19-February -2025-Special-Article

PRADHAN MANTRI FASAL BIMA YOJANA (PMFBY)

The Pradhan Mantri Fasal Bima Yojana (PMFBY) was introduced in 2016 to protect farmers from financial losses caused by crop damage due to natural calamities, pests, and diseases. The scheme ensures financial stability for farmers and promotes sustainable agricultural practices. The Union Cabinet has approved the continuation of PMFBY and the Restructured Weather Based Crop Insurance Scheme (RWBCIS) until 2025-26.

About PMFBY

Key Objectives

• To provide financial security to farmers in case of crop failure.
• To ensure stability in farm income and encourage farmers to adopt modern agricultural techniques.
• To reduce farmers’ dependence on informal credit sources.
• To facilitate quick and transparent compensation for losses.

Eligibility Criteria

• All farmers, including sharecroppers and tenant farmers, growing notified crops in designated areas can enroll.
• Participation is voluntary.
• Non-loanee farmers account for 55% of total beneficiaries.

Risk Coverage

The scheme provides extensive coverage for various risks:

• Natural Calamities: Floods, droughts, cyclones, hailstorms, landslides, and unseasonal rains.
• Pest and Disease Infestation: Covers losses due to pest attacks and plant diseases.
• Post-Harvest Losses: Protects harvested crops stored in “cut and spread” conditions for up to 14 days.
• Prevented Sowing Coverage: Provides 25% compensation of the sum insured if farmers are unable to sow due to adverse weather conditions.

Affordable Premiums

• Kharif crops: 2% of the sum insured.
• Rabi crops: 1.5% of the sum insured.
• Annual commercial/horticultural crops: 5% of the sum insured.
• The government covers 100% of the premium for farmers in Northeastern States, Jammu & Kashmir, and Himachal Pradesh.

Technological Advancements

• Satellite Imagery & Drones: Used for crop area estimation, yield assessment, and loss evaluation.
• Crop Cutting Experiments (CCEs): The CCE-Agri App enables direct upload of crop yield data to the National Crop Insurance Portal (NCIP), ensuring transparency.
• Digital Platforms: Reduce delays and enhance efficiency in claim settlements.

Timely Compensation

• Claims are settled within two months of harvest.
• This helps farmers recover quickly and reduces the risk of falling into debt traps.

Global Recognition

• PMFBY is the largest crop insurance scheme in the world (2023-24) in terms of the number of farmers and area covered.

Comparison: PMFBY vs RWBCIS

Feature	PMFBY	RWBCIS
Basis of Compensation	Actual crop loss assessment	Weather deviations affecting crops
Risk Factors	Natural disasters, pests, diseases	Rainfall, temperature, humidity, wind speed
Assessment Method	Field-level inspections	Weather data as a proxy
Claim Settlement	Yield-based compensation	Deemed crop loss based on weather deviations

Challenges in PMFBY Implementation

Delayed Claim Settlements

• Claims take longer than expected due to procedural inefficiencies.
• Disputes arise over damage calculations and yield estimates.

Uneven Coverage Across States

• High participation in states like Gujarat, Maharashtra, Andhra Pradesh, and Madhya Pradesh.
• Low penetration in states like Bihar, Assam, and Northeastern states.

Subsidy Delays

• Delays in government subsidy payments cause long claim processing times (12-18 months).
• Affects farmers’ trust and scheme credibility.

Issues with Post-Harvest Loss Coverage

• Only physical damage is covered; quality degradation (e.g., discoloration, rotting) is not.
• Coverage for post-harvest losses is limited to 14 days, making compensation complex.

Data Limitations

• Lack of accurate farm gate price data and yield estimates complicate damage assessment.
• Inaccurate land records make it difficult for tenant farmers to claim benefits.

Distinction Between Insurance & Disaster Relief

• Crop insurance covers commercial risks, while disaster relief provides emergency aid.
• High-value crops (horticulture) lack MSP coverage, making risk assessment challenging.

Way Forward:

Faster Claim Settlement

• Insurers must process claims efficiently instead of prioritizing reinsurance profits.
• A monitoring system should track claim settlements to ensure fair compensation.

Inclusion of Small and Marginal Farmers

• Community-based insurance models and Farmer Producer Organizations (FPOs) can improve coverage.
• Reducing transaction costs and creating a legal framework for dispute resolution.

Increasing Participation

• Banks, private insurers, and agents should educate farmers about PMFBY benefits.
• Strengthen outreach using local networks and business correspondents (BCs).

Expanding Risk Coverage

• Including damages caused by wild animals like Nilgai and elephants.
• Encouraging farmers to cultivate a variety of crops with assured insurance protection.

Conclusion

The Pradhan Mantri Fasal Bima Yojana has played a crucial role in protecting farmers against crop losses and ensuring financial security. However, challenges like delayed claim settlements, subsidy issues, and data inaccuracies need urgent attention. With better implementation, increased awareness, and expanded coverage, PMFBY can significantly contribute to India’s agricultural resilience and rural prosperity.

Mains Question:

1. Critically analyze the effectiveness of the Pradhan Mantri Fasal Bima Yojana (PMFBY) in addressing agricultural risks in India. What challenges hinder its implementation, and how can they be resolved? (150 WORDS)