From UPSC perspective, the following things are important :
Prelims level : PMFBY, Beed Model of Crop Insurance
Mains level : Issues with PMFBY
Maharashtra may follow several other big states and opt-out Pradhan Mantri Fasal Bima Yojana (PMFBY), the government’s much-highlighted crop insurance scheme.
Why do many states want to opt-out?
- The major reasons are denial and delay of claims along with a huge subsidy burden on state governments.
- The farmers are facing a problem with timely claim settlement.
- Maharashtra is studying the Beed Model for insurance settlement.
Who else has stepped out?
- Andhra Pradesh, Jharkhand, Telangana, Bihar, Gujarat (PM’s home state), Punjab and West Bengal — all predominantly agriculture states — have already opted out of the scheme.
- Some of these states have their own insurance schemes.
What is PMFBY?
- The PMFBY was launched in February 2016. It is being administered by Ministry of Agriculture.
- It provides a comprehensive insurance cover against failure of the crop thus helping in stabilising the income of the farmers.
- It is implemented by empanelled general insurance companies.
- The scheme is compulsory for loanee farmers availing Crop Loan /KCC account for notified crops and voluntary for other others.
- PMFBY insures farmers against all non-preventable natural risks from pre-sowing to post-harvest.
- Farmers have to pay a maximum of 2 per cent of the total premium of the insured amount for kharif crops, 1.5 per cent for rabi food crops and oilseeds as well as 5 per cent for commercial / horticultural crops.
- The balance premium is shared by the Union and state governments on a 50:50 basis and on a 90:10 basis in the case of northeastern states.
- All farmers growing notified crops in a notified area during the season who have insurable interest in the crop are eligible.
- To address the demand of farmers, the scheme has been made voluntary for all farmers from Kharif 2020.
- Earlier to Kharif 2020, the enrolment under the scheme was compulsory for following categories of farmers:
- Farmers in the notified area who possess a Crop Loan account/KCC account (called as Loanee Farmers) to whom credit limit is sanctioned/renewed for the notified crop during the crop season. and
- Such other farmers whom the Government may decide to include from time to time.
Risks covered under the scheme
- Comprehensive risk insurance is provided to cover yield losses due to non-preventable risks, such as Natural Fire and Lightning, Storm, Hailstorm, Cyclone, Typhoon, Tempest, Hurricane, Tornado.
- Risks due to Flood, Inundation and Landslide, Drought, Dry spells, Pests/ Diseases also will be covered.
- In post-harvest losses, coverage will be 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.
- For certain localized problems, Loss/damage resulting from the occurrence of identified localized risks like hailstorm, landslide, and Inundation affecting isolated farms in the notified area would also be covered.
Back2Basics: Beed Model
- The model of crop insurance in place in Maharashtra’s Beed district is being studied by a central government panel set up to suggest suitable working models for PMFBY.
- In the Beed model, there is a cap on the profit of the insurance companies.
- If the claims exceed the insurance cover, the state government pays the bridge amount.
- If the claims are less than the premium collected, the insurance company keeps 20 per cent of the amount as handling charges and reimburses the rest to the state government.
- This is expected to reduce burden of subsidies from state.