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Pradhan Mantri Fasal Bima Yojana
The Pradhan Mantri Fasal Bima Yojana (PMFBY), launched on February 18, 2016, under the leadership of Prime Minister Narendra Modi, stands as a crucial insurance service catering to farmers and their crop yields. Formulated under the One Nation–One Scheme ethos, PMFBY consolidates and enhances previous initiatives like the National Agricultural Insurance Scheme (NAIS) and the Modified National Agricultural Insurance Scheme (MNAIS), rectifying their shortcomings while integrating their strengths. Its primary objectives include alleviating the premium burden on farmers and ensuring prompt settlement of crop assurance claims for the full insured sum.PMFBY endeavors to offer comprehensive insurance coverage against crop failure, thereby aiding in stabilizing farmers’ incomes. Encompassing Food & Oilseeds crops as well as Annual Commercial/Horticultural Crops with available past yield data and requisite Crop Cutting Experiments (CCEs) conducted under the General Crop Estimation Survey (GCES), the scheme is executed through empanelled general insurance companies. The selection of Implementing Agencies (IAs) is facilitated by respective State Governments through a bidding process.Initially mandatory for loanee farmers availing Crop Loans/Kisan Credit Card (KCC) accounts for specific crops, PMFBY transitioned to a voluntary participation model in 2020 following scheme reforms. Oversight and administration of PMFBY rest with the Ministry of Agriculture and Farmers Welfare.Despite its noble intentions, PMFBY has encountered challenges, notably significant outstanding dues owed to farmers, amounting to thousands of crores, while insurance companies have benefited financially.
Objective of the Scheme
The primary objectives of the Pradhan Mantri Fasal Bima Yojana (PMFBY) are to foster sustainable agricultural production by:
- Offering financial assistance to farmers affected by crop loss or damage due to unexpected circumstances.
- Enhancing the stability of farmers’ income, thereby promoting their continued engagement in farming activities.
- Encouraging the adoption of innovative and modern agricultural techniques among farmers.
- Facilitating the flow of credit to the agricultural sector, thereby bolstering food security, promoting crop diversification, and fostering growth and competitiveness in the agricultural domain. Additionally, this initiative serves to shield farmers from the inherent risks associated with agricultural production.
Implementing Agency
The implementation of the Scheme will be carried out through a collaborative framework involving selected insurance companies, overseen by the Department of Agriculture, Cooperation & Farmers Welfare (DAC&FW) under the Ministry of Agriculture & Farmers Welfare (MoA&FW), Government of India (GOI), and the respective State authorities. This coordinated effort will involve various other entities including financial institutions such as Commercial Banks, Co-operative Banks, Regional Rural Banks, and their regulatory bodies, as well as Government Departments responsible for Agriculture, Co-operation, Horticulture, Statistics, Revenue, Information/Science & Technology, and Panchayati Raj, among others
Farmers Coverage:
All farmers cultivating notified crops within a designated area during the season and possessing insurable interest in the crop are eligible for coverage.
Voluntary Enrollment: Since the 2020 Kharif season, enrollment has become entirely voluntary.
Crop Coverage: The scheme extends coverage to:
- Oilseeds
- Food crops
- Annual Commercial/Horticultural crops
For perennial crops, coverage pilots may be initiated for those perennial horticultural crops for which a standard yield estimation methodology is available
Coverage of Risks and Exclusions: The scheme covers various stages of crop risks leading to crop loss, including:
- Prevented Sowing/Planting/Germination Risk: When the insured area cannot be sown/planted/germinated due to deficient rainfall or adverse seasonal/weather conditions.
- Standing Crop (Sowing to Harvesting): Comprehensive risk insurance covering yield losses from non-preventable risks such as drought, dry spells, floods, pests, diseases, landslides, fires due to natural causes, lightning, storms, hailstorms, and cyclones.
- Post-Harvest Losses: Coverage extends up to two weeks post-harvest for crops requiring drying in the field against specific perils like hailstorms, cyclones, cyclonic rains, and unseasonal rains.
- Localized Calamities: Loss/damage to insured crops from identified localized risks such as hailstorms, landslides, inundation, cloud bursts, and natural fires due to lightning affecting isolated farms in the designated area.
- Add-on coverage for crop loss due to wildlife attack: States may consider providing additional coverage for crop loss due to wildlife attacks where substantial and identifiable risks exist.
- General Exclusions: Losses arising from war, nuclear risks, malicious damage, and other preventable risks are excluded from coverage.
Challenges:
When the guidelines for the PMFBY were introduced, Prime Minister Modi highlighted farmers’ lack of trust in previous schemes as a significant barrier to enrollment. The PMFBY aimed for a rapid increase in enrollment, with the goal of covering 50% of the cropped area, approximately 98 million hectares, by 2018-’19.However, during the second year of the PMFBY in 2017-’18, enrollment numbers plummeted, leading to coverage levels dropping below those of 2015. Instead of reaching the targeted 50% coverage by 2018-’19, coverage remained at less than 26% in 2017-’18. Despite being designed to offer insurance protection to farmers against crop losses due to natural events, the scheme has become lucrative for insurance companies, leaving farmers frustrated with delays in claim settlements, rejections, and inadequate compensation.Since its launch in 2016, the PMFBY has completed four full seasons, with insurance companies earning nearly Rs. 16,000 crore from the first three seasons. However, claim settlements for the rabi 2017-18 season, which ended over two months ago, are still pending. Essentially, the scheme seems to transfer funds from farmers and government coffers to insurance companies without adequately compensating farmers for their lost crops.According to data obtained through RTI inquiries, farmers’ claims worth Rs. 2,829 crore remain unpaid for the two seasons during which the PMFBY has been in operation. The Ministry of Agriculture and Farmers’ Welfare’s response indicates that a significant portion of claims for the rabi 2017-18 season is yet to be estimated or approved by insurance companies. Claims totaling Rs. 546 crore for the 2016–17 season and Rs. 2,282 crore for the 2017–18 season remain pending.In 2020, several states opted out of the scheme due to concerns over high premiums draining their finances. Gujarat withdrew from the PMFBY scheme in August 2020, citing financial strain, while Punjab refused to implement the scheme altogether. Additionally, Andhra Pradesh, Telangana, and Jharkhand initially joined the scheme but later exited. The delay in claim settlements has been criticized by the Parliamentary Standing Committee On Agriculture, stating that it undermines the core objective of the flagship Pradhan Mantri Fasal Bima Yojana.
