The Pradhan Mantri Fasal Bima Yojana (PMFBY), the Government of India’s flagship crop insurance scheme, celebrated its fifth anniversary on January 13th, 2021. As a pioneering initiative aimed at providing farmers across the country with a comprehensive risk solution at the most affordable uniform premium, the scheme has played a significant role in stabilising the income of farmers.
The PMFBY: Providing Comprehensive Insurance Cover
The PMFBY provides expansive insurance coverage against crop failure, thus serving to stabilize the income of farmers. This crop insurance extends to all food and oilseed crops and annual commercial/horticultural crops, as long as past yield data is available for these crops.
Premiums Under the PMFBY
Regarding premiums, farmers are required to pay 2% for all Kharif crops and 1.5% for all Rabi crops. For annual commercial and horticultural crops, the premium is set at 5%. Additionally, premium costs not covered by farmer contributions are subsidized equally by the different States and the GoI. However, for the North Eastern States where uptake needs promoting, the GoI covers 90% of the premium subsidy.
Compulsory or Voluntary Enrollment
The scheme necessitates enrollment for loanee farmers availing the Crop Loan/Kisan Credit Card (KCC) account for notified crops, while voluntary for others.
The Introduction of PMFBY 2.0
In efforts to improve the efficiency and effectiveness of the scheme, the central government revamped it for the 2020 Kharif season, now often referred to as PMFBY 2.0. Key features of this overhauled version include completely voluntary enrollment for all farmers, a limit to the Centre’s premium subsidy, and more implementation flexibility for states/UTs.
Investing in Information, Education, and Communication Activities
Insurance companies are now mandated to spend 0.5% of total premium collected on information, education, and communication (IEC) activities.
Adoption of Technology
The use of technology has been significantly increased under PMFBY 2.0. A Crop Insurance App facilitates easy enrollment of farmers and easier reporting of crop loss within 72 hours of an event. Other technological tools used include satellite imagery, remote-sensing technology, drones, artificial intelligence, and machine learning to assess crop losses. Furthermore, a PMFBY portal has been created for the integration of land records.
PMFBY’s Performance So Far
On a yearly basis, the scheme covers approximately 5.5 crore farmer applications. Thanks to the seeding of Aadhar (linking Aadhaar through Internet banking portals), claim settlement directly into the farmer accounts has been hastened.
The Way Forward: Enhancing PMFBY’s Impact
For the PMFBY to have a greater impact, several areas need addressing. Loan waiver schemes announced by state governments should be rationalised alongside mandatory Aadhar linkage. Timely compensation needs attention with some states reportedly delaying compensation. Emphasis is also needed on facilitating behavioural change regarding the perception of insurance cost as a necessary input, not a money-back investment. To cover more risk areas, the PMFBY needs to be streamlined with state crop insurance schemes and others like the Restructured Weather Based Crop Insurance Scheme. Successful implementation of these measures would mark a significant milestone in agricultural reform in India, enabling self-sufficient farmers capable of coping during times of crisis.
