicted on the basis of historical loss experience and the consideration of the risk involved.

 Coverage of Farmers 

  • The scheme covers loanee farmers (those who have availed of institutional loans through Kisan Credit Cards etc.), non-loanee farmers (those who avail of insurance cover on a voluntary basis), sharecroppers and tenant farmers (those who farm on rented land). 
  • PMFBY is compulsory for loanee farmers. 

Why the need for PMFBY? 

  • Before the PMFBY, the National Agriculture Insurance Scheme (NAIS) and Modified NAIS (MNAIS) were there.
  • The sum insured under MNAIS, particularly for the risky crops, was meagre. 
  • It was based either on the quantum of crop loans or on the capping of the sum insured; the crop damage assessment based on crop cutting experiments was time-consuming, and compensation to farmers often took several months —very often, more than a year. 

Challenges for PMFBY 

  • The premium subsidy under the PMFBY is to be equally shared between the Centre and the states. One reason for delay in claim payments by insurance companies is the latter not releasing their part of the subsidy on time. 
  • The states are also slow in conducting village-level crop-cutting experiments and submitting yield data from the same to the insurance companies. 
  • The insurance companies themselves have no direct connection with the farmers. In most cases, they don’t even maintain databases relating to landholdings or cropping patterns. The premiums are collected and passed on by the banks that extend loans to the farmers.
  • The scheme, thus, acts “more as loan insurance than as crop insurance”.
  • Problem encountered with this scheme is that the actuarial premium, instead of coming down with the increasing scale of coverage, has gone up, sharply, from 9.8 per cent in kharif 2015 to 14.9 per cent in kharif 2016. This defies the very logic of insurance that premiums should drop when scale increases. 
  • The fact that farmers are still to get over Rs 5,600 crore worth of estimated claims from the 2016 kharif season is clear proof of a well-intentioned scheme not delivering on the ground. 

What reforms are needed? 

  • Centre should take over the entire premium subsidy burden. If the Centre can pay 100 per cent of subsidy on fertilisers, why cannot it do the same for insurance premium, which is at least a productive expenditure unlike the former? 
  • To force the states to implement PMFBY properly, the Centre should bear the whole premium subsidy and link its release to states meeting prescribed operational schedules. 
  • Once insurance companies are assured of timely release of subsidy and also of crop yield data from the states, they will have no excuse for delaying claim settlements.

Way Forward

A comprehensive programme of capacity building of concerned officials, including state government functionaries, insurers and Central government agencies associated with crop insurance schemes, should be undertaken for successful implementation of PMFBY.

 Kharif crops 

The Kharif crop is the summer crop or monsoon crop in India. Kharif crops are usually sown with the beginning of the first rains in July, during the south-west monsoon season. Major Kharif crops of India include Millets (Bajra & Jowar), Cotton, Soyabean, Sugarcane, Turmeric, Paddy (Rice), Maize, Moong (Pulses), Groundnut, Red Chillies, etc.

 Rabi Crops 

The Rabi crop is the spring harvest or winter crop in India . It is sown in October last and harvested in March April every year. Major Rabi crops in India include Wheat, Barley, Mustard, Sesame, Peas etc.

 Zaid Crop

This crop is grown in some parts of country during March to June. Prominent examples are Muskmelon, Watermelon etc.


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