There is an observable decrease in the number of beneficiaries under Pradhan Mantri Fasal Bima Yojana (PMFBY) from 2016-17 to 2017-18. This reduction in farmer applicants’ coverage stems principally from factors such as the announcement of a Debt Waiver Scheme in Maharashtra and Uttar Pradesh, improved perceptions of risk mitigation in 2017-18 due to favorable monsoon conditions, and the mandatory requirement of Aadhaar for coverage which led to de-duplication.
Concerns over Coverage
A recent investigation into Risk Management in Agriculture conducted by the committee on doubling farmers’ income, noted that there is inadequate coverage of non-loanee farmers (farmers who do not avail crop loans) under the scheme. Similarly, it was also observed that a reduced number of bidders in the drought-prone rain-fed regions leads to exceptionally high (actuarial) premium rates of up to 25%. The limited number of insurance companies bidding in these areas indicates an inclination towards low-risk areas while neglecting high-risk districts where farmers are more vulnerable.
Implications of Delayed Claim Settlement
One potential reason for farmers losing interest in PMFBY could be the delay experienced in the settlement of claims. This results in reduced confidence in the efficiency and reliability of the scheme.
Efforts to Augment Coverage
The Government, despite the scheme being optional for States, has been encouraging the States to include more areas and crops under the scheme with the aim of maximizing farmer coverage. In order to enhance farmer awareness about crop insurance schemes, the Government seeks active cooperation from all stakeholders, particularly the States and implementing insurance companies. Various measures have been proposed for this purpose, including regular advertisements in national/local newspapers, audio-visual media broadcasts, distribution of pamphlets in local languages, participation in agriculture fairs/melas, circulating SMS messages, and conducting workshops/training sessions for State Government officials and financial institutions.
Role of Insurance Companies
Insurance companies are being asked to allocate 0.5% of the total premium collected by them for publicity and awareness generation activities. This initiative aims to increase the visibility of the scheme.
Overview of Pradhan Mantri Fasal Bima Yojana (PMFBY)
PMFBY was launched in 2016 with the objective of reducing the burden of crop insurance on farmers. The scheme replaces the earlier National Agricultural Insurance Scheme (NAIS) and Modified National Agricultural Insurance Scheme (MNAIS), aligning with the One Nation – One Scheme theme.
Key Features of PMFBY
The scheme sets a uniform premium of 2% of the sum insured as the payment to be made by farmers for all kharif crops and 1.5% of the sum insured for all rabi crops. For annual commercial and horticultural crops, it’s 5% of the sum insured or the actuarial rate, whichever is lower. The remaining balance of the premium will be borne by the government to provide farmers with the complete insured amount against crop loss due to natural calamities. The government subsidy for actuarial premium has no upper limit and is divided evenly between state and central government. To accelerate the settlement process, 25% of the likely claim will be settled directly into farmers’ accounts. Moreover, the scheme provides coverage for post-harvest losses and localized crop losses and makes judicious use of technology like smartphones and remote sensing for efficient data capture, upload, and claims processing. It covers loanee farmers, non-loanee farmers, sharecroppers, and tenant farmers.