Pradhan Mantri Fasal Bima Yojana

The Pradhan Mantri Fasal Bima Yojana (PMFBY) launched on 18 February 2016 by Prime Minister Narendra Modi is an insurance service for farmers for their yields.[1] It was formulated in line with One Nation–One Scheme theme by replacing earlier two schemes National Agricultural Insurance Scheme (NAIS) and Modified National Agricultural Insurance Scheme (MNAIS) by incorporating their best features and removing their inherent drawbacks (shortcomings). It aims to reduce the premium burden on farmers and ensure early settlement of crop assurance claim for the full insured sum.

Pradhan Mantri Fasal Bima Yojana
CountryIndia
Prime Minister(s)Narendra Modi
MinistryMinistry of Agriculture and Farmers Welfare
Launched13 January 2016 (2016-01-13)
StatusActive
Websitehttps://pmfby.gov.in
India
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politics and government of
India
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PMFBY aims to provide a comprehensive insurance cover against failure of the crop thus helping in stabilising the income of the farmers. The Scheme covers all Food & Oilseeds crops and Annual Commercial/Horticultural Crops for which past yield data is available and for which requisite number of Crop Cutting Experiments (CCEs) are being conducted under General Crop Estimation Survey (GCES). The scheme is implemented by empanelled general insurance companies. Selection of Implementing Agency (IA) is done by the concerned State Government through bidding. The scheme is compulsory for loanee farmers availing Crop Loan /KCC account for notified crops and voluntary for other others. The scheme is being administered by Ministry of Agriculture.

The scheme has been beset by a number of problems for the farmers with unpaid dues in thousands of crores while insurance companies have pocketed the money.

Objective of the Scheme

Pradhan Mantri Fasal Bima Yojana (PMFBY) aims at supporting sustainable production in agriculture

sector by way of[2]

  • Providing financial support to farmers suffering crop loss/damage arising out of unforeseen events
  • Stabilizing the income of farmers to ensure their continuance in farming
  • Encouraging farmers to adopt innovative and modern agricultural practices
  • Ensuring flow of credit to the agriculture sector which will contribute to food security, crop diversification and enhancing growth and competitiveness of agriculture sector besides protecting farmers from production risks.

Implementing Agency

The Scheme shall be implemented through a multi-agency framework by selected insurance companies under the overall guidance & control of the Department of Agriculture, Cooperation & Farmers Welfare (DAC&FW), Ministry of Agriculture & Farmers Welfare (MoA&FW), Government of India (GOI) and the concerned State in co-ordination with various other agencies; viz Financial Institutions like Commercial Banks, Co-operative Banks, Regional Rural Banks and their regulatory bodies, Government Departments viz. Agriculture, Co-operation, Horticulture, Statistics, Revenue, Information/Science & Technology, Panchayati Raj etc.[3]

Coverage of Farmers

All the farmers growing notified crops in a notified area during the season who have insurable interest in the crop are eligible.

Compulsory coverage : The enrollment under the scheme, subject to possession of insurable interest on the cultivation of the notified crop in the notified area, shall be compulsory for following categories of farmers:

  • Farmers in the notified area who possess a Crop Loan account/KCC account (called as Loanee Farmers) to whom credit limit is sanctioned/renewed for the notified crop during the crop season. and
  • Such other farmers whom the Government may decide to include from time to time.

Voluntary coverage : Voluntary coverage may be obtained by all farmers not covered above, including Crop KCC/Crop Loan Account holders whose credit limit is not renewed.

Coverage of Crops
  1. Oil seeds
  2. Food crop
  3. Annual Commercial / Annual Horticultural crops.

In addition for perennial crops, pilots for coverage can be taken for those perennial horticultural crops

for which standard methodology for yield estimation is available.[4]

Coverage of Risks and Exclusions

Following stages of the crop risks leading to crop loss are covered under the Scheme.[5]

  1. Prevented Sowing/Planting/Germination Risk: Insured area is prevented from sowing/planting/germination due to deficit rainfall or adverse seasonal/weather conditions.
  2. Standing Crop (Sowing to Harvesting): Comprehensive risk insurance is provided to cover yield losses due to non-preventable risks, viz. Drought, Dry spell, Flood, Inundation, widespread Pests and Disease attack, Landslides, Fire due to natural causes, Lightening, Storm, Hailstorm and Cyclone.
  3. Post-Harvest Losses: Coverage is available only up to a maximum period of two weeks from harvesting, for those crops which are required to be dried in cut and spread / small bundled condition in the field after harvesting against specific perils of Hailstorm, Cyclone, Cyclonic rains and Unseasonal rains
  4. Localized Calamities: Loss/damage to notified insured crops resulting from occurrence of identified localized risks of Hailstorm, Landslide, Inundation, Cloud burst and Natural fire due to lightening affecting isolated farms in the notified area.
  5. Add-on coverage for crop loss due to attack by wild animals: The States may consider providing add-on coverage for crop loss due to attack by wild animals wherever the risk is perceived to be substantial and is identifiable.

General Exclusions: Losses arising out of war and nuclear risks, malicious damage and other preventable risks shall be excluded.

List of insurance companies

Department of Agriculture Cooperation & Farmers Welfare has designated/empanelled Agriculture Insurance Company of India(AIC) and some private insurance companies presently to participate in the Government sponsored agriculture /crop insurance schemes based on their financial strength, infrastructure, manpower and expertise etc. The empaneled insurance companies at present are:[6]

The only government insurance company on this list, the Agriculture Insurance Company of India, exited the scheme after making large gains in the first year.[7]

Unit of Insurance

The Scheme shall be implemented on an ‘Area Approach basis’ i.e., Defined Areas for each notified crop for widespread calamities with the assumption that all the insured farmers, in a Unit of Insurance, to be defined as "Notified Area‟ for a crop, 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, in the notified area.

Defined Area (i.e., unit area of insurance) is Village/Village Panchayat level by whatsoever name these areas may be called for major crops and for other crops it may be a unit of size above the level of Village/Village Panchayat. In due course of time, the Unit of Insurance can be a Geo-Fenced/Geo-mapped region having homogeneous Risk Profile for the notified crop.

For Risks of Localised calamities and Post-Harvest losses on account of defined peril, the Unit of Insurance for loss assessment shall be the affected insured field of the individual farmer.

Calendar of activity
Activity Kharif Rabi
Loaning period (loan sanctioned) for Loanee farmers covered on Compulsory basis. April to July October to December
Cut-off date for receipt of Proposals of farmers (loanee & non-loanee). 31 July 31 December
Cut-off date for receipt of yield data Within a month from final harvest Within a month from final harvest

Problems

Unveiling the guidelines of the PMFBY, Modi attributed low enrolment in crop insurance to farmers’ “lack of faith” in previous schemes. A rapid increase in enrolment was to be the hallmark of the PMFBY. The target was to cover 50% of the cropped area, about 98 million hectares, by 2018-’19.

But in 2017-’18, the second year of the PMFBY, the enrolment numbers fell sharply, taking the coverage to below 2015 levels. Against the target of 50% for 2018-’19, the coverage stands at less than 26% in 2017-’18.[8] The scheme is supposed to provide insurance protection to farmers against crop losses due to natural events – has turned into a bonanza for insurance companies while farmers are angry over delays in claim settlement, rejections and paltry compensation. Launched in 2016, four full seasons have passed since and the financial transactions show earnings of insurance companies reaching almost Rs.16,000 crore from the first three seasons, kharif 2016, rabi 2016-17 and kharif 2017. Although the rabi 2017-18 season is over yet over two months later, claim settlement is still not complete.

In other words, the scheme is essentially transferring farmers’ money and govt. funds to the insurance companies ’coffers while pretending to provide much needed compensation to farmers whose crops are lost in inclement weather conditions.[9] RTI data received and reviewed by The Wire has revealed that farmers’ claims worth Rs 2,829 crore remain unpaid for the two seasons that the PMFBY has been implemented.

The RTI response of the ministry of agriculture and farmers’ welfare is dated October 10.

“A majority of claims for rabi 2017-18 are yet to be estimated/approved by company,” the ministry noted in its response. Thus, for the 2017-18 season, a majority of the data pertains to Kharif 2017 and the data reflects only 1% of the claims paid for the rabi 2017-18 season.

For the 2016-17 season, claims of Rs 546 crore remain pending. Claims need to be settled within two months of harvest, according to the PMFBY guidelines. Harvest for the 2016-17 season would have ended in May 2017, at the very latest.

For the 2017-18 season, claims worth Rs 2,282 crore remain pending. The data essentially pertains to Kharif 2017-18, as pointed out by the ministry. The harvest for which would have ended in December 2017, at the very latest.[10]

References

See also

Citations
  1. "Department of Financial Services".
  2. "OPERATIONAL GUIDELINES Pradhan Mantri Fasal Bima Yojana" (PDF). pmfby.gov.in.
  3. "PRADHAN MANTRI FASAL BIMA YOJANA (PMFBY)" (PDF). pmfby.gov.in.
  4. "PRADHAN MANTRI FASAL BIMA YOJANA (PMFBY)" (PDF). pmfby.gov.in.
  5. "OPERATIONAL GUIDELINES Pradhan Mantri Fasal Bima Yojana" (PDF). pmfby.gov.in.
  6. "General Insurance Companies empanelled under Crop Insurance Schemes". vikaspedia.
  7. "How the PM's Crop Insurance Scheme Turned Into a Goldmine for 10 Private Insurers". The Wire. Retrieved 24 April 2019.
  8. "Modi's ambitious crop insurance scheme is failing. Here are the hard facts". scroll.in. 21 January 2019.
  9. "PMFBY – Insurance Companies Make Super Profits, Farmers Suffer". Newsclick.
  10. "Under Modi's Crop Insurance Scheme, Companies Owe Farmers a Whopping Rs 2,800 Crore". thewire.in. 27 November 2018.
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