Pradhan Mantri Fasal Bima Yojana – A boost to the farming sector

The highlights of this scheme

• There will be a uniform premium of only 2% to be paid by farmers for all Kharif crops and 1.5% for all Rabi crops. In case of annual commercial and horticultural crops, the premium to be paid by farmers will be only 5%. The premium rates to be paid by farmers are very low and balance premium will be paid by the Government to provide full insured amount to the farmers against crop loss on account of natural calamities.
• There is no upper limit on Government subsidy. Even if balance premium is 90%, it will be borne by the Government.
• Earlier, there was a provision of capping the premium rate which resulted in low claims being paid to farmers. This capping was done to limit Government outgo on the premium subsidy. This capping has now been removed and farmers will get claim against full sum insured without any reduction.
• The use of technology will 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.
• The new Crop Insurance Scheme is in line with One Nation – One Scheme theme. It incorporates the best features of all previous schemes and at the same time, all previous shortcomings/weaknesses have been removed.
• It is farmers’ welfare scheme that aims to reduce the premium burden on farmers and ensure early settlement of crop assurance claim for the full insured sum

Significance

• Robust cushion to our farmers
• Encourage them to consider investing more on inputs and crop protection solutions thereby adding to overall yield and production.
• The contribution of farmers in premiums will be substantially reduced between 1.5 and 5 per cent – and the government will bear the remaining financial burden even if the share of the government increases beyond 90 per cent. Under the PMFBY, there will be only one premium rate for each season for all foodgrain, oilseeds and pulses.
• Under the PMFBY, farmers would pay only 2 per cent premium for all kharif, 1.5 for rabi and 5 per cent for horticulture crops. Previous premiums ranged between 8 and 12 per cent
• Old systems lacked transparency and systemic inefficiencies which will now be addressed.
• Under earlier scheme Compensation took a long time and process of claims and disbursement was riddled with corruption, which will be addressed by the new scheme
• It also assumes significance as the government has been working towards spreading financial literacy by providing access to the common man to insurance products. Starting a new crop insurance scheme can be viewed as an extension of the same ideology.
• For the first time, inundation and post harvest losses arising out of cyclone and unseasonal rains have been included under localised risk cover, major improvements over the previous schemes.
• The scheme is also likely to rationalise government spends – as against its current annual spend of about Rs 5,000 crore on disaster relief, the new scheme is likely to cost Rs 8,000-9,000 crore, which shall only mean an incremental addition.

Areas of concern

1. We have to ensure the land records are in place and digitised including their linkages with the Aadhaar card number of the farmers.
2. The assessments of crop losses have to be done in a time bound manner, and using high-end technologies such as automatic weather stations (AWS), drones, Low Earth Orbits (leos) and satellites.
3. Payment to farmers should be done directly into their accounts.
4. Insurance companies and government departments dealing with this must be geared to deal with high volumes
5. Weather data of all regions should be adequately captured so that forecasts and assessments are done expeditiously
6. Creating awareness among farmers, and especially the small peasants who are more vulnerable, is going to be vital for the spread of the programme.
7. Those assigned the task of making crop loss assessment should be adequately trained.