PRADHAN MANTRI FASAL BIMA YOJANA (PMFBY)
It is a large-scale crop subsidy insurance scheme launched in 2016 that was aimed to safeguard farmers.
The scheme is being administered by the Department of Agriculture, Cooperation and Farmers’ Welfare under the Ministry of Agriculture, along with empanelled general insurance companies.
It replaced the National Agricultural Insurance Scheme (NAIS) and Modified National Agricultural Insurance Scheme (MNAIS).
Aim: To facilitate agricultural output by offering reasonably priced crop insurance that guarantees farmers' crops are fully protected against all non-preventable natural risks.
The scheme provides coverage for the entire cropping cycle, from pre-sowing to post-harvest and midseason adversities.
Objectives:
Providing financial support to farmers suffering crop loss/damage arising out of unforeseen events;
Stabilizing the income of farmers to ensure their continuance in farming;
Encouraging farmers to adopt innovative and modern agricultural practices;
Ensuring flow of credit to the agriculture sector, which will contribute to food security, crop diversification and enhancing growth and competitiveness of the agriculture sector besides protecting farmers from production risks
Eligibility criteria:
It is compulsory for loanee farmers availing Crop Loan /KCC account for notified crops.
It would be optional for non-loanee farmers.
Insurance Coverage:
The insurance cover is limited to specific crops and agricultural risks related to crop yield.
List of notified crops includes food crops (i.e., cereals, millets, and pulses), oilseeds, annual commercial crops, and annual horticultural crops.
Premiums Under Pradhan Mantri Fasal Bima Yojana
Farmers need to contribute a small portion of actuarial premiums.
Rates differ based on the type of crops:
Kharif crops (2%),
Rabi crops (1.5%),
Commercial crops (5%), and
Horticultural crops (5%).
However, the bulk of the actuarial premium, ranging from 95% to 98.5%, is covered jointly by both the state and central governments, with the costs shared equally on a 1:1 ratio.
Challenges associated with the Pradhan Mantri Fasal Bima Yojana:
Climate change impacts: The rise in extreme weather events like droughts and floods challenges the scheme's financial resources and complicates risk assessment.
Market fluctuations: Variability in agricultural commodity prices affects the scheme's financial sustainability and farmers' ability to afford premiums.
Corruption and misuse: Leakages and irregularities in claim settlements can undermine trust and effectiveness.
Farmer dissatisfaction: Delays, exclusions, and inadequate compensation lead to farmer discontent and lower participation.
Policy shifts: Changes in government policies or funding can disrupt the scheme's stability and effectiveness.
Opportunities Under Pradhan Mantri Fasal Bima Yojana
Universal coverage: Covers over 5.5 crore farmers and 22 Kharif and Rabi crops across 31 states and UTs, providing wider protection than previous schemes.
Affordable premiums: Farmers pay 1% to 2% of the sum insured, making it accessible for smallholder farmers.
Technology integration: Use of remote sensing data and crop cutting experiments reduces paperwork and speeds up claim settlements.
Improved claim settlement: The claim settlement ratio increased from 42% in 2016-17 to 59% in 2022-23, showing progress in reducing delays.
Farmer awareness: Outreach campaigns and training programs are increasing awareness about the scheme and its benefits.
Way Forward
Rethinking strategies: Both state and central governments should address pending issues to ensure that farmers fully benefit from the scheme.
Investment in new models: Instead of subsidies, states should consider investing in innovative insurance models.
The PMFBY works on the One Nation, One Crop, One Premium. To provide insurance coverage and financial support to the farmers in the event of failure of any of the notified crops as a result of natural calamities, pests & diseases.
