Pradhan Mantri Fasal Bima Yojana

Pradhan Mantri Fasal Bima Yojana (PMFBY) aims at supporting sustainable production in agriculture

sector by way of[2]

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

The Scheme shall be implemented through a multi-agency framework by selected insurance companies under the overall guidance & control of the Department of Agriculture, Cooperation & Farmers Welfare (DAC&FW), Ministry of Agriculture & Farmers Welfare (MoA&FW), Government of India (GOI) and the concerned State in co-ordination with various other agencies; viz Financial Institutions like Commercial Banks, Co-operative Banks, Regional Rural Banks and their regulatory bodies, Government Departments viz. Agriculture, Co-operation, Horticulture, Statistics, Revenue, Information/Science & Technology, Panchayati Raj etc.[3]

All the farmers growing notified crops in a notified area during the season who have insurable interest in the crop are eligible.

Compulsory coverage : The enrollment under the scheme, subject to possession of insurable interest on the cultivation of the notified crop in the notified area, shall be compulsory for following categories of farmers:

• Farmers in the notified area who possess a Crop Loan account/KCC account (called as Loanee Farmers) to whom credit limit is sanctioned/renewed for the notified crop during the crop season. and
• Such other farmers whom the Government may decide to include from time to time.

Voluntary coverage : Voluntary coverage may be obtained by all farmers not covered above, including Crop KCC/Crop Loan Account holders whose credit limit is not renewed.

1. Oil seeds
2. Food crop
3. Annual Commercial / Annual Horticultural crops.

In addition for perennial crops, pilots for coverage can be taken for those perennial horticultural crops

for which standard methodology for yield estimation is available.[4]

Following stages of the crop risks leading to crop loss are covered under the Scheme.[5]

1. Prevented Sowing/Planting/Germination Risk: Insured area is prevented from sowing/planting/germination due to deficit rainfall or adverse seasonal/weather conditions.
2. Standing Crop (Sowing to Harvesting): Comprehensive risk insurance is provided to cover yield losses due to non-preventable risks, viz. Drought, Dry spell, Flood, Inundation, widespread Pests and Disease attack, Landslides, Fire due to natural causes, Lightening, Storm, Hailstorm and Cyclone.
3. Post-Harvest Losses: Coverage is available only up to a maximum period of two weeks from harvesting, for those crops which are required to be dried in cut and spread / small bundled condition in the field after harvesting against specific perils of Hailstorm, Cyclone, Cyclonic rains and Unseasonal rains
4. Localized Calamities: Loss/damage to notified insured crops resulting from occurrence of identified localized risks of Hailstorm, Landslide, Inundation, Cloud burst and Natural fire due to lightening affecting isolated farms in the notified area.
5. Add-on coverage for crop loss due to attack by wild animals: The States may consider providing add-on coverage for crop loss due to attack by wild animals wherever the risk is perceived to be substantial and is identifiable.

General Exclusions: Losses arising out of war and nuclear risks, malicious damage and other preventable risks shall be excluded.

Department of Agriculture Cooperation & Farmers Welfare has designated/empanelled Agriculture Insurance Company of India(AIC) and some private insurance companies presently to participate in the Government sponsored agriculture /crop insurance schemes based on their financial strength, infrastructure, manpower and expertise etc. The empaneled insurance companies at present are:[6]

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

The only government insurance company on this list, the Agriculture Insurance Company of India, exited the scheme after making large gains in the first year.[7]

The Scheme shall be implemented on an ‘Area Approach basis’ i.e., Defined Areas for each notified crop for widespread calamities with the assumption that all the insured farmers, in a Unit of Insurance, to be defined as "Notified Area‟ for a crop, face similar risk exposures, incur to a large extent, identical cost of production per hectare, earn comparable farm income per hectare, and experience similar extent of crop loss due to the operation of an insured peril, in the notified area.

Defined Area (i.e., unit area of insurance) is Village/Village Panchayat level by whatsoever name these areas may be called for major crops and for other crops it may be a unit of size above the level of Village/Village Panchayat. In due course of time, the Unit of Insurance can be a Geo-Fenced/Geo-mapped region having homogeneous Risk Profile for the notified crop.

For Risks of Localised calamities and Post-Harvest losses on account of defined peril, the Unit of Insurance for loss assessment shall be the affected insured field of the individual farmer.

Unveiling the guidelines of the PMFBY, Modi attributed low enrolment in crop insurance to farmers’ “lack of faith” in previous schemes. A rapid increase in enrolment was to be the hallmark of the PMFBY. The target was to cover 50% of the cropped area, about 98 million hectares, by 2018-’19.

But in 2017-’18, the second year of the PMFBY, the enrolment numbers fell sharply, taking the coverage to below 2015 levels. Against the target of 50% for 2018-’19, the coverage stands at less than 26% in 2017-’18.[8] The scheme is supposed to provide insurance protection to farmers against crop losses due to natural events – has turned into a bonanza for insurance companies while farmers are angry over delays in claim settlement, rejections and paltry compensation. Launched in 2016, four full seasons have passed since and the financial transactions show earnings of insurance companies reaching almost Rs.16,000 crore from the first three seasons, kharif 2016, rabi 2016-17 and kharif 2017. Although the rabi 2017-18 season is over yet over two months later, claim settlement is still not complete.

In other words, the scheme is essentially transferring farmers’ money and govt. funds to the insurance companies ’coffers while pretending to provide much needed compensation to farmers whose crops are lost in inclement weather conditions.[9] RTI data received and reviewed by The Wire has revealed that farmers’ claims worth Rs 2,829 crore remain unpaid for the two seasons that the PMFBY has been implemented.

The RTI response of the ministry of agriculture and farmers’ welfare is dated October 10.

“A majority of claims for rabi 2017-18 are yet to be estimated/approved by company,” the ministry noted in its response. Thus, for the 2017-18 season, a majority of the data pertains to Kharif 2017 and the data reflects only 1% of the claims paid for the rabi 2017-18 season.

For the 2016-17 season, claims of Rs 546 crore remain pending. Claims need to be settled within two months of harvest, according to the PMFBY guidelines. Harvest for the 2016-17 season would have ended in May 2017, at the very latest.

For the 2017-18 season, claims worth Rs 2,282 crore remain pending. The data essentially pertains to Kharif 2017-18, as pointed out by the ministry. The harvest for which would have ended in December 2017, at the very latest.[10]

In 2020, several states exited the scheme, declining to implement it. The State of Gujarat exited the PMFBY scheme in August 2020, citing drains on the state's finances because of the high premiums charged under the scheme.[11] The State of Punjab had declined to implement the scheme at all, and the states of Andhra Pradesh, Telangana and Jharkhand subsequently exited the scheme after initially signing up for it.[12]