Saturday, 2 April 2016

How Does Pradhan Mantri Fasal Bima Yojana Differ From Modified National Agriculture Insurance Scheme


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Government of India has introduced a new crop insurance scheme called Pradhan Mantri Fasal Bima Yojana; which would replace both National Agriculture Insurance Scheme and Modified National Agriculture Insurance Scheme. The Union Cabinet has approved PMFBY for formers’ welfare; this scheme will provide financial support to the farmers in the event of failure of the crop due to natural calamities, pests, and diseases. In the event of failure of the crop, farmers face financial crisis and as a result farmers become unable to continue farming. Previous schemes (NAIS & MNAIS) had high premium rates due to which few farmers adopted these schemes; but new PMFBY offers maximum sum insured at very lucrative premium rates.

As of now, only 23 percent farmers are insured under various crop insurance schemes. With this new PMFBY scheme, Govt. has set a target to insure at least 50 percent farmers. To achieve this target, Govt. has significantly reduced premium rates for farmers. Furthermore, PMFBY removes previous capping on premium so that farmers can get maximum sum insured.

Under this scheme, farmers will pay a uniform premium of only 2 percent for Kharif crops and 1.5 percent for Rabi crops. In case of annual commercial and horticultural crops, framers will pay 5 percent premium.

“Farmers to be covered-All farmers growing notified crops in notified area during the season who have insurable interest in the crop are eligible, “the statement said. 

For fast claim settlements, PMFBY has also introduced mobile phone technology. Mobile phone technology will be used to capture of crop growth at various stages; so that, claims will be settled in short time. This scheme will provide coverage for multiple localized risks (Landslide, Inundation) and post-harvest losses (cyclone, cyclonic rain, un-seasonal rain etc). Furthermore, a Unit Package Insurance Policy has also been approved by Govt. to cover other assets or activities of farmers.  

It is noticeable that PMFBY is compulsory for all loanee farmers; however, no such compulsion for non-loanee farmers.

Objectives of Pradhan Mantri Fasal Bima Yojana-


  • To provide financial support to the farmers in the event of failure of notified crop as a result of natural calamities, pests & diseases
  • To encourage farmers to adopt innovative and modern agriculture techniques
  • To stabilize the income of farmers to ensure their continuance in farming
  • To ensure the flow of credit to the agriculture sector

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How does PMFBY Differ from Earlier Crop Insurance Schemes-


It is crystal clear that earlier crop insurance schemes had some drawbacks; that’s why, few farmers had been adopting them for example; In Modified National Agriculture Insurance Scheme, farmers pay high rate of premiums; and MNAIS used to offer less sum insured.  

PMFBY is an improved version of Modified National Agriculture Insurance Scheme; which would eliminate the drawbacks of MNAIS. Govt. has significantly reduced premium rates so that more farmers get insurance cover for their crops. Pradhan Mantri Fasal Bima Yojana is tailored to provide maximum sum insured in minimum premium rates.

“State government will review the performance of PMFBY after one year to point out corrections; if needed,” sources said.  PMFBY will be implemented from April 1 2016 to achieve the desired targets. The PMFBY is more likely to attract the farmers; however, adequate publicity needs to make it successful.

Indeed, it is a beneficial scheme for the farmers. In this day and age of climate change, farmers need such favorable schemes; so that, they can do worry-free farming. As we’re aware that agriculture is the backbone of Indian economy (probably not because of contribution to our economy; but, because of more than 60 percent of Indian population directly depends on agriculture); therefore, we can achieve desired economic growth by uplifting this section. 
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