PMFBY: Empowering Farmers with Crop Insurance

Pradhan Mantri Fasal Bima Yojana (PMFBY) – A Detailed Overview

Introduction

The Pradhan Mantri Fasal Bima Yojana (PMFBY), launched in 2016, is a flagship crop insurance scheme introduced by the Government of India. Its primary objective is to provide financial support to farmers in case of crop failures due to natural calamities, pests, or diseases. PMFBY aims to reduce the financial burden on farmers, helping them recover from the economic impact of crop loss and encouraging farming Insurance them to continue their agricultural activities

The scheme is part of the Indian government’s broader initiative to promote agricultural growth and rural development while improving the financial resilience of farmers across the country.

Key Features of PMFBY

1. Comprehensive Coverage:
   PMFBY offers comprehensive coverage for farmers, including:
   • Pre-sowing to post-harvest coverage: Insurance covers the entire crop cycle, from the sowing stage to the post-harvest stage. This includes coverage for any damage caused due to natural disasters during the cropping period, as well as for losses occurring during the harvest and post-harvest stages.
   • Multiple risks covered: It insures against a wide range of risks such as drought, floods, hailstorms, cyclone, landslides, and diseases, ensuring that farmers are protected against all kinds of natural calamities.
2. Affordable Premiums:
   • The premium rates for farmers under PMFBY are very affordable, with the government subsidizing a significant portion of the premium.
   • For Rabi and Kharif crops, farmers pay a premium of 2% and 1.5% of the sum insured, respectively, for food crops and oilseeds.
   • For commercial and horticultural crops, the premium is capped at 5% of the sum insured.
3. Government Contribution:
   • The central government and state governments jointly contribute to the premium subsidy. While the farmer contributes the lowest premium, the governments bear the remaining premium amount, making it affordable for small and marginal farmers.
   • The central government also bears a portion of the administrative cost, further lowering the burden on the farmers.
4. Seamless Process:
   • PMFBY aims to make the claim process quick and efficient. Farmers can register for the scheme at the start of the crop season, and the claims process is automated using modern technologies.
   • The scheme uses technology-driven methods like Remote Sensing, Geographical Information System (GIS), Drones, and Weather Satellites to assess the crop loss accurately. This reduces manual interventions and speeds up claim settlements.
5. Transparency and Timely Claim Settlement:
   • One of the most important features of PMFBY is transparency. The use of technology such as mobile apps and GIS mapping ensures that the process is transparent and reduces any delays in claims settlement.
   • The scheme ensures that claims are settled within two months of the harvest. In the case of unforeseen natural calamities, the claims are processed in a time-bound manner.
6. Implementation through Insurance Companies:
   • The scheme is implemented through empaneled insurance companies across India. Farmers can select an insurance provider that is registered under PMFBY.
   • The insurance companies are responsible for processing claims, collecting premiums, and managing the risk pools.
7. Cashless Transactions:
   • To avoid delays in the disbursement of claims, PMFBY has made the process cashless. Farmers do not need to pay upfront for the insurance; instead, the premium is automatically deducted from their bank accounts or crop loans.
8. Multiple Crop Options:
   • PMFBY covers a wide range of crops, including food crops, oilseeds, pulses, commercial crops, and horticultural crops. This ensures that farmers across different agricultural sectors are covered under the scheme.
9. Voluntary Participation:
   • Although Crop Insurance or PMFBY is mandatory for farmers availing crop loans, it is voluntary for non-loanee farmers. Farmers who do not avail of crop loans can still opt for the scheme and get insurance coverage for their crops.

Eligibility for PMFBY

• Farmers Growing Eligible Crops: The scheme is available to all farmers, whether they own or lease land, who grow eligible crops (both food and non-food crops).
• Crop Loans: Farmers who take loans for crops from financial institutions are mandatorily covered under PMFBY.
• Non-loanee Farmers: These farmers can voluntarily enroll in the scheme by registering themselves through the local revenue or agriculture department.

Benefits of PMFBY

1. Risk Mitigation for Farmers:
   • The most significant benefit of PMFBY is its ability to mitigate risks associated with farming. Farmers are often vulnerable to unpredictable weather patterns, pests, and diseases. PMFBY provides financial protection, making agriculture a less risky endeavor.
2. Reduction of Loan Defaults:
   • By insuring crops, farmers who suffer losses due to natural disasters are less likely to default on crop loans. This improves the overall financial stability of rural areas and promotes timely loan repayment.
3. Boost to Agricultural Productivity:
   • With the knowledge that they are insured, farmers are more likely to invest in modern farming techniques, improve productivity, and adopt better practices without the fear of losing everything to natural disasters.
4. Sustainability of Agricultural Practices:
   • The scheme helps in sustaining agriculture, as farmers are less likely to abandon farming due to financial stress caused by crop failure.
5. Promoting Credit Flow in Agriculture:
   • PMFBY encourages agricultural credit by assuring financial institutions that they can recover loans even if crops fail. This reduces the credit risk faced by lenders and ensures more accessible credit for farmers.
6. Encourages Investment in Agriculture:
   • Insurance coverage under PMFBY encourages private investments in the agricultural sector. It ensures that financial institutions, investors, and insurance companies have faith in the agricultural sector’s stability.
7. Encouraging Technological Advancements:
   • The scheme promotes the use of technology in agriculture, from crop monitoring and data analytics to rapid claims settlement. This aligns with the government’s Digital India initiative and pushes for smart farming practices.

Challenges and Criticisms

1. Low Enrollment of Farmers:
   • While PMFBY has been successful in attracting crop loan farmers, the voluntary participation of non-loanee farmers has been comparatively low. The scheme still faces challenges in widespread adoption, especially in remote regions.
2. Delays in Claim Settlement:
   • Despite the scheme’s intent to ensure quick claims processing, some farmers have faced delays in receiving compensation, especially in the aftermath of large-scale natural disasters.
3. Underreporting of Crop Losses:
   • In some cases, farmers have complained about the under reporting of crop losses, where the actual loss suffered is not accurately accounted for, leading to insufficient compensation.
4. Limited Awareness:
   • Awareness of PMFBY remains a barrier, particularly in rural and underdeveloped regions. Farmers are often not well informed about the scheme’s benefits, coverage options, and how to file claims.
5. State-Specific Variations:
   • The implementation of PMFBY varies from state to state, leading to disparities in coverage and claim settlement efficiency across the country.

Conclusion

Pradhan Mantri Fasal Bima Yojana (PMFBY) is a revolutionary step in securing the future of Farming Insurance for India’s farmers. With its affordable premium rates, broad coverage, and government support, the scheme promises to alleviate the financial distress caused by natural disasters and promote sustainability in agriculture. However, for PMFBY to be truly successful, it is crucial to address challenges related to farmer awareness, efficient claims processing, and wider participation.

Ultimately, PMFBY stands as a beacon of hope for the agricultural community, offering a safety net that can help farmers weather the storms of uncertainty that come with crop cultivation.