Pradhan Mantri Fasal Bima Yojana

Pradhan Mantri Fasal Bima Yojana (PMFBY) is a crop insurance scheme launched in January 2016 to provide financial protection to farmers against crop losses caused by natural calamities, pests, diseases, and adverse weather conditions. It replaced several earlier crop insurance schemes with a simplified, low-premium design.

What Is PMFBY?

PMFBY provides comprehensive insurance coverage from pre-sowing to post-harvest against non-preventable natural risks. The government pays a large portion of the premium, making it affordable for farmers.

Premium Structure

Farmers pay a very low premium:
– Kharif crops: 2% of sum insured
– Rabi crops: 1.5% of sum insured
– Annual commercial and horticultural crops: 5% of sum insured

The difference between the actuarial premium rate and the farmer’s contribution is shared by the state and central governments.

Coverage

PMFBY covers:
– Prevented sowing/planting risk (when widespread calamity prevents farmers from sowing)
– Standing crop losses due to drought, flood, cyclone, pest and disease, landslide, etc.
– Post-harvest losses due to cyclone, rain, or hailstorm for up to 14 days
– Localised calamities: losses to notified crops from hailstorm, landslide, and inundation in specific plots

Technology Integration

PMFBY uses:
– Remote sensing and satellite technology to assess crop losses
– Yield estimation through Crop Cutting Experiments (CCEs)
– Drone surveys for localised loss assessment
– Direct benefit transfer for claim settlement to farmer’s bank account

Recent Reforms

From 2020, PMFBY became voluntary for farmers (earlier it was mandatory for loanee farmers). The Restructured-PMFBY (Rabi 2020-21 onwards) increased the Centre-State premium sharing cap and made the scheme more flexible at the state level.

Practical Example

Ramesh, a wheat farmer, insures his 5-acre farm under PMFBY. The sum insured is Rs 60,000. His premium at 1.5% is Rs 900. In February, his crop is damaged by an unseasonal hailstorm. After satellite assessment and crop cutting, his loss is assessed at 60%. He receives Rs 36,000 (60% of Rs 60,000) directly in his bank account within weeks.

Key Takeaways

– PMFBY provides crop insurance at premiums of just 1.5% to 5% of the sum insured for farmers
– The balance premium is shared by state and central governments
– Covers pre-sowing, standing crop, post-harvest, and localised calamity losses
– Technology (satellite, drones, CCEs) is used to speed up and improve claim assessment
– Enrollment is voluntary for non-loanee farmers; enrollment can be done through bank branches or insurance companies