Implementation of Crop Insurance Schemes

Pradhan Mantri Fasal Bima Yojana (PMFBY) was launched from Kharif 2016 to provide comprehensive insurance coverage for all food crops (cereals, millets & pulses), oilseeds crops and annual commercial/horticultural crops against all non-preventable natural risks. 

• This is however subject to yield data being made available for the particular crop for a sufficient number of years and the capacity of State Governments to conduct requisite number of Crop Cutting Experiments (CCEs) to assess the yield loss. 
• The highlights of this scheme are as under:
• There will be a uniform premium of only 2% to be paid by farmers for all Kharif crops and 1.5% for all Rabi crops. 
• In case of annual commercial and horticultural crops, the premium to be paid by farmers will be only 5%. 
• The premium rates to be paid by farmers are very low and balance premium will be paid by the Government to provide full insured amount to the farmers against crop loss on account of natural calamities.
• There is no upper limit on 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 resulted in low claims being paid to farmers. 
• This capping was done to limit Government outgo on the premium subsidy. This capping has now been removed and farmers will get claim against full sum insured without any reduction.
• The use of technology will be encouraged to a great extent. Smart phones 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. 
• The new Crop Insurance Scheme is in line with One Nation – One Scheme theme. 
• It incorporates the best features of all previous schemes and at the same time, all previous shortcomings/weaknesses have been removed.

er Crop Insurance Scheme - Comparison

No	Feature	NAIS [1999]	MNAIS [2010]	PM Crop Insurance Scheme
1	Premium rate	Low	High	Lower than even NAIS (Govt to contribute 5 times that of farmer)
2	One Season – One Premium	Yes	No	Yes
3	Insurance Amount cover	Full	Capped	Full
4	On Account Payment	No	Yes	Yes
5	Localised Risk coverage	No	Hail storm Land slide	Hail storm Land slide Inundation
6	Post Harvest Losses coverage	No	Coastal areas - for cyclonic rain	All India – for cyclonic + unseasonal rain
7	Prevented Sowing coverage	No	Yes	Yes
8	Use of Technology (for quicker settlement of claims)	No	Intended	Mandatory
9	Awareness	No	No	Yes (target to double coverage to 50%)

One Nation – One Scheme: best features of all previous schemes incorporated + all previous shortcomings / weaknesses removed

Perennial horticultural crops can also be insured under Restructured Weather Based Crop Insurance Scheme (RWBCIS).  

• Inclusion of crops and areas under the PMFBY/RWBCIS are however, decided/notified by the concerned State Governments.   
• NAIS and MNAIS have been discontinued from Kharif 2016, but the ongoing Weather Based Crop Insurance Scheme (WBCIS) and Coconut Palm Insurance Scheme would continue to operate while premium to be paid under WBCIS has been brought on a par with PMFBY.
• The Agriculture ministry has empaneled state-owned Agriculture Insurance Company of India (AIC) and 10 private companies including ICICI-Lombard General Insurance, HDFC-ERGO General Insurance, IFFCO-Tokio General Insurance and SBI General Insurance, for implementation of the mega scheme.

The Central Government on its part, has continuously persuaded the State Governments to notify maximum number of crops and areas under crop insurance schemes, so that the coverage can be enhanced from the present level of about 30% of cropped area in 2016-17 to  50% of cropped  area over the next two years. 

This is the first year of implementation of PMFBY/RWBCIS and 23 States implemented the schemes during Kharif 2016 and 25 States and 3 Union Territories during Rabi 2016-17. 

Disparities among States in coverage is  attributable to the schemes being optional for States, notification by States of food and oilseeds crops & annual commercial/horticultural crops on selective basis, poor infrastructure of insurance companies for coverage of non-loanee farmers etc.   

Apart from these factors, coverage of farmers differs from State to State also due to perception of risk of areas and crops, being higher in more risky areas and crops.  

Government is keeping a close watch on the implementation/progress of the schemes which are being monitored at the highest level and through weekly video conferences with State Governments, insurance companies and financial institutions.  

Due to the improved features of the new schemes and efforts made by the Government, coverage under PMFBY/RWBCIS has increased substantially over that of the erstwhile schemes.