Introduction
PMFBY is a technology based crop insurance scheme launched on 13th January 2016 by GOI to benefit farmers in a direct manner through Direct Benefit Transfer (DBT)Need for PMFBY
- Agriculture is facing increased natural risks
- The frequency of natural disasters is on the rise making insurance mandatory
- Increasing occurrence of farmer suicides due to crop failure
- Prevailing drought conditions across the country
- Failing monsoons
- Uncertainty in agriculture production
- The new PMFBY scheme is well catered to address and cover the crop loss in the current situation
Background
- PMFBY replaces the National Agriculture Insurance Scheme (NAIS) and modified NAIS
- This scheme is implemented by Ministry of Agriculture from this Kharif season (April 1, 2016)
- The scheme aims to cover nearly 50 percent of the total cropped area in our country in the next three years
- Initially in 2015-2016, the budget for crop insurance was fixed at 2823 crore rupees and eventually raised to 7750 crore rupees in 2018-2019
Features of PMFBY
- The premium for the crops is uniform throughout the country
- The premium subsidy is equally shared between the state and the centre
- The scheme offers a uniform premium rate of 2 percent for kharif crops
- 1.5 percent for Rabi crops
- 5 percent for commercial and horticulture crops
- The crop insurance premium to be paid by farmers is low
- The low premium feature forms a significant aspect in penetrating the agriculture insurance market and increase enrolment.
- The low premium aspect is likely to attract many farmers to enroll thereby covering a wide population
- Government pays the rest premium and provides full insured amount against crop loss due to natural calamities
- Another added feature is that the insurance scheme covers post-harvest losses
- Farmers feel confident and safe due to this added feature
Advantage of PMFBY over the previous schemes
- This new crop insurance scheme gains relevance in solving the two major issues with old insurance schemes
- First is the delayed compensation for crop damage (may even take a year)
- Second is the lack of transparency in crop damage assessment
- The scheme employs satellite technology for speedy claim settlement and facilitates accurate assessment of crop damage
- Technology in the form of smart phones is used to assess the crop damage by taking pictures and uploading the crop cutting data
- This also reduces the delay in claim compensation and enhances the level of transparency
- The loss assessment is done at individual farms after harvesting and damage due to hailstorm, inundation, landslide, cyclonic rains is assessed
Limitations of PMFBY
- There are certain uncertainties associated with the new crop insurance
- The subsidy sharing between state and centre on equal basis is unclear as most of the states have not agreed
- The land owner’s grievances are addressed but there is no mention about the tenant farmers problems in the scheme
- In most of the agricultural lands, crop damage occurs due to the destruction caused by wild animals
- This risk of crop damage by animals is not addressed in the scheme
Way Forward
- PMFBY is a sign of progress but the key lies in the implementation of the scheme in a transparent manner
- Most of the farmers are illiterates and the concept of technology especially smart phone based crop damage assessment will require a lot of training and awareness
- Direct benefit transfer is a major success of the present government and this must be extended to the crop insurance in such a way that the farmer gets the compensation directly in bank account
- Overall, the scheme has set high standards with technology application and the real success of the scheme lies in the farmer adapting to the scheme.
