Crop Insurance Coverage Under Pradhan Mantri FasalBima Yojana

Syllabus: GS 3/Economy

General insurance companies reduced their exposure to crop insurance under the Pradhan Mantri Fasal Bima Yojana (PMFBY) during FY24 despite the government’s push to expand the insurance coverage in the farm sector.

The Pradhan Mantri Fasal Bima Yojana (PMFBY) is a crucial initiative launched in 2016 aimed at providing comprehensive crop insurance coverage to Indian farmers.

Objective: PMFBY aims to provide affordable crop insurance to farmers against non-preventable natural risks from pre-sowing to post-harvest stages.
Coverage: It covers food crops (cereals, millets, pulses), oilseeds, annual commercial, and horticultural crops.
Key Features:

- Premium Rates: Subsidized premiums (2% for Kharif crops, 1.5% for Rabi crops, and 5% for commercial/horticultural crops) make insurance accessible.
- Sum Insured: Based on area sown, type of crop, and extent of damage, ensuring adequate compensation.
- Technology Integration: Uses smartphones, remote sensing, and satellite imagery for quick assessment and transparent settlement of claims.
- Participation: While voluntary for farmers, it’s mandatory for loanee farmers to enroll.

- Financial Security: Provides financial support in case of crop failure, reducing economic vulnerability.
- Promotes Risk-taking: Encourages adoption of modern agricultural practices.
- Inclusive Growth: Particularly benefits small and marginal farmers.
- Ensures Credit Flow: Supports agricultural sector stability and growth.

Operational Issues:
- Delayed Claim Settlements: Farmers face delays in receiving insurance payouts.
- Awareness: Lack of awareness among farmers about the scheme and its benefits.
- Financial Burden on States: States sometimes struggle with high financial liabilities related to the scheme.
- Accuracy in Assessment: Challenges in reliable loss and yield assessments.

Enhanced Coordination: Improve coordination among insurance companies, banks, and state governments for effective implementation.
Addressing Operational Issues: Streamline claim settlement processes to reduce delays and enhance transparency.
Increasing Awareness: Conduct extensive awareness campaigns to educate farmers about the scheme’s benefits and procedures.
Technology Advancements: Continue leveraging technology for better assessment and monitoring of crop losses.

PMFBY has played a crucial role in safeguarding farmers’ interests and promoting agricultural stability. Despite its challenges, the scheme represents a significant step towards ensuring the financial security of farmers across India.
Addressing operational challenges and enhancing stakeholder coordination will be essential for its continued success and effectiveness in the agricultural sector.