2 Years of
In January earlier this year, in a move aimed at reducing the
recurrence of agricultural distress without having to effect hefty hikes in the
Minimum Support Prices (MSP), Narendra Modi led National Democratic Alliance
government had announced a crop insurance scheme named Pradhan Mantri Fasal
Bima Yojana (PMFBY).
Under the new scheme being implemented from Kharif season of 2016,
the premium paid by farmers had been reduced to 2% of the insured value for the
more rain-dependent kharif crop and 1.5% for the rabi season, compared with
3.5-8% charged for the two earlier schemes ---- National Agricultural Insurance
Scheme (NAIS) and Modified National Agricultural Insurance Scheme (MNAIS). In
the case of horticultural crops, farmers’ premium burden will be 5% of the sum
assured or 50% of the total premium.
NAIS and MNAIS have been discontinued from Kharif 2016, but the
ongoing Weather Based Crop Insurance Scheme (WBCIS) and Coconut Palm Insurance
Scheme would continue to operate while premium to be paid under WBCIS has been
brought on a par with PMFBY.
Later while unveiling the operational guidelines for the PMFBY at
a massive farmers' rally in Sehore in Madhya Pradesh in February this year,
Prime Minister Modi had noted that new crop insurance scheme would provide a
solution for the farmers problems, in times of difficulty. He said care had
been taken to eliminate the shortcomings of previous crop insurance schemes,
and create trust among farmers with regard to crop insurance. He said
technology would be used extensively with this scheme to ensure early
settlement of claims, and exhorted farmers to take benefit of this scheme.
Under the PMFBY, there would be no upper limit on government
subsidy provided by centre and state governments. “Even if the balance premium
(after farmers’ contribution) is 90%, it will be borne by the government,”
according to an agriculture ministry statement.
In the earlier schemes, there was a provision of capping the
premium rate which resulted in low claims being paid to farmers. Officials said
that this capping on premium was done to limit the government outgo on the
premium subsidy. “This capping has now been removed and farmers will get claim
against full sum insured without any reduction,” an official said.
This would ensure that farmers get the full sum insured without
any reduction or hassles from the 11 designated insurance companies if natural
calamities ravage their crops. Officials said that the following roll out of
PMFBY, the crop insurance coverage is set to rise from 45 million hectares or
23% of the area under cultivation at present to 50% of the crop area by
Another benefit to farmers under the new crop insurance scheme is
that losses incurred by them at any stage of the farming activity — from the
sowing to the post-harvest season — would be covered. Earlier, only
post-harvest losses can be offset by the insurance facility under the two
existing schemes. Also, even those farmers who haven’t taken bank loans will be
eligible for insurance cover under PMFBY.
“The new scheme will increase farmers’ income and resultant
increase in rural demand,” an agriculture ministry official said. The subsidy
would be borne by the Centre and the state government concerned equally. For
PMFBY, finance minister Arun Jaitley had allocated Rs 5,501 crore in
2016-17 while Rs 2,995 crore was allocated for various crop insurance schemes
in the previous fiscal.
thrust of PMFBY has been the use of technology which would be encouraged to a
great extent. “Smart phones will be used to capture and upload data of crop
cutting to reduce the delays in claim payment to farmers. Remote sensing will
be used to reduce the number of crop cutting experiments,” an official said.
In the earlier schemes, only 20 million of an estimated 120
million farmers in the country — earning for a population four to five times as
many — had crop insurance cover in 2014-15, even as the facility was just
against the cost of cultivation and barely provided any income protection.
According to the agriculture ministry data, most of the farmers
who earlier took crop insurance were in Rajasthan, Bihar, Uttar Pradesh,
Maharashtra, Karnataka and Andhra Pradesh. In terms of the value of the farm
output, the MNAIS and the Weather-based Crop Insurance Scheme — fared even more
dismally, with a coverage of only around 5.5%.
Since the launch of PMFBY in January, states such as Andhra
Pradesh, Jharkhand, Odisha, West Bengal, Himachal Pradesh and Uttarkhand have
already awarded contracts to empanelled insurance companies for providing crop
insurance coverage to large number of farmers in forthcoming kharif
However states like Punjab and Haryana are yet to decide on
rolling out the new crop insurance scheme so far. “The Punjab government has
decided not to implement PMFBY while the state government is still discussing
about implementing Weather Based Crop Insurance Scheme (WBCIS) whose premium
has been brought on a par with PMFBY,” an official.
In case of Haryana, the State Level Coordination Committee on Crop
Insurance meetings were held recently and state government is yet to decide on
rolling out mega crop insurance scheme. However, Maharashtra, which had
received deficient rainfall during last couple of years leading to fall in crop
output, the state cabinet recently gave a nod for implementation of PMFBY.
In Gujarat, Uttar Pradesh and Chhattisgarh, the bidding process of
identifying insurance companies have been completed and notifications are
expected to be out shortly. The roll out of crop insurance would commence in
Tamil Nadu and Assam after the state elections.
The Agriculture ministry has empaneled state-owned Agriculture
Insurance Company of India (AIC) and 10 private companies including
ICICI-Lombard General Insurance, HDFC-ERGO General Insurance, IFFCO-Tokio
General Insurance and SBI General Insurance, for implementation of the mega
“The expansion of the crop insurance scheme would depend on the
number of farmers voluntarily opting for it. Lower premium rates might
encourage more farmers to take up crop insurance,” Ajay Vir Jahkar, chairman,
Bharat Krishak Samaj, said
Meanwhile, the government has decided to entrust more
responsibility on banks for covering more number of farmers under the PMFBY, a
senior Agriculture ministry officer has said.
“Banks will be squarely responsible. In case there is crop loss to
a loanee farmer who is not insured, the bank will have to make good the losses.
The onus is now on banks and insurance companies to deliver”, Ashish Kumar
Bhutani, Joint Secretary, Agriculture ministry recently said. He said that the
government is trying to bring non-loanee farmers such as share-croppers too
within the PMFBY fold. "There is a separate committee of the government
looking into the land leasing policy and we should be able to address the
aspect of sharecropper also getting the benefit of crop insurance,” he noted.
Experts say that PMFBY if implemented properly across the country
would mitigate farm distress to a large extent especially when the erratic
climates have become a norm rather than exception.
(*The author is a Delhi based journalist.)