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Five Years of Pradhan Mantri Fasal Bima Yojana

  • 13 Jan 2021
  • 5 min read

Why In News

Recently, the flagship crop insurance scheme of the Government of India - the Pradhan Mantri Fasal Bima Yojana (PMFBY) - has completed five years of its launch.

  • PMFBY was launched on 13th January 2016.
  • The scheme was conceived as a milestone initiative to provide a comprehensive risk solution at the lowest uniform premium across the country for farmers.

Key Points

  • Pradhan Mantri Fasal Bima Yojana (PMFBY):
    • It provides a comprehensive insurance cover against failure of the crop thus helping in stabilising the income of the farmers.
    • Scope: All food & oilseed crops and annual commercial/horticultural crops for which past yield data is available.
    • Premium: The prescribed premium is 2% to be paid by farmers for all Kharif crops and 1.5% for all rabi crops. In the case of annual commercial and horticultural crops, the premium is 5%.
      • Premium cost over and above the farmer share was equally subsidized by States and GoI.
      • However, GoI shared 90% of the premium subsidy for North Eastern States to promote the uptake in the region.
    • The scheme was compulsory for loanee farmers availing Crop Loan/Kisan Credit Card (KCC) account for notified crops and voluntary for others.
  • PMFBY 2.0:
    • In order to ensure more efficient and effective implementation of the scheme, the central government had revamped PMFBY in the 2020 Kharif season.
    • This overhauled PMFBY is often called PMFBY 2.0, it has the following features:
      • Completely Voluntary: Enrolment 100% voluntary for all farmers from 2020 Kharif.
      • Limit to Central Subsidy: The Cabinet has decided to cap the Centre’s premium subsidy under the scheme for premium rates up to 30% for unirrigated areas/crops and 25% for irrigated areas/crops.
      • More Flexibility to States: The government has given the flexibility to states/UTs to implement PMFBY and given them the option to select any number of additional risk covers/features.
      • Investing in ICE Activities: Insurance companies have to now spend 0.5% of the total premium collected on information, education and communication (IEC) activities.
  • Use of Technology under PMFBY:
    • Crop Insurance App:
      • Provides for easy enrollment of farmers.
      • Facilitate easier reporting of crop loss within 72 hours of occurrence of any event.
    • Latest Technological Tools: To assess crop losses, satellite imagery, remote-sensing technology, drones, artificial intelligence and machine learning are used.
    • PMFBY Portal: For integration of land records.
  • Performance of the Scheme:
    • The Scheme covers over 5.5 crore farmer applications on average per year.
    • Aadhar seeding (linking Aadhaar through Internet banking portals) has helped in speedy claim settlement directly into the farmer accounts.
    • One notable example is mid-season adversity claims of nearly Rs. 30 crore in Rajasthan during Rabi 2019-20 Locust attack.

Way Forward

  • Rationalising waivers and service delivery: Loan waiver schemes announced by state governments along with mandatory Aadhar linkage should be rationalised to enable PMFBY of greater coverage.
  • Enable Timely Compensation: There has been reports of delayed compensation by some of the states.
  • Bringing Behavioural Change: Apart from this, a lot more needs to be done in bringing about a behavioural change regarding the cost of insurance being a necessary input and not a money-back investment.
  • Streamlining with Similar Schemes: PMFBY needs to be streamlined with state crop insurance schemes and schemes like Restructured Weather Based Crop Insurance Scheme to include more risk areas not covered under them.
  • Proper Implementation: Successful implementation of PMFBY is an essential benchmark in agricultural reform in India to make farmers self-sufficient in times of crisis and support the creation of an Aatmanirbhar Kisan.

Source: PIB

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