Pradhan Mantri Fasal Bima Yojana is an innovative crop insurance scheme launched by the Indian Government in 2016. The initiative, administrated by the Ministry of Agriculture and Farmers Welfare, replaced two older schemes – the National Agricultural Insurance Scheme (NAIS) and Modified National Agricultural Insurance Scheme (MNAIS). The main objective of PMFBY is to provide insurance coverage and financial support to farmers in the event of failure of any of the notified crops as a result of natural calamities, pests & diseases.
Eligibility and Premiums
All farmers – including sharecroppers and tenant farmers – who grow notified crops within notified areas are eligible for coverage under PMFBY. The premium rates are minimal, with a uniform rate of only 2% for all Kharif crops and 1.5% for all Rabi crops. For annual commercial and horticultural crops, the premium is only 5%. The majority of the balance premium is paid by the Government, with subsidies that have no upper limit.
Technological Interventions
PMFBY leverages various technological tools, such as satellite imagery, remote-sensing technology, drones, artificial intelligence, and machine learning, for crop loss assessment. The scheme has its own app, which aids easy enrollment of farmers and facilitates quicker reporting of crop loss. The integration of land records is also facilitated through the PMFBY portal.
Recent Changes in the Scheme
Originally mandatory for loanee farmers, PMFBY was made optional for all farmers in 2020. Previously, the rate of average premium subsidy – the difference between the actuarial premium rate and the rate of insurance premium payable by the farmer – was shared by the state and federal governments. This setup allowed for additional subsidies from state budgets. However, the Centre decided in February 2020 to limit its premium subsidy to 30% for unirrigated areas and 25% for irrigated ones.
Challenges Faced by PMFBY
Despite its innovative approach, the scheme has been plagued by several issues. Financial constraints of states, alongside a low claim ratio during normal seasons, have been key reasons for the non-implementation of the Scheme. Additionally, compensation delays and dissatisfaction over compensation amounts have caused unrest among farmers. The implementation gaps have been further widened due to insurance companies showing no interest in bidding for clusters prone to crop loss.
Way Forward & Proposed Changes
To ensure the benefits of the scheme reach the farmers effectively, there is an urgent need for comprehensive rethinking among states and the central government to resolve all pending issues. One proposed solution is for the state government to invest money earmarked for subsidies under this scheme in a new insurance model instead.
Previous Year Questions on PMFBY in UPSC Civil Services Examination
The UPSC examination has previously asked questions related to the PMFBY. In 2016, one question asked candidates to consider statements regarding the uniform premium and the scheme’s coverage of post-harvest losses due to cyclones and unseasonal rains. The correct answer was that the scheme does cover such post-harvest losses. However, the premium is not uniform across the board—while premiums for Kharif crops are 2%, they are 1.5% for Rabi crops and 5% for annual commercial and horticultural crops.
