Pradhan Mantri Fasal Bima Yojana Highlights
The Hon’ble Prime Minister of India, Shree Narendra Modi has launched a brand new crop insurance scheme on 13th January, 2016. This crop insurance scheme is called Pradhan Mantri Fasal Bima Yojana (PMFBY) which will be implemented in every state of India, with association with the respective State Governments. This crop insurance scheme will be administered under the Ministry of Agriculture and Farmers’ Welfare, Government of India.
The main motto of this new crop insurance scheme is to provide a more efficient insurance support to the farmers of the country and become a financial support to thousands of farmers. Govt. has decided to provide low premium insurance cover to the farmers so that they can sustain even if the yield is damaged. This announcement has been made during the Makar Sankranti which is the harvest festival of India, celebrated along the lengths and breadths of the country. It is celebrated as Pongal in the South, Lohri in North and Bihu in Assam. So the total budget estimate for flooring this project is estimated to be approximately Rs. 17,600 crore.
A major portion of Indian citizens, mostly in rural areas depends on agriculture and farming. So it is very necessary to strengthen their crop insurance scheme so as to prevent them incur heavy losses even if the crops gets damaged due to natural calamities and other unavoidable circumstances. There are several factors that result in poor production of crops in some regions.
Worst case scenario is that the entire crop gets damaged and the cultivators have to go through heavy losses. Most farmers take loans for buying agricultural seeds, fertilizers, irrigation facilities, pesticides and other agricultural machineries for cultivation of crops. But sometimes unavoidable natural disasters like draught, floods, fire, pest attack, etc. strike and destroy the crop yield.
Then farmers choose the path of suicide as they become unable to cope up with the burden of debt. There is an alarming number of farmer suicides in India, which is a burning issue, not only in India, but also throughout the world. As per reports of Home Ministry, reports of near about 3000 farmers’ suicide have been registered in India, in the last three years itself. So the Centre has planned to bring back a new crop insurance scheme called Pradhan Mantri Fasal Bima Yojana in the country and rectify the loopholes, present in the existing one.
In the year of 1999, an insurance scheme was launched which was named National Agriculture Insurance Scheme (NIAS). But it had some drawbacks due to which it never became a success and could not stand efficient for the insurance purposes of the farmers. It was implemented only in 14 states of India, which are most affected by weather calamities. States like Madhya Pradesh, Uttar Pradesh, Rajasthan, etc. were in the list of the affected states. As per NIAS, the insurance premium rates were 1.5 % and up to 3.5 % of the net sum assured for all food crops. These food crops include pulses, cereals, oilseeds, grains, etc. And actuarial premium rates were charged for commercial crops and horticulture crops.
Cotton was the most popular commercial crop at that time, which got largely affected by pest attacks. Later, the NIAS was restructured and modified as MNIAS which stands for Modified NIAS. But MNIAS was implemented in only 6 states of India and thus could not get success. The other failing factors of these past schemes were caps on the sum assured, slow claim process, fraud in the insurance system, etc. Also a major setback of this insurance plan was that those farmers who have taken loan for purchasing agriculture machineries, crop seeds, insecticides and pesticides, etc. were only given the insurance benefit.
So due to all those disadvantages of the earlier insurance scheme, the Govt. has planned for a new crop insurance scheme that will not provide insurance to all farmers from crop damage, but also become a financial support for them. Under this insurance plan, the premium rate will be 2 % of the actual sum assured amount for Kharif crops and for the Rabi crops, it will be 1.5 % of the total sum assured. The sum assured amount is likely to be increased so as to provide a better insurance cover to the farmers.
For the commercial and horticulture crops, the premium rate will be 5 %. Apart from this, the Prime Minister has mentioned that the use of technology will be implemented into the scheme to make it a fast, user friendly, efficient and fraud free system. Better infrastructure will be built to provide irrigation facilities to every farmland of India and fight the drought conditions. More technologies for weather prediction is to be implemented so as to lower the levels of crop damage due to natural calamities. This new crop insurance plan will be functional from the next Kharif season of crop cultivation.