“The penetration of farm insurance is less than 10% in India”. In this light mention the key features of Pradan Mantri Fasal Bima Yojana? What are the challenges in its implementation?
According to NSSO data, less than 10 per cent farmers insured their crops in the 2012-13 cropping year. Crop insurance refers to an insurance which insures farmers and crop producers against their loss of crops due to natural disasters, such as hail drought, and floods.
The previous crop insurance schemes like National Agricultural Insurance Scheme(NAIS) and the Modified National Agricultural Insurance Scheme (MNAIS) could not provide protection from all crop losses. Hence, the government came up with new crop insurance to the farmers through Pradhan Mantri Fasal Bima Yojana (PMFBY).
Key features of PMFBY:
- Under the scheme a uniform premium of 2% needs to be paid by farmers for Kharif crops, and 1.5% for Rabi crops. For commercial and horticultural crops the premium is 5% which is lower than the previous schemes like NAIS and MNAIS.
- This insurance scheme will provide localized risk coverage and has added a number of natural calamities. The insurance plan will now provide coverage for post-harvest losses caused owing to rain and hailstorm across India. In addition, it also provides insurance for the attack of pests and disease.
- Further, the insurance scheme also makes provision for compensation if farmers have to skip sowing owing to natural calamities like floods, unseasonal rains, hailstorm and cyclones.
- Previously, insure policies don’t have enough infrastructures to assess crop loss. But, the use of technology will be encouraged to a great extent. Smart phones, Remote sensing drones and GPS technologies will be used to capture and upload data of crop cutting to reduce the delays in the claim payment.
However, despite its superior performance, PMFBY has following challenges:
According to a NGO”Centre for sustainable agriculture” there was a sharp decline in take-up of the insurance scheme in 2017-18, where the coverage came down to 49 million farmers, a 14 per cent drop from 2016-2017.
- The scheme is mandatory for farmers who have taken institutional loans from banks. It’s optional for farmers who have not taken institutional credit. But, NSSO 70th round report stated only 15% has institutional credit so the uptake of insurance policies may be low.
- Gaps in assessment of crop loss: There is hardly any use of modern technology in assessing crop damages. The non-utilization of technologies like smart phones and drones due to lack of training and there is scope of corruption during implementation.
- Delay in disposal of claims: The reason for the very low payout of claims is that delay in premium payments by state and union government. Hence, insurance companies are unable to settle claims on time.
- High cost of premium: In the regions of droughts / floods farmers are unable to pay even stipulated premium which is low.
- No grievance redressal mechanism for farmers.
- Poor capacity to deliver: There has been no concerted effort by the state government and insurance companies to build awareness of farmers on PMFBY. Insurance companies have failed to set-up infrastructure for proper Implementation of PMFBY.
PMFBY can be a revolutionary scheme that would minimize agricultural risks related to weather and market. It will enable farmers to invest their capital better there by realizing the government’s goal of doubling farmer’s income by 2022.