INSURANCE FOR FARMING AND AGRICULTURE IN INDIA
Agriculture is susceptible to market risks and requires insurance just like other commodities. In this respect, the Government of India has introduced certain reformed schemes. The latest schemes are the Pradhan Mantri Fasal Bima Yojana (PMFBY) and Paramparagat Krishi Vikas Yojana (PKVY).
The previous schemes that were being implemented are the Farm Income Insurance Scheme, Weather Based Crop Insurance Scheme (WBCIS), Comprehensive Crop Insurance Scheme, Unified Package Insurance Scheme (UPIS), Modified National Agriculture Insurance Scheme and National Agriculture Insurance Scheme (NAIS).
Let us look at some of these in brief with a focus on PMFBY.
Only key factors have been highlighted here. For more information regarding crop insurance and government policies please check the related websites as per the scheme.
The Pradhan Mantri Fasal Bima Yojana (PMFBY)
- The Pradhan Mantri Fasal Bima Yojana Scheme is an innovative scheme introduced by the Central Government to replace the earlier two schemes.
- The PMFBY will be implemented pan India and be monitored by the Ministry of Agriculture and Farmers’ Welfare, Government of India.
- The PMFBY provides insurance cover against failure of crops thus helping in stabilizing farmers’ income and encourages them towards more innovative practices.
- All farmers including sharecroppers and tenant farmers growing notified crops are eligible for cover
- The Scheme covers all Food & Oilseeds crops and Annual Commercial / Horticultural Crops for which past yield data is available and for which requisite number of Crop Cutting Experiments (CCEs) will be conducted as a part of General Crop Estimation Survey (GCES). ·
- The scheme is compulsory for farmers seeking crop cover loans.
- The Maximum Premium payable by farmers is 2% for Kharif Food & Oilseeds crops, 1.5% for Rabi Food & Oilseeds crops and 5% for Annual Commercial / Horticultural Crops.
- All farmers availing Seasonal Agricultural Operation loans from Financial Institutions will be mandatorily covered
- The scheme will be implemented by AIC and other empanelled private general insurance companies. Selection of Implementing Agency (IA) will be done by the concerned State Government through bidding.
- The existing State Level Co-ordination Committee on Crop Insurance (SLCCCI), Sub-Committee to SLCCCI, District Level Monitoring Committee (DLMC) shall be responsible for proper management of the Scheme.
- The Scheme shall be implemented on an ‘Area Approach basis’. The unit of insurance is Village / Village Panchayat level for major crops and for the rest is could be a higher level.
- The Loss assessment for crop losses due to non-preventable natural risks will be based on Area approach.
- In case majority insured crops are prevented from sowing, the insured crops due to adverse weather conditions that will be eligible for indemnity claims up to 25% of the sum will be insured.
- However losses due to local perils and Post-Harvest losses will be assessed at the affected insured field of the individual insured farmer.
- Three levels of Indemnity, namely 70%, 80% and 90% corresponding to crop Risk in the areas shall be available for all crops.
- The Threshold Yield (TY) at which Insurance protection is given to all insured farmers will be the moving average yield of last seven years excluding yield up to two notified calamity years multiplied by Indemnity level.
- In case of smaller States, the whole State shall be assigned to one IA.
- The designated / empanelled companies participating in bidding have to bid the premium rates for all the crops notified / to be notified by the State Govt. and non-compliance will lead to rejection of company’s bid
- Crop Cutting Experiments (CCE) will be considered per unit area / per crop
- State governments should use Smart phone apps for video / image capturing CCEs process and transmission with CCE data on a real time basis.
- The cost of using technology etc. for conduct of CCEs etc will be shared between Central Government and State/U.T. Governments on 50:50 basis.
- There will be a provision on account claims in case of adverse seasonal conditions during crop season such as floods, prolonged dry spells, severe drought, and unseasonal rains.
- On account payment, up to 25% of likely claims will be provided, if the expected yield during the season is likely to be less than 50% of normal yield.
- The claim amount will be credited electronically to the individual Insured Bank Account.
- The Government is integrating all stakeholders such as farmers, insurance companies, financial institutions and Government agencies on an IT platform to ensure better administration, coordination and transparency for getting real time information and monitoring.
- 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 has now been removed and farmers will get claim against full sum insured without any reduction.
Paramparagat Krishi Vikas Yojana
This scheme was developed to address the importance of soil and water and also to improve productivity of crops. This scheme will give emphasis to organic farming, agriculture infrastructure, mechanized farming, warehousing, irrigation facilities and so on.
Earlier Schemes –
The earlier schemes are either withdrawn or are in conjunction with the new schemes. The new schemes more or less replace the older ones. But here is a brief understanding of what these schemes basically did for the agricultural sector.
Weather Based Crop Insurance Scheme (WBCIS)
The Weather Based Crop Insurance Scheme (WBCIS) aims to mitigate the hardship of the insured farmers against the likelihood of financial loss on account of anticipated crop loss resulting from adverse weather conditions
Unified Package Insurance Scheme (UPIS)
The Unified Package Insurance Scheme (UPIS) was implemented to provide financial protection and comprehensive risk coverage of crops
Comprehensive Crop Insurance Scheme
The Comprehensive Crop Insurance Scheme was developed to protect farmers against crop failures.
Modified National Agriculture Insurance Scheme
The Modified National Agriculture Insurance Scheme was developed to protect farmers against crop failures.
Farm Income Insurance Scheme
This scheme was developed to target farmers yield and price through a single insurance policy.
National Agriculture Insurance Scheme (NAIS)
The NAIS is also called the Rashtriya Krishi Bima Yojana and was introduced to cover all food crops as well as cover for farmers. The premium varies from 1.5 – 3.5%. NIAS operated on area approach and individual basis. This scheme is being implemented by the Agriculture Insurance Corporation of India.