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

Current Status of the Scheme

  • Implementing States: Gujarat, Andhra Pradesh, Telangana, Jharkhand, West Bengal and Bihar exited the scheme, citing the cost of the premium subsidy to be borne by them.
  • Never Implemented: The state of Punjab has not implemented crop insurance scheme.
  • States with their own Schemes: Bihar, West Bengal and Andhra Pradesh have their schemes under which farmers do not pay any premium, but they receive a fixed amount of compensation in case of crop failure.

Performance

  • The Scheme covers over 5.5 crore farmer applications year on year. Even during COVID lock down period nearly 70 lakh farmers benefitted and claims worth Rs. 8741.30 crores were transferred to the beneficiaries.
  • Since inception of the scheme in 2016-17, against the premium of Rs. 21614 crore paid by farmers, the claims amounting to Rs. 97719 crore have been paid to 834.6 lakh farmer applications (till july 2021)

Challenges

  • Use of manual process for transmission of yield data
  • Late release of states share in premium subsidy has led to delay in settlements in some 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

Possibilities and Prospects

  • 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.

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