Pradhan Mantri Fasal Bima Yojana (PMFBY)

Why in news?

• Domestic general insurance companies are gradually reducing their exposure to the crop insurance segment, the Pradhan Mantri Fasal Bima Yojana (PMFBY), in a bid to balance their portfolios and cut down losses on account of high claims.

About PMFBY:

• PMFBY aims to provide a comprehensive insurance cover against failure of the crop thus helping in stabilising the income of the farmers.
• The PMFBY replaced the existing two schemes National Agricultural Insurance Scheme as well as the Modified NAIS. Hence it is in line with One Nation – One Scheme theme. 
• 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 being administered by Ministry of Agriculture & Farmers welfare.

Objective of the Schemes:

• 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.

Highlights of the 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.

Farmers to be covered

• All farmers growing notified crops in a notified area during the season who have insurable interest in the crop are eligible.
• To address the demand of farmers, the scheme has been made voluntary for all farmers from Kharif 2020.

Risks covered under the scheme

• Prevented sowing/planting/germination risk:
  • Insured area is prevented from sowing / planting / germination due to deficit rainfall or adverse seasonal/weather conditions.
• 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.
• Post-harvest losses
• Localized calamities:
  • Loss/damage to notified insured crops resulting from occurrence of identified localized risks of Hailstorm, Landslide, Inundation, Cloud burst etc.
• Add-on coverage for crop loss due to attack by wild animals

Add ons:

• The government has given the flexibility to states/UTs to implement PMFBY and given them the option to select any number of additional risk covers/features.
• Government also mandated insurance companies to now spend 0.5% of the total premium collected on information, education and communication (IEC) activities.

PRACTICE QUESTION

Consider the following statements regarding Pradhan Mantri Fasal Bima Yojana (PMFBY)?

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

2. The scheme is implemented by empanelled general insurance companies.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Answer