Launched in 2016, it aims to provide comprehensive insurance coverage against crop loss.
It replaced the National Agricultural Insurance Scheme (NAIS) and the Modified National Agricultural Insurance Scheme (MNAIS).
It is a Centrally Sponsored Scheme (CSS).
Objectives:
To provide insurance coverage and financial support to the farmers in the event of failure of any of the notified crop as a result of natural calamities, pests & diseases.
To stabilise the income of farmers to ensure their continuance in farming.
To encourage farmers to adopt innovative and modern agricultural practices.
To ensure flow of credit to the agriculture sector.
Implementing department: Department of Agriculture, Cooperation & Farmers Welfare (DAC&FW)
One crop one rate: A uniform maximum premium of only 2% will be paid by farmers for all Kharif crops, 1.5% for all Rabi crops and 5% for annual commercial and horticultural crops. The balance premium will be paid by the Government, to be shared equally by State & Central Government. Coverage of crops:
i) Food crops ii) Oil Seeds
iii) Commercial/Horticulture crops
Note: Plantation crops are not included in this scheme.
The yield losses covered for notified crops within a unit of insurance fall in four categories
Prevented sowing/planting risks: Due to deficit rainfall or adverse seasonal conditions (loss assessed at the insured unit level).
Loss to standing crop (sowing to harvesting): Due to non-preventable risks, i.e. drought, dry spells, flood, inundation, pests and diseases, landslides, natural fire and lightening, storms, hailstorms, cyclones, typhoons, tempests, hurricanes and tornadoes (loss assessed at the insured unit level).
Post-harvest losses (up to a period of 14 days): (loss assessed at the individual-farmer level)
Localized calamities: Loss/damage from the occurrence of identified localized risks of hailstorms, landslides or inundation affecting isolated farms in the notified area (loss assessed at the individual-farmer level).
There is no capping of premium rates and government subsidy (earlier there was capping on premium rates but it has been removed as it resulted in low claims being paid to farmers). So the farmers will get claim against full sum insured without any reduction.
It is compulsory for farmers availing crop loans for notified crops in notified areas and voluntary for non-loanee farmers.
The scheme is implemented on an ‘Area Approach basis’ i.e., Defined Areas for each notified crop for widespread calamities.
Defined Area (Notified Area) is the unit of insurance with the assumption that farmers growing the notified crop within the notified area face similar risk exposures, incur to a large extent, identical cost of production per hectare, earn comparable farm income per hectare, and experience similar extent of crop loss due to the operation of an insured peril (threat), in the notified area.
For major crops, the Unit of Insurance shall ordinarily be Village/Village Panchayat level and for minor crops may be at a higher level.
Geo-fencing/Geo-mapping can be done to identify the regions having homogenous Risk Profile for the notified crop.
Use of technology: Smart phones, drones etc., 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 (The CCE or the Crop Cutting Experiment is a process used to analyse the overall yield of the village [it is like a survey]).
Progress:
The coverage of this scheme has reached about 30% of the total cropped area in the country. PMFBY targets coverage of 50% of the total cropped area of the country during next two to three years.
A large numbers of small farmers have taken insurance under PMFBY (this may be because of the mandatory coverage of loanee farmers as mostly small farmers take loans).
Challenges:
Only limited number of crops are being notified. For example, In Haryana although moong, urad, jowar and sunflower seed are sown in many parts of the state, they have not been included in the state notification under major crops. This means that farmers growing these crops are not eligible for insurance under PMFBY. Furthermore, this is discouraging mixed cropping and crop diversification.
Delayed notification by the state governments: As per the PMFBY operational guidelines, there should be a gap of at least one month between notification issuance and date of risk inception. In many states, however, the PMFBY notification was issued after the sowing season had already begun. Delayed notification meant that farmers could not avail claims for prevented sowing.
Negligible coverage of sharecropper and tenant farmers: The primary reason is that to avail of insurance, farmers needs papers or certification to prove that they are farming as tenants or sharecroppers. This is not feasible as most state governments have either legally banned or imposed restrictions on agricultural land leasing. There is a need to change land tenure laws in states that allow easy registration of tenant farmers without any punitive measures on the landowner or the sharecropper/tenant farmers. Until this is done, PMFBY will not be able to include sharecropper/tenant farmers in the scheme.
The scheme does not cover the risks and losses inflicted by wild animals like elephants and wild boars which is a major problem in certain states.
Low public awareness: A CAG audit report on Centre’s crop insurance schemes (2017) found that only 37 per cent of the farmers were aware of crop insurance schemes.
Delayed payments: Delay at the state level causes obstruction in providing financial aid to farmers.
Outdated methods: Often outdated methods are used for crop loss assessment.
Reforms suggested by NITI Aayog in India Action Agenda:
There is no upper limit on subsidy amount which results in larger absolute subsidy amounts for larger farmers who are less vulnerable. The scheme should instead be modified to have a capped subsidy amount per farm household.
Second, insurance scheme should provide coverage for three to five years so that coverage extends to both good and bad years. Otherwise, insurance companies will have an incentive to go slow in selling policies during years that droughts are predicted.
Third, the subsidy on the premium should take the form of direct benefit transfer to ensure that farmers can shop for the best value for their money.
Finally, there should be minimally two companies offering insurance in any given location. This will create competition and lead to greater efficiency and lower premiums for farmers.
Weather Based Crop Insurance Scheme (WBCIS): It aims to provide insurance protection to the farmers against adverse weather incidence, such as deficit and excess rainfall, high or low temperature, humidity etc. which are deemed to impact adversely the crop production. WBCIS has been restructured and its premium rates have been made the same as in PMFBY. Further the capping on premium has also been removed, in line with PMFBY. State governments have the authority to decide whether they want PMFBY, WBCIS or both in their respective states.
Unified Package Insurance Scheme (UPIS): It aims at providing financial protection to citizens associated in agriculture sector. The package includes crop insurance (PMFBY/WBCIS), life insurance (PMJJBY), tractor insurance, pump set insurance, etc.
