Crop Insurance Scheme

Recently, The Union Cabinet chaired by the Prime Minister approved continuation of the Pradhan Mantri Fasal Bima Yojana and Restructured Weather Based Crop Insurance Scheme till 2025-26 with an overall outlay of Rs.69,515.71 Crore from 2021-22 to 2025-26.

Fund for Innovation and Technology (FIAT)

• A separate Fund for Innovation and Technology (FIAT) with a corpus of ₹824.77 crore has been created.
• Purpose: To enable faster assessment of crop damage, quicker claim settlement, and reduction in disputes.
• FIAT will also focus on promoting digital enrolment of farmers, increasing coverage, and supporting research and development studies.

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Technology-Based Initiatives

• YES-TECH (Yield Estimation System using Technology):
  • This system uses remote sensing technology for yield estimation with a minimum of 30% weightage given to technology-based estimates.
  • Aim: To phase out traditional Crop Cutting Experiments (CCE) gradually.
  • For the year 2023-24, claims were calculated and settled using YES-TECH.
  • Nine major states currently implementing: Andhra Pradesh, Assam, Haryana, Uttar Pradesh, Madhya Pradesh, Maharashtra, Odisha, Tamil Nadu, and Karnataka.
    • Madhya Pradesh has adopted 100% technology-based yield estimation.
• WINDS (Weather Information and Network Data Systems):
  • Aim: To establish Automatic Weather Stations (AWS) at the block level and Automatic Rain Gauges (ARGs) at the panchayat level to improve hyper-local weather data collection.
  • The initiative plans to expand the current weather data network density fivefold.
  • Implementation has been deferred to 2024-25 (originally planned for 2023-24) to allow for preparatory work.
  • Costs for data rental will be shared by the Centre and States.
  • Nine states implementing WINDS: Kerala, Uttar Pradesh, Himachal Pradesh, Puducherry, Assam, Odisha, Karnataka, Uttarakhand, and Rajasthan.

About Pradhan Mantri Fasal Bima Yojana (PMFBY)

• Launch: Launched in 2016, A large-scale crop subsidy insurance scheme that was aimed to safeguard farmers.
• Umbrella scheme: PMFBY scheme was designed in line with the One Nation–One Scheme and replaces three older initiatives:
  • Modified National Agricultural Insurance Scheme (MNAIS), 
  • Weather-based Crop Insurance Scheme and 
  • National Agricultural Insurance Scheme (NAIS).
• Objectives:
  • To provide insurance coverage and financial support to the farmers in the event of failure of any of the notified crops as a result of natural calamities, pests & diseases.
  • To stabilise the income of farmers to ensure their continuance in farming.
  • To encourage farmers to adopt innovative and modern agricultural practices.
  • To ensure flow of credit to the agriculture sector.
• Functioning:
  • 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.
• Coverage:
• • Risks covered under the scheme: Risk of sowing, planting and germination failure, Risk of standing crop failure, Risk of post-harvest losses, Protection against calamities.
  • Exclusions: Loss or damage to notified insured crops due to war, nuclear risks, malicious damage and other preventable risks is excluded from the scope of coverage.
  • Coverage of Crops: Food crops (Cereals, Millets and Pulses), Oilseeds, Annual Commercial / Annual Horticultural crops.

About Restructured Weather Based Crop Insurance Scheme (RWBCIS)

• Launch: Launched by the central government in 2016.
• Administering Authority: Ministry of Agriculture & Farmers Welfare.
• Basis for Compensation: Weather triggers instead of actual crop yield.
• Objective of RWBCIS
  • To mitigate the financial hardship of farmers by providing compensation for anticipated crop losses caused by adverse weather conditions.
  • Weather parameters such as rainfall, temperature, wind, and humidity serve as proxies for crop yield in determining payouts.
• Coverage: Food crops (cereals, millets, pulses), oilseeds, and annual commercial/horticultural crops.
• Weather Risks Covered:
  • Rainfall (deficit, excess, unseasonal, dry spells, rainy days).
  • Temperature (high or low).
  • Relative humidity.
  • Wind speed.
  • Hailstorms and cloudbursts.
• Implementation
  • The scheme operates on an Area Approach wherein a Reference Weather Unit Area (RUA) determines weather parameters.
  • Crop life cycle is divided into phases (sowing to maturity), and weather risks are assessed for each phase.

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Comparison Between RWBCIS and PMFBY