Pradhan Mantri Fasal Bima Yojana (PMFBY)

Origin

• The Pradhan Mantri Fasal Bima Yojana (PMFBY) was launched in India in 2016 by the Ministry of Agriculture and Farmers Welfare. 
• The scheme was created to provide financial support and insurance coverage to farmers in the event of crop failure due to natural disasters, pests, and diseases. 

About

• Ministry:
  • Ministry of Agriculture and Farmers Welfare
• The Pradhan Mantri Fasal Bima Yojana (PMFBY), launched in 2016 by the Government of India, is a national crop insurance scheme aimed at providing financial protection to farmers against crop losses caused by natural calamities, pests, and diseases.
• The program aims to reduce the financial risks associated with farming and ensure a stable income for farmers, particularly small and marginal ones, who are most vulnerable to uncertainties in agriculture.

Key Features of PMFBY

• Coverage of Crops:
  • PMFBY provides coverage for a wide variety of crops. This includes both food and cash crops like paddy, wheat, maize, cotton, sugarcane, soybeans, and more. It is designed to cover crops grown in both kharif (monsoon) and rabi (winter) seasons.
• Risk Coverage:
  • The scheme offers protection against several risks such as:
    • Yield Losses due to natural calamities like droughts, floods, hailstorms, cyclones, etc.
    • Prevented Sowing due to adverse weather conditions.
    • Post-Harvest Losses, in case of unseasonal rains or other weather events.
    • Localized Risks like pest attacks and diseases.
• Premium Subsidy:
  • One of the significant features of PMFBY is the subsidy offered on insurance premiums. The farmers are required to pay a minimal premium amount (usually between 1.5% to 2% for food crops and 5% for commercial crops), while the government subsidizes the remaining premium. The subsidy is shared between the central and state governments.
  • Kharif Crops:
    • Farmers pay up to 2% of the sum insured.
  • Rabi Crops:
    • Farmers pay up to 1.5% of the sum insured.
  • Commercial and Horticultural Crops:
    • Farmers pay up to 5% of the sum insured.
• Enrollment Process:
  • Farmers can enroll in PMFBY through several channels:
    • Farmers’ Self-Enrollment: Farmers can register via the online portal or through Common Service Centers (CSCs).
    • Automated Enrollment: The government has also developed a system to automatically enroll farmers based on land records and data.
    This ensures that the process is streamlined and that even marginal farmers are included.
• Seamless Claims Process:
  • In case of a crop loss, PMFBY guarantees a fast-track claim settlement process. The insurance is based on an area-based approach, and the loss is assessed based on the district level, rather than individual farms. This helps reduce delays in claim settlements. The claims are made based on the Actual Production History (APH), and payouts are made based on the difference between the threshold yield (average yield) and the actual yield obtained.
• Technology Integration:
  • PMFBY makes use of modern technology like remote sensing, weather data, satellite imagery, and drones to assess crop damage and determine the payout amounts. This reduces the need for extensive field surveys and helps in quicker claim processing.
• Farmer-Friendly Approach:
  • No Upper Limit on Premium:
    • There is no upper limit on the sum insured under PMFBY, which ensures that farmers can get adequate coverage for their crops.
  • No Cap on Area:
    • The scheme is applicable to both irrigated and unirrigated areas, which is particularly beneficial for regions with less irrigation infrastructure.
  • Risk Mitigation for Small Farmers:
    • The government’s subsidy reduces the burden on small-scale farmers, making it more accessible.

Benefits of PMFBY

• Financial Security for Farmers:
  • PMFBY provides farmers with financial assistance when crops are damaged by unpredictable weather patterns, helping them recover and continue farming without significant losses.
• Encourages Investment in Agriculture:
  • Since farmers have financial protection against crop failure, they are more likely to invest in better seeds, technology, and farming practices, which can lead to better yields.
• Improved Agricultural Growth:
  • By mitigating risk, PMFBY indirectly contributes to the overall stability of the agricultural sector, ensuring higher food production and greater food security for the nation.
• Reduced Dependency on Loan Waivers:
  • PMFBY is designed to prevent farmers from relying on loan waivers and other government interventions in times of distress, as the scheme ensures that they can be compensated for their crop losses in a timely manner.
• Support for Marginal Farmers:
  • The scheme is especially beneficial for small and marginal farmers who may not have the resources to withstand natural disasters. The low premium burden and government subsidy make the insurance affordable and accessible.

Challenges in Implementation

Despite the numerous benefits, the implementation of PMFBY has faced some challenges:

• Awareness and Participation:
  • A lack of awareness about the scheme among farmers, especially in rural and remote areas, has limited its adoption. Many farmers are still unfamiliar with the enrollment process or how the claims system works.
• Delays in Claim Settlements:
  • While the process is meant to be fast-tracked, several instances of delayed claims processing have been reported. These delays affect the livelihood of farmers who are already struggling due to crop failure.
• Accurate Damage Assessment:
  • While technology helps assess damage, there are still concerns over the accuracy of assessments, particularly in cases where localized or micro-climatic risks are involved. Some farmers feel that the assessment does not always reflect the actual damage they have incurred.
• Limited Coverage in Certain Areas:
  • Some farmers in areas with little or no data infrastructure (e.g., lack of rainfall or yield data) find it difficult to get insurance coverage. The scheme’s dependence on area-based estimates also sometimes misses out on addressing individual farm variations.
• Insurance Companies’ Role:
  • There are instances where insurance companies have been slow to process claims or have used complicated procedures, adding to the frustration of farmers.

Recent Updates & Reforms

• Increasing Coverage:
  • The government is making efforts to include more farmers and crops under the scheme.
• Simplifying the Process:
  • Steps are being taken to make the enrollment process simpler, including digitization of land records and integrating them with the insurance database.
• Ensuring Faster Claims:
  • The government has introduced measures to make the claims process quicker, using technology for real-time crop assessment.
• Incentivizing States:
  • States that contribute to the scheme by sharing the premium burden receive financial incentives, motivating them to actively participate.

Conclusion

• The Pradhan Mantri Fasal Bima Yojana (PMFBY) plays a crucial role in safeguarding the livelihoods of Indian farmers by providing insurance cover against unpredictable weather events and natural disasters.
• The scheme’s goal of ensuring financial security, boosting agricultural productivity, and reducing farm distress is essential for the sustainable growth of India’s agricultural sector.
• However, its success hinges on greater awareness, timely claim settlement, and more efficient damage assessment processes.

With continued reforms and improved implementation, PMFBY can serve as a strong pillar in the government’s efforts to strengthen the agricultural economy and improve farmers’ resilience to climate risks.