Agricultural Insurance

Pradhan Mantri Fasal Bima Yojana (PMFBY)

The launch of this one-of-a-kind crop insurance scheme was announced by the Union Home Minister, Mr. Rajnath Singh.   Pradhan Mantri Fasal Bima Yojana will offer more insurance with less premium, and purchasing capacity of farmers will rise.

     On 18 February 2016, Prime Minister, Narendra Modi unveiled the guidelines for operationalization of the Pradhan Mantri Fasal Bima Yojana (PMFBY). The guidelines were issued at a farmers’ convention that was held at Madhya Pradesh’s Sherpur village. The Yojna, which aims at boosting India’s agriculture sector, will come into force from the 2016 Kharif season.
 

Highlights of the Scheme

• For many years now, a number of complex crop insurance schemes have existed. Farmers, however, have been unable to avail the benefits of these schemes. The Pradhan Mantri Fasal Bima Yojna has now replaced all other crop insurance schemes and integrated the benefits in one single yojana.
• This means that earlier schemes such as the National Agricultural Insurance Scheme (NAIS) and Modified National Agricultural Insurance Scheme (MNAIS) will no longer be available.
• In most of the earlier crop insurance schemes, premium rates had risen drastically in recent years. This means that the premium charged was about 25 percent of the sum assured – the rise in premium was anywhere between 22 and 57 percent. The compensation derived by farmers in the eventuality of a crop failure, was in contrast, very low.
• The Pradhan Mantri Fasal Bima Yojana is premised on a premium amount of 2 percent for Kharif crops and of 1.5 percent for Rabi crops. This covers most food crops and oil crops cultivated in India. The premium is pegged at 5 percent for commercial or horticultural crops (including cotton) for one year.
• This means that the farmers shall derive “maximum benefits by paying minimal premium”. The government has decided to get rid of the “capping” mechanism that did not allow farmers to derive legitimate benefits previously.
• This drastic reduction in crop insurance premium is likely to result in an increase of the Center’s financial load by about 500 percent. The benefits will, however, be derived by the farmers, the government said.
• Apart from relief on premium, the farmers shall derive the benefits of this scheme where assessment of crop losses shall be quick. Smart phones, remote sensing technology and even drones shall be used to estimate losses, assess compensation, and settle claims without much delay.
• The Pradhan Mantri Fasal Bima Yojana will be applicable from the forthcoming Kharif season of 2016.

The Scheme and detailed Operational Guidelines are available on the GOI’s websites www.agricoop.nic.in

& www.agri-insurance.gov.in