💥Join UPSC 2027,2028 Mentorship (June Batch) + Access XFactor Notes & Microthemes PDF
Talk to Mentor

Civilsdaily

Login

Type: Schemes

  • Coronavirus – Economic Issues

    [pib] Atmanirbhar Bharat Abhiyan (Self-reliant India Mission)

    13 May 2020 | PIBSchemes | Economics
    Mains Paper 3: Indian Economy, Mobilization Of Resources

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Atmanirbhar Bharat Abhiyan

    Mains level: Significance and need for such a mission

    The PM has announced the Atma-nirbhar Bharat Abhiyan (or Self-reliant India Mission) and said that in the days to come the government would unveil the details of an economic package — worth Rs 20 lakh crore or 10% of India’s GDP in 2019-20 — aimed towards achieving this mission.

    Try a question:

    ‘Doubling Farmer’s Income’ and ‘USD 5 trillion economy’  seems more like slogans today in wake of COVID pandemic. Comment on the statement with keeping in view the Atmanirbhar Bharat Abhiyan of the government.

    Atmanirbhar Bharat: With a special package

    • PM has announced a special economic package and gave a clarion call for Self-reliant India.
    • The package will provide a much-needed boost towards achieving self-reliance.
    • This package, taken together with earlier announcements by the government during COVID crisis and decisions taken by RBI, is to the tune of Rs 20 lakh crore, which is equivalent to almost 10% of India’s GDP.
    • The package will also focus on land, labour, liquidity and laws. It will cater to various sections including cottage industry, MSMEs, labourers, middle class, and industries, among others.

    Five pillars of a self-reliant India

    PM iterated that a self-reliant India will stand on five pillars viz.

    1) Economy, which brings in quantum jump and not incremental change

    2) Infrastructure, which should become the identity of India

    3) System, based on 21st-century technology-driven arrangements

    4) Vibrant Demography, which is our source of energy for a self-reliant India and

    5) Demand, whereby the strength of our demand and supply chain should be utilized to full capacity

    Is this a new package?

    • The PM did not give the details, but he specified that this calculation of Rs 20 lakh crore includes what the government has already announced and the steps taken by the RBI.
    • This means the total amount of additional money — that is over and above what the government would have spent even in the absence of a Covid crisis — will not be Rs 20 lakh crore.
    • It would be substantially less.

    Why?

    • That’s because the PM has included the actions of RBI, India’s central bank, as part of the government’s “fiscal” package, even though only the government controls the fiscal policy and not the RBI (which controls the ‘monetary’ policy).
    • Government expenditure and RBI’s actions are neither the same nor can they be added in this manner.

    What did the RBI provide earlier?

    • A rough estimate suggests that the RBI’s decisions have provided additional liquidity of Rs 5-6 lakh crore since the start of the Covid-19 crisis.
    • Add this to the Rs 1.7 lakh crore of the first fiscal relief package announced by the Centre on March 26. Together, the two already account for 40 per cent of the Rs 20-lakh crore package.
    • That leaves an effective amount of Rs 12 lakh crore.
    • However, if the government is including RBI’s liquidity decisions in the calculation, then the actual fresh spending by the government could be considerably lower than Rs 12 lakh crore.
    • That’s because RBI has been coming out with long term bond-buying operations (long term repo operation or LTRO, to infuse liquidity into the banking system) worth Rs 1 lakh crore at a time.
    • If for argument’s sake, RBI comes out with another LTRO of Rs 1 lakh crore, then the overall fiscal help falls by the same amount.

    Why shouldn’t RBI’s package be included in the overall package?

    • That is because direct expenditure by a government — either by way of wage subsidy or direct benefit transfer or any, immediately and necessarily stimulates the economy.
    • In other words, that money necessarily reaches the people — either as someone’s salary or someone’s purchase.
    • But credit easing by the RBI — that is, making more money available to the banks so that they can lend to the broader economy — is not like government expenditure.
    • That’s because, especially in times of crisis, banks may take that money from RBI and elsewhere and, instead of lending it, park it back with the RBI.

    Back2Basics: Long Term Repo Operations (LTRO)

    • The LTRO is a tool under which the RBI provides 1-3 year money to banks at the prevailing repo rate, accepting government securities with matching or higher tenure as the collateral.
    • Funds through LTRO are provided at the repo rate.
    • But usually, loans with higher maturity period (here like 1 year and 3 years) will have a higher interest rate compared to short term (repo) loans.
    • According to the RBI, the LTRO scheme will be in addition to the existing Liquidity Adjustment Facility (LAF) and the Marginal Standing Facility (MSF) operations.
    • The LAF and MSF are the two sets of liquidity operations by the RBI with the LAF having a number of tools like repo, reverse repo, term repo etc.

    What are Repo and Reverse Repo rates?

    • The repo rate is the rate at which the RBI lends money to the banking system (or banks) for short durations.
    • The reverse repo rate is the rate at which banks can park their money with the RBI.
    • With both kinds of the repo, which is short for repurchase agreement, transactions happen via bonds — one party sells bonds to the other with the promise to buy them back (or repurchase them) at a later specified date.
    • In a growing economy, commercial banks need funds to lend to businesses.
    • One source of funds for such lending is the money they receive from common people who maintain savings deposits with the banks. Repo is another option.

    Get an IAS/IPS ranker as your 1: 1 personal mentor

  • Financial Inclusion in India and Its Challenges

    [pib] Atal Pension Yojana:  Marking 5 Years of Implementation

    12 May 2020 | PIBSchemes | Governance
    Mains Paper 2: Government Scheme/Policies

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: APY, NPS, PFRDA

    Mains level: Old age security concerns addressed by APY

    The flagship social security scheme ‘Atal Pension Yojana’ (APY) has completed five years of successful implementation.

    Five years of successfull implemention of APY is a significant feat. A statement based prelims question on terms of enrolment of the APY can be asked.

    Atal Pension Yojana

    • APY is a government-backed pension scheme, primarily targeted at the unorganised sector.
    • It is a social security scheme launched by the government on 9th May 2015 to provide a defined pension between Rs 1,000 to Rs 5,000.
    • It aims of delivering old age income security particularly to the workers in the unorganised sector with a guarantee of minimum pension after 60 years of age.

    Terms of enrolment

    • APY can be subscribed by any Indian citizen in the age group of 18-40 years having a bank account and its uniqueness is attributable to three distinctive benefits.
    • First, it provides a minimum guaranteed pension ranging from Rs 1000 to Rs 5000 on attaining 60 years of age,
    • Secondly, the amount of pension is guaranteed for a lifetime to spouse on death of the subscriber.
    • And lastly, in the event of the death of both the subscriber and the spouse, entire pension corpus is paid to the nominee.

    Success of the scheme

    • The scheme has now 2.23 crores enrolment.
    • Apart from remarkable enrolments, the scheme has been implemented comprehensively across the country covering all states and UTs with male to a female subscription ratio of 57:43.

    About PFRDA

    • Pension Fund Regulatory and Development Authority (PFRDA) is the statutory authority established by an enactment of the Parliament.
    • It aims to regulate, promote and ensure orderly growth of the National Pension System (NPS) and pension schemes to which this Act applies.
    • NPS was initially notified for central government employees recruits w.e.f. 1st Jan 2004 and subsequently adopted by almost all State Governments for its employees.
    • NPS was extended to all Indian citizens (resident/non-resident/overseas) on a voluntary basis and to corporates for its employees.

    Get an IAS/IPS ranker as your 1: 1 personal mentor

  • Land Reforms

    SWAMITVA Scheme to map rural inhabited lands

    25 April 2020 | Schemes | Governance
    Mains Paper 2: Government Scheme/Policies

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Swamitva Scheme, e-Gramswaraj Portal

    Mains level: Land records management and its significance for urban and rural planning

    The Prime Minister has launched the Swamitva Scheme and e-Gramswaraj Portal & mobile app as a portal to prepare and plan Gram Panchayat Development Plans.

    Swamitva Scheme

    • SWAMITVA stands for Survey of Villages and Mapping with Improvised Technology in Village Areas.
    • Under the scheme, the latest surveying technology such as drones will be used for measuring the inhabited land in villages and rural areas.
    • The mapping and survey will be conducted in collaboration with the Survey of India, State Revenue Department and State Panchayati Raj Department under the Ministry of Panchayati Raj.
    • The drones will draw the digital map of every property falling in the geographical limit of each Indian village.
    • Property Cards will be prepared and given to the respective owners.

    Benefits

    • The scheme will create records of land ownership in villages and these records will further facilitate tax collection, new building plan and issuance of permits.
    • It will enable the government to effectively plan for the infrastructural programs in villages.
    • It would help in reducing the disputes over property.

    What is e-Gramswaraj Portal?

    • E Gram Swaraj portal is the official portal of central govt for the implementation of Swamitva scheme.
    • By visiting this portal people can check their Panchayat profile easily. It will also contain the details of ongoing development works and the fund allocated for them.
    • Any citizen can create his or her account on the portal and can know about the developmental works of villages.
    • The user of E Gram Swaraj portal can also access all work of the Ministry of Panchayati Raj.
    • This single interface will help speed-up the implementation of projects in rural areas from planning to completion.

    Get an IAS/IPS ranker as your 1: 1 personal mentor

  • Parliament – Sessions, Procedures, Motions, Committees etc

    MPLADS funds suspended over COVID-19 crisis

    7 April 2020 | Schemes | Polity
    Mains Paper 2: Government Scheme/Policies

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: MPLADS

    Mains level: MPLADS and its implementation

    The Union Cabinet gave its nod to the temporary suspension of MPLAD Funds during 2020-21 and 2021-22 in view of the adverse impact of the outbreak of COVID-19 in India.

    Why suspend MPLAD?

    • The consolidated amount of MPLAD Funds for 2 years – Rs 7,900 crores – will go to Consolidated Fund of India.
    • The Cabinet has also approved an ordinance to reduce the salaries, allowances and pensions of Members of Parliament (MPs), including the Prime Minister, by 30 per cent for one year.
    • The amount so collected would be utilized in the fight against coronavirus.

    What is the MPLAD scheme?

    • The Members of Parliament Local Area Development Scheme (MPLADS) is a programme first launched during the Narasimha Rao Government in 1993.
    • It was aimed towards providing funds for developmental works recommended by individual MPs.

    Funds available

    • The MPs then were entitled to recommend works to the tune of Rs 1 crore annually between 1994-95 and 1997-98, after which the annual entitlement was enhanced to Rs 2 crore.
    • The UPA government in 2011-12 raised the annual entitlement to Rs 5 crore per MP.

    Implementation

    • To implement their plans in an area, MPs have to recommend them to the District Authority of the respective Nodal District.
    • The District Authorities then identify Implementing Agencies which execute the projects.
    • The respective District Authority is supposed to oversee the implementation and has to submit monthly reports, audit reports, and work completion reports to the Nodal District Authority.
    • The MPLADS funds can be merged with other schemes such as MGNREGA and Khelo India.

    Guidelines for MPLADS implementation

    • The document ‘Guidelines on MPLADS’ was published by the Ministry of Statistics and Programme Implementation in June 2016 in this regard.
    • It stated the objective of the scheme to enable MPs to recommend works of developmental nature with emphasis on the creation of durable community assets based on the locally felt needs in their Constituencies.
    • Right from inception of the Scheme, durable assets of national priorities viz. drinking water, primary education, public health, sanitation and roads, etc. should be created.
    • It recommended MPs to works costing at least 15 per cent of their entitlement for the year for areas inhabited by Scheduled Caste population and 7.5 per cent for areas inhabited by ST population.
    • It layy down a number of development works including construction of railway halt stations, providing financial assistance to recognised bodies, cooperative societies, installing CCTV cameras etc.

    Get an IAS/IPS ranker as your 1: 1 personal mentor

  • Coronavirus – Economic Issues

    PM Gareeb Kalyan Scheme

    26 March 2020 | Schemes | Economics
    Mains Paper 3

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: PM Gareeb Kalyan Scheme

    Mains level: Coronovirus outbreak and its mitigation

    Union Finance Minister has announced the Pradhan Mantri Garib Kalyan Scheme, under which the government would provide a relief package of Rs 1.7 trillion to the underprivileged, poor and migrant workers affected by a lockdown amid the Covid-19 crisis.

    PM Garib Kalyan Scheme

    • PM Gareeb Kalyan scheme is to have two parts — cash transfer and food security.
    • The package aims to take care of the welfare concerns of the poor and migrant workers who have been suffering because of a nationwide lockdown.

    Two silos of the scheme

    1) PM Gareeb Kalyan Anna Yojana

    • 800 million poor people in the country to get 5 kg of rice/wheat per month free of cost, in addition to the 5 kg they already get.
    • Additionally, each household to get 1 kg of preferred dal for free for the next three months

    2) Cash transfer scheme

    It has nine sub-parts

    • Farmers: First instalment of the PM-KISAN payment of Rs 2,000 to be frontloaded; move to benefit 87 million
    • MGNREGS: Wage increased from Rs 182 to Rs 202 per day. A wage increase to benefit 50 million families, as there will be about 2000 increase in their income
    • Poor widows, aged, and divyang: Ex-gratia of Rs 1,000 for the next three months, in two instalments. 30 million people to benefit. transfers to be done through direct benefits transfer (DBT)
    • Women with Jan Dhan Yojana accounts: 200 million to benefit from Rs 500 ex-gratia for the next 3 months
    • Beneficiaries of the Ujjwala scheme: 80 million households benefit from the gas cylinders provided under the scheme. These beneficiaries will get free cylinders for three months in view of the disruption the coronavirus lockdown will cause.
    • Women in self-help groups: 6.3 million SHGs get up to Rs 10 lakh collateral-free loans under the Deen Dayal Upadhyaya National Rural Mission scheme. The cap has been doubled to Rs 20 lakh. The move will benefit 70 million households
    • Organised sector workers: Two parts to this. First, the Government of India will pay the EPF contribution of both employee and employer for the next three months. This will be for all those establishments which have up to 100 employees, 90 per cent of whom earn less than Rs 15,000 a month
    • Construction workers: States to be directed to utilise the Rs 31,000 crore welfare fund for building and construction workers for the benefit of 35 million workers in the midst of the coronavirus crisis
    • District mineral fund: State govts. to be urged to utilise this fund for medical screening, medical testing and providing health care services in the wake of the coronavirus crisis

    Other initiatives

    • Insurance cover for healthcare workers attending to Covid-19 patients: Rs 50 lakh per person.
    • Two million health workers to benefit from the insurance scheme.
    • In what will benefit 8 million employees and 400,000 establishments, the EPFO regulation will be amended to allow the withdrawal of up to 75 per cent of their corpus as non-refundable advance, or three months’ salary, whichever is less.

    Get an IAS/IPS ranker as your 1: 1 personal mentor

  • Minimum Support Prices for Agricultural Produce

    MSP for Minor Forest Produce Scheme

    26 March 2020 | Schemes | Agriculture
    Mains Paper 3: Conservation, Environmental Pollution & Degradation, Eia

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: MSP for MFP Scheme

    Mains level: MSP for MFP Scheme

    The Union government’s ‘mechanism for the marketing of minor forest produce (MFP) through minimum support price (MSP) and development of value chain for MFP’ scheme can offer respite to forest-dependent labourers in the wake of novel coronavirus (COVID-19) outbreak, according to experts.

    About MSP for MFP Scheme

    • The scheme, launched by the Centre in August 2013, provides fair price for MFP collected by tribals through MSP.
    • It is designed as a social safety net for improvement of livelihood of MFP gatherers by providing them fair price for the MFPs they collect.
    • MFP comprises all non-timber forest produce of plant origin such as bamboo, brush wood, stumps, cane, tussar, cocoons, honey, wax, lac, tendu or kendu leaves, medicinal plants and herbs, roots, tubers, etc, according to the Forest Rights Act, 2006.
    • The Scheme was been implemented in eight States having Schedule areas as listed in the Fifth Schedule of the constitution of India.
    • From November 2016, the scheme is applicable in all States.

    Issues in implementation

    • Almost 60-70 per cent income of forest dwellers depends on collection and sale of MFP, according to the tribal affairs ministry.
    • However, the scheme has not been activated because in most cases, states have not given their 25 per cent share.

    Get an IAS/IPS ranker as your 1: 1 personal mentor

  • Labour, Jobs and Employment – Harmonization of labour laws, gender gap, unemployment, etc.

    [pib] Employees’ Pension Scheme (Amendment) Scheme, 2020

    17 March 2020 | PIBSchemes | Economics
    Mains Paper 3: Issues relating growth and development, employment

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: EPS Scheme

    Mains level: Scope and benefits of EPS

    The Union Ministry of Labour & Employment has informed about the total enrollments under EPS.

    Employees Pension Scheme (EPS)

    • EPS is a social security scheme that was launched in 1995 and is facilitated by EPFO.
    • The scheme makes provisions for pensions for the employees in the organized sector after retirement at the age of 58 years.
    • Employees who are members of EPFO automatically become eligible for EPS.
    • Both employer and employee contribute 12% of employee’s monthly salary (basic wages plus dearness allowance) to the Employees’ Provident Fund (EPF) scheme.
    • EPF scheme is mandatory for employees who draw a basic wage of Rs. 15,000 per month.
    • Of the employer’s share of 12 %, 8.33 % is diverted towards the EPS.

    Features of the 2020 Amendment

    • EPS pensioners will get normal pension even after getting a reduced pension due to commutation.
    • On retirement, if the employee opts for commutation of pension, a portion is paid as a lump sum based on the commutation factor while on the balance the pension begins.
    • In simple terms, commutation means a lump sum payment in lieu of periodic payments of pension.
    • In such a case, the amount of pension will be lower than the amount of pension without any commutation.
    • The amendment seeks to restore the original amount of pension as per the commutation table, after 15 years equal to the same amount as it would have been without commutation.

    Get an IAS/IPS ranker as your 1: 1 personal mentor

  • [pib] Various schemes implemented by Zonal Cultural Centres (ZCCs)

    3 March 2020 | PIBSchemes | History
    Mains Paper 1: Arts & Culture

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Various initiaitives mentioned in the newscard

    Mains level: Schemes for cultural promotion

    The Ministry of Culture and Tourism has informed about its various schemes in the Lok Sabha.

    Zonal Cultural Centres (ZCCs)

    • To preserve & promote various forms of folk art and culture of the tribals throughout the country including West Bengal, the govt. has set up seven Zonal Cultural Centres (ZCCs).
    • These are headquartered at Patiala, Nagpur, Udaipur, Prayagraj, Kolkata, Dimapur and Thanjavur.
    • These ZCCs organize various cultural activities and programmes all over the country on regular basis.

    These ZCCs under Ministry of Culture are also implementing a number of schemes for promoting the folk/tribal art and culture, details of which are as below –

    1) Award to Young Talented Artists:

    • The Scheme “Young Talented Artists” is carried out to encourage and recognize the young talents especially in the field of rare art forms.
    • Talented youngsters of the age group of 18-30 years are selected and given a one-time  cash award of Rs. 10,000/-.

    2) Guru Shishya Parampara:

    • This scheme envisages transmitting our valued traditions to the coming generations. Disciples are trained under veterans in art forms which are rare and vanishing.
    • Rare and vanishing art forms of the region are identified and eminent exponents are selected to carry out the training programmes in ‘Gurukula’ tradition.
    • The monthly remuneration for Guru – Rs. 7,500/-, Accompanist – Rs. 3,750/- and        Pupils – Rs. 1,500/- each for the period of six month to maximum 1 year for one scheme.
    • The names of the Gurus are recommended by the State Cultural Affairs Departments.

    3) National Cultural Exchange Programme (NCEP):

    • It can be termed as the lifeline of the Zonal Cultural Centers. Under this scheme, various festivals of performing arts, exhibitions, yatras etc are organized in member States.
    • Artists from other zones/states are invited to participate in these programmes. Participation of artists from the Zone in festivals held in other parts of the country are also facilitated.
    • Zonal centres also participate in Major festivals happening in member States by arranging performances during these festivals where large number of audience get chance to enjoy and understand art forms of other regions.
    • These festivals provide opportunity to taste and understand various cultures of our country.

    4) Preservation of Languages

    • Sahitya Akademi, an autonomous organization under Ministry of Culture, encourages the preservation and promotion of languages, especially the unrecognized and tribal languages.
    • The Akademi periodically organizes language conventions throughout the country in this regard.

    5) Theatre Rejuvenation:

    • To promote theatre activities including stage shows and Production oriented workshops, etc. Honorarium Up to Rs. 30,000/- per show excluding TA & DA is paid.
    • The groups finalized on the basis their credentials as well as the merit of project submitted by them.

    6) Research & Documentation:

    • To preserve promote and propagate vanishing visual and performing art forms including folk, tribal and classical in the field of music, dance, theatre, literature, fine arts etc. in print/ audio – visual media.
    • The art form is finalized in consultation with state Cultural Department.

    7) Shilpgram:  To promote folk and tribal art and crafts of the zone by organizing seminar, workshops, exhibitions, craft fairs, design development and marketing support to the artisans living in the rural areas.

    8) Octave:  To promote and propagate the rich cultural heritage of North East region comprising of eight States namely Arunachal Pradesh, Assam, Meghalaya, Mizoram, Sikkim, Nagaland, Manipur and Tripura to the rest of India.

    Get an IAS/IPS ranker as your 1: 1 personal mentor

  • Water Management – Institutional Reforms, Conservation Efforts, etc.

    Jalyukta Shivar Abhiyan

    24 February 2020 | SchemesStates | Environment
    Mains Paper 3: Conservation, Environmental Pollution & Degradation, Eia

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Jalyukta Shivar Abhiyan

    Mains level: Various schemes for drought management

     

     

    Jalyukta Shivar, the flagship water conservation project launched by the earlier government has been officially scrapped by the present Maha government.

    What is Jalyukta Shivar?

    • Launched in December 2014 after Maharashtra experienced consecutive droughts, the project aimed at rolling out measures that could potentially mitigate water scarcity in the most drought-prone villages in a systematic manner.
    • Nearly 52 per cent of the state’s geographical area is prone to drought, either naturally or due to poor rainfall.
    • This includes Marathwada and adjoining areas of Madhya Maharashtra and large parts of Vidarbha.
    • The project targeted strengthening and streamlining existing water resources like canals, bunds and ponds by arresting maximum run-off rainwater during monsoon.
    • Tasks to widen and deepen natural water streams and connect them to nearby water storage facilities like earthen or concrete check-dams were proposed.
    • In the first phase, planned during 2015 – 2019, Jalyukta Shivar envisaged making 5,000 villages drought-free, every year.
    • During its proposed tenure, the government eyed at making 25,000 drought-prone villages water-sufficient.

    Was Jalyukta Shivar beneficial?

    • While the exact number of villages that were declared drought-free remains unknown, the programme attempted to bring water stress down in a majority of the most water-scarce villages in the state.
    • In January last year, then CM had announced that the scheme had transformed 16,000 drought-prone villages of Maharashtra.

    What is the future of water conservation in the state?

    • Geologists and hydrologists, who worked on implementing the project, shared similar views and hailed Jalyukta Shivar.
    • This was mainly due to the interventions undertaken in the existing water reserves, planned de-silting activities, among many others.
    • However, experts agreed that the scheme was not appropriately implemented.
    • Now with Jalyukta Shivar no longer in existence, focused efforts of the past five years, in most likelihood, will go down the drain unless a similar scheme is introduced.
    • With rainfall variations getting more pronounced, in addition to depleting groundwater reserves, the state will need concrete interventions to tackle future water requirements.

    Get an IAS/IPS ranker as your 1: 1 personal mentor

  • Crop Insurance – PMFBY, etc.

    Changes in Crop Insurance Scheme

    21 February 2020 | Schemes | Agriculture
    Mains Paper 3

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Crop insurrance schemes in India

    Mains level: Impacts of the said changes

    The Centre has decided to restrict its premium subsidy in its flagship crop insurance schemes to 30% for unirrigated areas and 25% for irrigated areas (from the existing unlimited), and to make enrolment of farmers in the Pradhan Mantri Fasal Bima Yojana (PMFBY) and Restructured Weather Based Crop Insurance Scheme (RWBCIS) voluntary from the 2020 Kharif season.

     Other changes in crop insurance schemes

    • The government has given flexibility to states/UTs to implement PMFBY and RWBCIS, and given them the option to select any number of additional risk covers/features like prevented sowing, localised calamity, mid-season adversity, and post-harvest losses.
    • Earlier, these risk covers were mandatory.

    Why such a move?

    By capping the subsidy for premium rates up to 30%, the Centre wants to dis-incentivize certain crops in such areas where growing these crops involve high risks in terms of crop insurance premiums.

    What were the schemes?

    • At present, under PMFBY and RWBCIS, farmers pay a premium of 2% of the sum insured for all foodgrains and oilseeds crops of Kharif; 1.5% for all foodgrains and oilseeds crops of Rabi; and 5% for all horticultural crops.
    • The difference between actual premium rate and the rate of insurance premium payable by farmers, which is called the Rate of Normal Premium Subsidy, is shared equally between the Centre and the states.
    • However, states and UTs are free to extend additional subsidy over and above the normal subsidy from their budgets.
    • Until now, there was no upper limit for the central subsidy.
    • The Cabinet decided to cap the Centre’s premium subsidy under these schemes for premium rates up to 30% for unirrigated areas/crops and 25% for irrigated areas/crops.

    How many farmers are covered under these two schemes?

    • During 2018-19, about 5.64 crore farmers are enrolled with PMFBY for an insured sum of Rs 2,35,277 crore, and 30% of the gross cropped is insured.
    • When the government approved PMFBY four years ago, it was described as a path-breaking scheme for farmers’ welfare” under which there was no upper limit on government subsidy.
    • Even if balance premium was 90%, it was to be borne by the Government
    • While PMFBY is based on yield, RWBCIS is based on proxies and farmers are provided insurance protection against adverse weather conditions such as excess rainfall, wind and temperature.
    • The number of insured farmers under RWBCIS is relatively low.

    Impact of the move

    This change will have two main implications.

    • First, it may bring down the rates of overall premium as the state governments now will not be required to invite bids factoring these risks.
    • Second, it will make these schemes less attractive for farmers.
    • However, states/UTs can offer specific single peril risk/insurance covers like hailstorm etc under PMFBY.

    Burden of premium

    • One interpretation of this decision is that the burden of premium subsidy will go up for the states.
    • Example: In the old regime, if a farmer’s Kharif crop was insured for Rs 1,00,000 and the rate of actuarial premium was 40%, then the premium paid by the farmer was 2% (Rs 2,000), and the remaining premium was shared by the Centre and the state equally (19% or Rs 19,000).
    • In the new regime, for the same sum insured (Rs 1,00,000) and the same rate of premium (40%), the Centre will give subsidy for premium rates up to 30%.
    • This means that from the Kharif 2020 season , the Centre will have to pay premium at the rate of 14% (out of 30%, the farmer’s share is 2%, and the Centre’s and state’s 14% each).
    • The state has to bear the entire burden of the premium subsidy in cases where the rate of premium goes beyond the threshold of 30%.

    No insurance of certain crops

    • Another interpretation is that the Centre may stop supporting insurance of certain crops in certain areas where the rate of premium is more than 30%.
    • The Department of Agriculture, Cooperation and Farmers Welfare in consultation with other stakeholders/agencies will have to prepare State specific, alternative risk mitigation programme for crops/areas having high rate of premium.
    • While the average premium rate under PMFBY and RWBCIS at the national level was 12.32% for 2018-19, for some crops in certain districts, the rate of premium has been higher than 30% in recent years.
    • For instance, the rate of premium for Kharif groundnut has reached 49% in Rajkot of Gujarat, and the rate for Rabi paddy crop Ramnathapuram (Tamil Nadu) has reached 42%.

    Impact on states

    • The states are already defaulting on their share, and the Centre’s new cap will put an additional financial burden on them.
    • Madhya Pradesh has not paid its share of premium even for Kharif 2018, which comes to Rs 1,500 crore. As a result, farmers have not got their claims.
    • In fact, most states have delayed the payment of their share of premium.
    • Sources said that in some states, the expenditure on premium of PMFBY is more than 50% of their budget for agriculture.

    Immediate implications

    • That move will lead to a rise in the rates of premium, as the area covered under insurance and the number of enrolled farmers is expected to come down significantly.
    • As of now the schemes are compulsory for all loanee farmers and optional for other farmers.
    • Non-loanee farmers under the crop insurance schemes are much fewer than loanee farmers.
    • If the latter opt out of the schemes, the number of insured farmers will drastically come down.
    • In such a scenario the rate of premium of certain crops in some areas may go beyond 30%.

    Back2Basics

    Pradhan Mantri Fasal Bima Yojana – Min Premium, Max Insurance

    Get an IAS/IPS ranker as your 1: 1 personal mentor