30/11/2016 NewcropinsuranceschemePradhanMantriFasalBimaYojana

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GovernmentofIndia
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19May201611:12IST
NewcropinsuranceschemePradhanMantriFasalBimaYojana

FEATURE
2 Years of
Government

*SandipDas

InJanuaryearlierthisyear,inamoveaimedatreducingtherecurrenceofagriculturaldistresswithouthavingto
effectheftyhikesintheMinimumSupportPrices(MSP),NarendraModiledNationalDemocraticAlliancegovernment
hadannouncedacropinsuranceschemenamedPradhanMantriFasalBimaYojana(PMFBY).
Under the new scheme being implemented from Kharif season of 2016, the premium paid by farmers had been
reducedto2%oftheinsuredvalueforthemoreraindependentkharifcropand1.5%fortherabiseason,comparedwith
3.58%chargedforthetwoearlierschemesNationalAgriculturalInsuranceScheme(NAIS)andModifiedNational
AgriculturalInsuranceScheme(MNAIS).Inthecaseofhorticulturalcrops,farmerspremiumburdenwillbe5%ofthe
sumassuredor50%ofthetotalpremium.
NAIS and MNAIS have been discontinued from Kharif 2016, but the ongoing Weather Based Crop Insurance
Scheme (WBCIS) and Coconut Palm Insurance Scheme would continue to operate while premium to be paid under
WBCIShasbeenbroughtonaparwithPMFBY.
LaterwhileunveilingtheoperationalguidelinesforthePMFBYatamassivefarmers'rallyinSehoreinMadhya
PradeshinFebruarythisyear,PrimeMinisterModihadnotedthatnewcropinsuranceschemewouldprovideasolution
forthefarmersproblems,intimesofdifficulty.Hesaidcarehadbeentakentoeliminatetheshortcomingsofpreviouscrop
insurance schemes, and create trust among farmers with regard to crop insurance. He said technology would be used
extensivelywiththisschemetoensureearlysettlementofclaims,andexhortedfarmerstotakebenefitofthisscheme.
Under the PMFBY, there would be no upper limit on government subsidy provided by centre and state
governments. Even if the balance premium (after farmers contribution) is 90%, it will be borne by the government,
accordingtoanagricultureministrystatement.
Intheearlierschemes,therewasaprovisionofcappingthepremiumratewhichresultedinlowclaimsbeingpaid
tofarmers.Officialssaidthatthiscappingonpremiumwasdonetolimitthegovernmentoutgoonthepremiumsubsidy.
This capping has now been removed and farmers will get claim against full sum insured without any reduction, an
officialsaid.
Thiswouldensurethatfarmersgetthefullsuminsuredwithoutanyreductionorhasslesfromthe11designated
insurancecompaniesifnaturalcalamitiesravagetheircrops.OfficialssaidthatthefollowingrolloutofPMFBY,thecrop
insurancecoverageissettorisefrom45millionhectaresor23%oftheareaundercultivationatpresentto50%ofthecrop
areaby201819.
Anotherbenefittofarmersunderthenewcropinsuranceschemeisthatlossesincurredbythematanystageofthe
farmingactivityfromthesowingtothepostharvestseasonwouldbecovered.Earlier,onlypostharvestlossescan
beoffsetbytheinsurancefacilityunderthetwoexistingschemes.Also,eventhosefarmerswhohaventtakenbankloans
willbeeligibleforinsurancecoverunderPMFBY.
Thenewschemewill increase farmers income and resultant increase in ruraldemand,anagricultureministry
officialsaid.ThesubsidywouldbebornebytheCentreandthestategovernmentconcernedequally.ForPMFBY,finance
minister Arun Jaitley had allocated Rs 5,501 crore in 201617 while Rs 2,995 crore was allocated for various crop
insuranceschemesinthepreviousfiscal.
ThebiggestthrustofPMFBYhasbeentheuseoftechnologywhichwouldbeencouragedtoagreatextent.Smart
phoneswillbeusedtocaptureanduploaddataofcropcuttingtoreducethedelaysinclaimpaymenttofarmers.Remote
sensingwillbeusedtoreducethenumberofcropcuttingexperiments,anofficialsaid.

In the earlier schemes, only 20 million of an estimated 120 million farmers in the country earning for a
populationfourtofivetimesasmanyhadcropinsurancecoverin201415,evenasthefacilitywasjustagainstthecost

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30/11/2016 NewcropinsuranceschemePradhanMantriFasalBimaYojana

ofcultivationandbarelyprovidedanyincomeprotection.
Accordingtotheagricultureministrydata,mostofthefarmerswhoearliertookcropinsurancewereinRajasthan,
Bihar,UttarPradesh,Maharashtra,KarnatakaandAndhraPradesh.Intermsofthevalueofthefarmoutput,theMNAIS
andtheWeatherbasedCropInsuranceSchemefaredevenmoredismally,withacoverageofonlyaround5.5%.
Progresssofar
SincethelaunchofPMFBYinJanuary,statessuchasAndhraPradesh,Jharkhand,Odisha,WestBengal,Himachal
PradeshandUttarkhandhavealreadyawardedcontractstoempanelledinsurancecompaniesforprovidingcropinsurance
coveragetolargenumberoffarmersinforthcomingkharifseason.
However states like Punjab and Haryana are yet to decide on rolling out the new crop insurance scheme so far.
The Punjab government has decided not to implement PMFBY while the state government is still discussing about
implementingWeatherBasedCropInsuranceScheme(WBCIS)whosepremiumhasbeenbroughtonaparwithPMFBY,
anofficial.
IncaseofHaryana,theStateLevelCoordinationCommitteeonCropInsurancemeetingswereheldrecentlyand
stategovernmentisyettodecideonrollingoutmegacropinsurancescheme.However,Maharashtra,whichhadreceived
deficient rainfall during last couple of years leading to fall in crop output, the state cabinet recently gave a nod for
implementationofPMFBY.
In Gujarat, Uttar Pradesh and Chhattisgarh, the bidding process of identifying insurance companies have been
completedandnotificationsareexpectedtobeoutshortly.TherolloutofcropinsurancewouldcommenceinTamilNadu
andAssamafterthestateelections.
TheAgricultureministryhasempaneledstateownedAgricultureInsuranceCompanyofIndia(AIC)and10private
companies including ICICILombard General Insurance, HDFCERGO General Insurance, IFFCOTokio General
InsuranceandSBIGeneralInsurance,forimplementationofthemegascheme.

The expansion of the crop insurance scheme would depend on the number of farmers voluntarily opting for it.
Lower premium rates might encourage more farmers to take up crop insurance, Ajay Vir Jahkar, chairman, Bharat
KrishakSamaj,said
Meanwhile, the government has decided to entrust more responsibility on banks for covering more number of
farmersunderthePMFBY,aseniorAgricultureministryofficerhassaid.
Bankswillbesquarelyresponsible.Incasethereiscroplosstoaloaneefarmerwhoisnotinsured,thebankwill
have to make good the losses.The onus is now on banks and insurance companies to deliver, Ashish Kumar Bhutani,
JointSecretary,Agricultureministryrecentlysaid.Hesaidthatthegovernmentistryingtobringnonloaneefarmerssuch
as sharecroppers too within the PMFBY fold. "There is a separate committee of the government looking into the land
leasingpolicyandweshouldbeabletoaddresstheaspectofsharecropperalsogettingthebenefitofcropinsurance,he
noted.
ExpertssaythatPMFBYifimplementedproperlyacrossthecountrywouldmitigatefarmdistresstoalargeextent
especiallywhentheerraticclimateshavebecomeanormratherthanexception.
(*TheauthorisaDelhibasedjournalist.)

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