Context: According to the Ministry of Agriculture and Farmers Welfare, enrolment under Pradhan Mantri Fasal Bima Yojana (PMFBY) has increased by 27 percent in the financial year 2023-24 so far.

• Ministry also informed that in past eight years of implementation of PMFBY, nearly 57 crore farmer applications have been enrolled and over 23 crore farmer applicants received claims.

Introduction to Pradhan Mantri Fasal Bima Yojana (PMFBY)

• PMFBF Full Form: Pradhan Mantri Fasal Bima Yojana
• Launch: Launched in 2016, the Pradhan Mantri Fasal Bima Yojana (PMFBY) is 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).
• Key objectives of the scheme: The PM Fasal Bima Yojana operates under the ‘One Nation, One Crop, One Premium’ motto and aims to achieve the following goals:
  • Offer cost-effective and extensive insurance coverage for crops, guarding against failure, damage, and losses.
  • Increase the reach of crop insurance, with a primary emphasis on covering the entire cultivated area.
  • Maintain stable income for farmers while promoting sustainability in agricultural production.
  • Facilitate access to credit for the agriculture sector.
  • Encourage the adoption of innovative and modern farming practices among farmers.
  • Foster competition within the agricultural industry.
  • Shield farmers from risks associated with production.
  • Provide farmers with exemptions from goods and services tax (GST).
• Implementing agency: The scheme is being administered by the Department of Agriculture, Cooperation and Farmers’ Welfare under the Ministry of Agriculture, along with empanelled general insurance companies.
• PMFBY Portal: Farmers can access PMFBY portal by visiting portal link: http://pmfby.gov.in/.

Salient Features of the Pradhan Mantri Fasal Bima Yojana (PMFBY)

(a) Insurance Coverage Under Pradhan Mantri Fasal Bima Yojana

• The Pradhan Mantri Fasal Bima Yojana offers insurance coverage specifically designed for certain crops and the risks associated with their yield. 
• The list of crops covered includes essential food crops like cereals, millets, and pulses, as well as oilseeds, annual commercial crops, and annual horticultural crops.
• It also covers all stages of the crop production cycle. The inclusions and exclusions of insurance cover provided are as follows:
  • Initial Stage – Risks during sowing, planting, and germination:  When unfavourable weather conditions, such as low rainfall or adverse weather, hinder successful sowing, planting, or germination, the insured area is protected. 
  • Growth Stage – Risks of crop failure during growth:  Insurance coverage extends to yield losses caused by uncontrollable factors like drought, dry spells, floods, inundation, pest infestations, crop diseases, landslides, natural fires, lightning, hailstorms, and cyclones. 
  • Harvest Stage – Risks during post-harvest:  This applies to crops that require drying in bundles after harvesting. Coverage is provided for up to two weeks from harvesting and extends to losses resulting from hailstorms, cyclones, cyclonic rains, and unseasonal rains. 
  • Protection against Calamities:  Coverage is available for loss or damage to designated insured crops caused by specific localized risks, including hailstorms, landslides, cloud bursts, and natural fires. 
  • Exclusions:  Loss or damage to the specified insured crops due to war, nuclear risks, malicious damage, and other avoidable risks are not covered under this scheme.
• The size of the insurance claim depends on the percentage of yield shortfall from the threshold yield, multiplied by the insured sum. 
• The insured sum is determined based on the financial scale provided to farmers, while the threshold crop yield is calculated using seven-year historical data and indemnity levels.

(b) Premiums Under Pradhan Mantri Fasal Bima Yojana

• To access the insurance benefits offered by this program, farmers need to contribute a small portion of actuarial premiums. 
• The contribution rates differ based on the type of crops: for Kharif crops (2%), Rabi crops (1.5%), Commercial crops (5%), and Horticultural crops (5%). 
• However, the bulk of the actuarial premium, ranging from 95% to 98.5%, is covered jointly by both the state and central governments, with the costs shared equally on a 1:1 ratio.

(c) Beneficiaries of Pradhan Mantri Fasal Bima Yojana

• According to the government, under this scheme, all farmers (including sharecroppers and tenant farmers) growing notified crops in the notified areas are eligible for coverage, if they have insurable interest for the insured crops.
• The eligible farmers can be broadly classified into two categories in Pradhan Mantri Fasal Bima Yojana;

(d) Insurance Companies Participating in Pradhan Mantri Fasal Bima Yojana

• This Pradhan Mantri Fasal Bima Yojana was implemented by 18 insurance companies that became empanelled partners by successfully completing the L1 bidding process and are listed as follows:
  • Agriculture Insurance Company
  • Bajaj Allianz General Insurance Co. Ltd.
  • Bharti Axa General Insurance Company Ltd.
  • Cholamandalam MS General Insurance Company Ltd.
  • Future Generali India Insurance Co. Ltd.
  • HDFC Ergo General Insurance Co. Ltd.
  • ICICI Lombard General Insurance Co. Ltd.
  • IIFCO Tokio General Insurance Co. Ltd.
  • National Insurance Company Ltd.
  • New India Assurance Company
  • Oriental Insurance Co.Ltd.
  • Reliance General Insurance Co. Ltd.
  • Royal Sundaram General Insurance Co. Ltd.
  • SBI General Insurance Co.Ltd.
  • Shriram General Insurance Co. Ltd.
  • Tata AIG General Insurance Co. Ltd.
  • United India Insurance Co.
  • Universal Sompo General Insurance Company.

SWOT Analysis of Pradhan Mantri Fasal Bima Yojana (PMFBY)

Strengths Of Pradhan Mantri Fasal Bima Yojana

• Universal coverage: The Pradhan Mantri Fasal Bima Yojana covers over 5.5 crore farmers and 22 Kharif and Rabi crops across 31 states and UTs, offering wider protection than previous schemes.
• Affordable premiums: Farmers’ contributions range from 1% to 2% of the sum insured, making it accessible even for smallholder farmers.
• Technology integration: Use of remote sensing data and crop cutting experiments minimizes paperwork and expedites claim settlement.
• Improved claim settlement: Claim settlement ratio has increased from 42% in 2016-17 to 59% in 2022-23, indicating progress in addressing delays.
• Farmer awareness: Increased outreach campaigns and farmer training programs are raising awareness about the scheme and its benefits.

Weaknesses Of Pradhan Mantri Fasal Bima Yojana

• Low enrolment: Only about 40% of eligible farmers participate in the scheme, highlighting incomplete coverage and potential exclusion of vulnerable groups.
• Exclusion of certain risks: Wild animal attacks and post-harvest losses are not covered, leaving farmers vulnerable to these specific risks.
• Incomplete data and transparency: Limited data availability on crop yields and reasons for claim rejections create suspicion and dissatisfaction among farmers.
• Operational inefficiencies: Delays in claim settlements, disinclined private insurance companies, and cumbersome grievance redressal mechanisms remain pain points.
• Financial sustainability: High operational costs and potential for misuse raise concerns about the scheme’s long-term financial viability.

Opportunities Under Pradhan Mantri Fasal Bima Yojana

• Expanding coverage: Including more farmers, crops, and risks like wild animal attacks can offer wider protection and enhance scheme relevance.
• Promoting participation: Targeted awareness campaigns, simplified enrollment processes, and incentives for marginalized groups can boost participation.
• Leveraging technology: Utilizing advanced technologies like drones and AI for yield estimation and claim assessments can improve efficiency and transparency.
• Strengthening risk assessment: Collaborating with meteorological agencies and agricultural institutions to refine risk assessment models can lead to more accurate premium calculations.
• Public-private partnerships: Fostering closer collaboration with private insurance companies can bring in expertise and resources to improve claim settlement rates and operational efficiency.

Challenges Associated With Pradhan Mantri Fasal Bima Yojana

• Climate change: Increased frequency of extreme weather events like droughts and floods can strain the Pradhan Mantri Fasal Bima Yojana’s financial resources and pose challenges for risk assessment.
• Market fluctuations: Changes in agricultural commodity prices can impact the scheme’s financial sustainability and premium affordability for farmers.
• Corruption and misuse: Concerns about leakages and irregularities in claim settlements can erode trust and undermine the scheme’s effectiveness.
• Farmer dissatisfaction: Continued delays, exclusions, and inadequate compensation can lead to farmer discontent and potentially reduce participation.
• Policy shifts: Changes in government policies or funding priorities can disrupt the scheme’s stability and impact its long-term effectiveness.