Pradhan Mantri Fasal Bima Yojana (PMFBY)

In April, 2016, the government of India had launched Pradhan Mantri Fasal Bima Yojana (PMFBY) after rolling back the earlier insurance schemes viz. National Agriculture Insurance Scheme (NAIS), Weather-based Crop Insurance scheme and Modified National Agricultural Insurance Scheme (MNAIS). Thus, at present, PMFBY is the only flagship scheme of the government for agricultural insurance in India.

What are objectives of PMFBY?

Pradhan Mantri Fasal Bima Yojana (PMFBY) aims at supporting sustainable production in agriculture sector by following ways:

• 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 contributes to food security, crop diversification and enhancing growth and competitiveness of agriculture sector besides protecting farmers from production risks.

What all crops are covered by PMFBY?

This scheme covers following crops:

• Food crops (Cereals, Millets and Pulses)
• Oilseeds
• Annual Commercial / Annual Horticultural crops

What are the conditions for loanee or non-loanee farmers?

The scheme is mandatory for farmers who have taken institutional loans from banks. It’s optional for farmers who have not taken institutional credit.

What are main conditions of Sum Insured /Coverage Limit in PMFBY?

Following are notable points:

• Sum Insured per hectare for both loanee and non-loanee farmers is same and equal to the Scale of Finance as decided by the District Level Technical Committee, and is pre-declared by SLCCCI and notified. No other calculation of Scale of Finance is applicable.
• Sum Insured for individual farmer is equal to the Scale of Finance per hectare multiplied by area of the notified crop proposed by the farmer for insurance. ‘Area under cultivation’ shall always be expressed in ‘hectare’.
• Sum insured for irrigated and un-irrigated areas may be separate.

What are Premium Rates and Premium Subsidy on PMFBY?

The rate of Insurance Charges payable by the farmer are as follows:

• For Kharif crops, the farmer’s part of premium is 2% of sum assured.
• For Rabi crops, the farmer’s part of premium is 1.5% of the sum assured.
• For annual commercial and horticultural crops, the farmer’s part of premium is 5%.

The remaining part of premium is paid equally by the central and respective state governments.

What is source of funds for government to pay premium?

All funds for this scheme come from Krishi Kalyan Kosh.

Are there any targets under this scheme?

The government under this system has migrated from claim-based insurance scheme to an upfront subsidy for premium based system. It is a demand driven scheme, therefore no targets are fixed. However, it was decided to increase the coverage up to 50% of total cropped area.

Which companies provide Insurance under this scheme?

Both Private and Public Sector Insurance Companies provide Fasal Bima. Currently, the insurance providing schemes are as follows:

• Agriculture Insurance Company
• Cholamandalam MS General Insurance Company
• Reliance General Insurance Co. Ltd.
• Bajaj Allianz
• Future Generali India Insurance Co. Ltd.
• HDFC ERGO General Insurance Co. Ltd.
• IFFCO Tokio General Insurance Co. Ltd.
• Universal Sompo General Insurance Company
• ICICI Lombard General Insurance Co. Ltd.
• Tata AIG General Insurance Co. Ltd.
• SBI General Insurance
• United India Insurance Co.

What types of the risks are covered under this scheme?

The scheme covers yield loss, post-harvest loss and localized calamities. Following risks leading to crop loss are to be covered under the scheme:

Yield Losses

• This includes Natural Fire and Lightning; Storm, Hailstorm, Cyclone, Typhoon, Tempest, Hurricane, Tornado etc.; Flood, Inundation and Landslide; Drought, Dry spells; Pests/ Diseases etc.

Post-Harvest Losses

• Coverage is available upto a maximum period of 14 days from harvesting for those crops which are kept in “cut & spread” condition to dry in the field after harvesting, against specific perils of cyclone / cyclonic rains, unseasonal rains throughout the country.

Localised Calamities

• This includes loss / damage resulting from occurrence of identified localized risks i.e. hailstorm, landslide, and Inundation affecting isolated farms in the notified area.

However, this scheme excludes perils such as war & kindred perils, nuclear risks, riots, malicious damage, theft, act of enmity, grazed and/or destroyed by domestic and/or wild animals, In case of Post–Harvest losses the harvested crop bundled and heaped at a place before threshing, other preventable risks.

What is mandatory use of technology in Pradhan Mantri Fasal Bima Yojana?

Use of technology is mandatory. The scheme proposes mandatory use of remote sensing, smart phones and drones for quick estimation of crop loss. This will speed up the claim process.