Pradhan Mantri Fasal Bima Yojana (PMFBY)

PMFBY is an actuarial premium based scheme aimed to insulate Indian farmers from the vagaries of Indian monsoon. The scheme (launched on 13th January 2016) provides comprehensive risk coverage from pre-sowing to post harvest losses due to non-preventable natural risks and follows One Season-One Premium and One Nation – One Scheme theme.

  • It incorporates the best features of all previous schemes (NAIS and MNAIS) while removing its shortcomings and weaknesses.

Features

  • The farmer needs to pay a uniform premium of 2% for Kharif, 1.5% for Rabi food & oilseed crops and 5% for annual commercial/horticultural crops.
  • The balance premium is borne equally by the state and central government against crop loss on account of natural calamities.
  • The provision of capping the premium rate has been removed and farmers are entitled to full sum insured without any reduction.
  • Mandatory use of Technology (like remote sensing and uploading data of crop cutting via smart phones) to reduce delays in payment claims to farmers.
  • The scheme covers localized risk coverage like hail storm, landslide and inundation
  • The post-harvest losses coverage includes all India and covers both cyclonic and unseasonal rain

Performance

  • The scheme has facilitated prompt claims settlement in face of natural calamities
  • State Government agencies have shifted to technology (smart phones /CCE Agri App) to assess crop yields.
  • Integration of all individual farmer data on National Crop Insurance Portal.
  • Increased the insurance amount that can be claimed by farmers.
  • Increase in cropping intensity and diversification towards high value crops.
  • Assessment of losses has turned more realistic as unit area of insurance has been lowered to village/village panchayat level for major crops and to individual farm level for localized calamities.
  • Farmers can enroll under the scheme directly and track the process of claims settlement.

Challenges

  • Use of manual process for transmission of yield data
  • Late release of states share in premium subsidyhas led to delay in settlements in some states.
  • Yield related disputes between insurance companies and States.
  • Non-receipt of account details of some farmers for transfer of claims.
  • The scheme increases states’ fiscal constraints as the premium subsidy is borne both by centre and state equally
  • Reallocates the financial budget available for agricultural capital formation.

Way Forward

  • Increase agricultural capital formation through greater investment in Agriculture sector.
  • Address the corruption in disbursement of insurance claim from the private insurer to the farmer.
  • Strict enforcement of provision of mandatory use of technology to reduce human error.
  • Encourage registration of farmers under m-portal and Kisan Suvidha App for receiving agro-advisories.

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