Pradhan Mantri Fasal Bima Yojana (PMFBY) was launched on 18th February 2016 by PM Narendra Modi. It is a scheme which provides comprehensive insurance cover to farmers against crop failure which helps farmers in stabilising the income in case of crop failure. This scheme covers all food & oilseed crops and also covers commercial and horticulture crops for which past yield (agriculture output) date is available.

PMFBY is administered by the Ministry of Agriculture and Farmers Welfare & implemented by empanelled General Insurance companies. The selection of implementing agency is done by the concerned state government through the bidding process. This scheme is compulsory for loanee farmers i.e. farmers who have taken crop loan or who have KCC (Kishan credit card) account with banks & it is voluntary for other farmers.

Pradhan Mantri Fasal Bima Yojana

The Purpose of the scheme is to encourage farmers to adopt innovative and modern agriculture practices. This scheme has replaced the two existing schemes, which are the National Agriculture Insurance Scheme (NAIS) of 1999 & Modified NAIS of 2010-11.

Points related to premium

  1. There will be a uniform premium rate of only 2 per cent to be paid by farmers for all Kharif crops and 1.5 per cent for all Rabi crops.

  2. For annual commercial and horticulture crops, the premium to be paid by farmers is only 5 per cent.

  3. While some premium is paid by farmers itself which is very low, the remaining premium will be paid by state governments and central governments equally. This helps farmers to provide full insured amount against crop loss on account of natural calamities.

  4. Earlier, there was a provision for capping on premium rates which resulted in low claims being paid to farmers. This was mainly done to limit the subsidy provided by the government for the premium. However, capping on premium rate has been removed now, so that farmers will be able to get the claim against full sum insured without any reduction.

  5. There is no upper limit on the Government subsidy. Even if the balance premium is 95 per cent, it will be paid by the government.

Other Important points related to PMFBY

  1. This scheme provides insurance coverage and financial support to the farmers in the event of failure of any of the notified crop as a result of natural calamities, pests & diseases.

  2. When crop yield is less than the guaranteed yield of notified crops, the claim payment equal to the shortfall in yield (total output) is payable to all insured farmers.

  3. 25 per cent of the likely claim will be settled directly to farmers account as immediate relief & there will be one insurance company for the entire state.

  4. There is a Provision of paying 12 per cent interest by insurance companies to farmers for the delay in the settlement of claims beyond two months of prescribed cut off date.

  5. On the similar lines, the state governments have to pay 12 per cent interest for delay in the release of the state share of subsidies which is provided for paying the remaining premium.

  6. Losses caused due to inundation, hail storm and landslide are assessed at the individual farm level.

  7. Use of remote sensing and drones to supplement Crop cutting experiments for faster settlement of claims.

  8. Smartphones are used to capture and upload data to reduce the claim payment to farmers.

  9. In post-harvest losses, coverage is available up to a maximum period of 14 days from harvesting for those crops which are kept in “cut & spread” condition to dry in the field.

  10. Now, more time is given to the insured farmers to intimate individual claims (72 hours instead of 48 hours) through any stakeholders and directly on the portal.

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