Pradhan Mantri Fasal Bima Yojana is a crop insurance scheme that was introduced on February 18, 2016, during Prime Minister Narendra Modi’s reign, mostly benefiting small-scale agricultural producers in India. The primary objective of the development plan is to relieve small farmers of the burden of high insurance premiums and enable prompt payment of the full amount of crop loss claims. This would include any subsequent planting in case of loss if it is introduced into a policy statement for climate insurance.
In addition, one should note that there is no information on the actual cost of production for any of the crops covered under this scheme, nor is it specifically relating to individual areas within a country, to ensure appropriate pricing by insurance companies. Farmers don’t pay attention to other related factors that affect the sum assured. For instance, one billion dollars has been spent to organize cabinet demonstrations on the same, even though farmers are also involved in its planning and implementation.
Under the General Crop Estimation Survey, this program is carried out by specific general insurance companies. The concerned state government selects the implementing agency by awarding the bid. Previously, it was obligatory for all the farmers who took crop loans or had KCC for the specified crops, yet it was optional for different individuals. However, this changed in 2020, when the scheme underwent some reforms.
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Objectives of the Pradhan Mantri Fasal Bima Yojana
- In the event of crop failure arising from natural calamities, pests, or diseases, insure against crop failure and provide financial support to farmers.
- The income of farmers is stabilized, thus ensuring their permanence in agriculture. Improvement and modernization of farming practices among farmers should be promoted.
- To ensure the flow of credit to the agriculture sector.
Benefits of the plan Pradhan Mantri Fasal Bima Yojana
- Complete insurance cover for Kharif season crops and Rabi season ones.
- Additional coverage may be purchased for contingency conditions.
- It is elective for the farmers who may or may not be beneficiaries of loans.
- This will keep the farmer’s income stable, so they will stick to farming.
- Death cover is Rs. 2,00,000 per member.
- To be provided by life insurance companies
Here are some detail table of Max. Insurance for Seasonal Crop:
| S. No. | Season | Crops | Maximum Insurance charges payable by the farmer (% of Sum Insured) |
|---|---|---|---|
| 1 | Kharif | Food & Oilseeds crops (all cereals, millets, & oilseeds, pulses) | 2.0% of SI or Actuarial rate, whichever is less |
| 2 | Rabi | Food & Oilseeds crops (all cereals, millets, & oilseeds, pulses) | 1.5% of SI or Actuarial rate, whichever is less |
| 3 | Kharif & Rabi | Annual Commercial / Annual Horticultural crops | 5% of SI or Actuarial rate, whichever is less |
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Challenges faced by the plan Pradhan Mantri Fasal Bima Yojana
Current challenges included a delayed settlement of claims, huge financial liabilities in the states, stakeholder exit from PMFBY, a lack of information access and farmer awareness, and an unreliable loss and yield assessment as per the insurance regulator.
Implementation Issues
The plan will be administered by a team of selected insurance companies, overseen by the Department of Agriculture, Cooperation, and Farmers Welfare (DAC&FW), the Ministry of Agriculture and Farmers Welfare (MoA&FW), the Government of India (GOI), and the relevant state coordinated by various other agencies such as financial institutions like commercial banks, cooperative banks, regional rural banks and their regulatory bodies, government departments viz. Agriculture, horticulture, cooperation, statistics, revenue, information/science and technology, Panchayati Raj, etc.
cooperation, horticulture, statistics, revenue, information/science and technology, Panchayati Raj, etc.
Coverage of farmers
All the farmers cultivating specified crops in a given area and season that are considered insurable are eligible. Starting in the 2020 Kharif season, the scheme has been made 100% voluntary.
Coverage of crops
- Oil Seeds
- Food Crop
- Annual Commercial or Annual Horticultural Crop.
The coverage of crops can include many Seeds and Oils. We can also pilot coverage for perennial horticultural crops, for which a standard methodology for yield estimation is available.
DAC&FW has designated and empaneled the Agriculture Insurance Company of India (AIC) and some private insurance companies :
Currently to participate in the government agriculture and crop insurance schemes based on their financial strength, infrastructure, manpower, expertise, etc. The empaneled private insurance companies offers:
- ICICI-Lombard General Insurance Company Ltd.
- HDFC-ERGO General Insurance Company Ltd.
- IFFCO-Tokio General Insurance Company Ltd.
- Cholamandalam MS General Insurance 2 Company Ltd.
- Bajaj Allianz General Insurance Company Ltd.
- Reliance General Insurance Company Ltd.
- Future Generali India Insurance Company Ltd.
- Tata-AIG General Insurance Company Ltd.
- SBI General Insurance Company Ltd.
- Universal Sompo General Insurance Company Ltd.
The concerned state government will choose an insurance agency from the accredited ones to execute the project in each state. The insurance agency will be selected from a list of accredited companies with prequalification criteria that include, but are not limited to, experience in the industry, capacity in terms of infrastructure in the area, and other qualitative aspects like covering farmers and regions and pay-outs. The ultimate choice of AI out of those insurance companies that are pre-qualified must rely on the lowest premium weighted by a pre-qualified company for each notified crop area across the district cluster.
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Eligibility for PMFBY (Pradhan Mantri Fasal Bima Yojana)
The farmers should have sanctioned Seasonal Agriculture Operations (SAO) loans ( Crop Loans from all the Financial Institutions(FIs), i.e. loanee farmers for the notification and be covered under this.
The scheme gives an alternative for all non-loanee farmers. All the coverage gives you a strict equivalent sum insured/hectare according to the Govt notification and/or National Crop Insurance Portal in the sown area.
To be eligible for the coverage under the Pradhan Mantri Fasal Bima Yojana ( PMFBY), the farmers should meet some criteria. Here is the below reference.
- Any eligible farmer should be a cultivator or a sharecropper on the insured land.
- The farmers should have a valid and authenticated land ownership certificate with a valid land tenancy agreement
- Any farmers should have applied for the insurance coverage in the prescriber time frame.
- The farmers should not have received compensation for the same crop loss from any source.
- All should have a valid Kisan Credit Card (KCC) or should have been obtained within six months of enrolment.
- The farmer should not have received compensation for any loss of crop from the insurance.
All should have a valid bank account with details of the bank account along with validated identity proof during the time of enrolment.
