Prime Minister Mr. Narendra Modi launched the guidelines for operationalisation of the Pradhan Mantri Fasal Bima Yojana (PMFBY) on February 18, 2016. The guidelines were issued at a farmers’ convention in Sherpur village of Madhya Pradesh. The PMFBY is a path-breaking scheme for crop insurance and was approved by the Union Cabinet on January 13, 2016. The Yojana will come into force from the 2016 Kharif season (from June to October in India). Under the scheme, the premium rates to be paid by the farmers have been brought down substantially so as to enable more farmers to avail themselves of cover against crop loss on account of natural calamities. It aims at boosting the agricultural sector of India and envisages a uniform premium to be paid by the farmers. Explaining the benefits of this comprehensive crop insurance scheme to the farmers, the Prime Minister said that it could provide a solution for the farmers’ problem, in times of difficulty.
He said that care had been taken to eliminate the shortcomings of previous crop insurance schemes, and create trust among farmers with regard to crop insurance. He said that technology would be used extensively with this scheme to ensure early settlement of claims, and exhorted farmers to take benefit of this scheme.
Under the scheme, the farmers will pay a uniform premium of only 2 percent for all Kharif crops and 1.5 percent for all Rabi crops. The rates are also applicable for oilseeds. The premium for annual commercial and horticultural crops will be 5 percent. In case of annual commercial and horticultural crops, farmers will pay a premium of only 5 percent. The balance premium, after farmers paying the premium at a very low rate, will be paid by the Government to provide full insured amount to the farmers against crop loss on account of natural calamities. There will not be any upper limit on the Government subsidy.
Even if balance premium is 90%, it will be borne by the Government. Earlier, there was a provision of capping the premium rate which reulted in low claims being paid to farmers. This capping limited the Government outgo on the premium subsidy. Now, this capping is removed and farmers will get full sum insured without any reduction against their claim. Pradhan Mantri Fasal Bima Yojana will be implemented under a budget of ` 17,600 crore. This will not only save the farmers from getting their crops damaged in natural calamities, but will also provide financial support to them. The new Crop Insurance Scheme will also seek to address a long-standing demand of farmers and provide farm-level assessment for localised calamities including hailstorms, unseasonal rains, landslides and inundation. The usage of technology will be encouraged to a great extent. Smartphones will be used to capture and upload data of crop-cutting to reduce the delays in claim payment to farmers. Remote sensing will be used to reduce the number of crop-cutting experiments.
Earlier, the insurance scheme which was functional was called the National Agriculture Insurance Scheme (NAIS), which was implemented in the year 1999. But there were some loopholes in that scheme. It was implemented only in 14 States of India. The insurance settlements were handled by the insurance company named Agriculture Insurance Company of India Ltd. (AIC). Under NAIS the insurance premium rates were 1.5% to 3.5% of the total sum assured for food crops like pulses, oilseeds, cereals, etc. But for commercial crops like cotton and horticultural crops, the actuarial premium rates were charged. The NAIS facilities were given according to the areas where the calamities are frequent and later it was converted into MNAIS, i.e. Modified NAIS. The MNAIS was also not a successful project as it was applied in six States of India. But these schemes were not successful because of several reasons like low-sum insured amount and slow claim process. According to reports of Home Ministry, in the past year 2015, there were 207 drought-hit districts throughout the country where the farmers suffered great economic losses on crop cultivation. Also, reports show that more than 300 districts were affected by irregular rainfall. This resulted in a large number of farmer suicides as there was no strong insurance plan to get thrugh the losses and start afresh. Over 3000 farmers have chosen the path of suicide in the last three years. Most suicide cases were registered with the State of Maharashtra. So to fight back this problem and to provide a good financial support to the farmers of the country, the Modi Government has launched the new crop insurance scheme by making some alterations in the existing scheme.

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