Fasal Bima: who's in, out & why

• Andhra Pradesh has decided to rejoin crop insurance scheme Pradhan Mantri Fasal Bima Yojana (PMFBY) from ongoing kharif season.
• Andhra Pradesh: One of six states that stopped implementation of the scheme over the last four years.
  • Other five: Bihar, Jharkhand, West Bengal, Jharkhand, and Telangana.

PMFBY

• Launched: February 2016.
• Administered by: Ministry of Agriculture.
• Objective: Comprehensive insurance cover against failure of crop which will help in stabilizing income of the farmers.
• Implemented by: General insurance companies.

Its functioning

• PMFBY insures farmers against all non-preventable natural risks from pre-sowing to post-harvest.
• Farmers have to pay a maximum of 2% of total premium of insured amount for kharif crops
• 1.5% for rabi food crops and oilseeds
• 5% for commercial / horticultural crops.
• Balance premium is shared by Union and state governments on 50:50 basis and on 90:10 basis in case of northeastern states.

Farmers covered

• All farmers growing notified crops in a notified area who have insurable interest in the crop are eligible.
• Earlier to Kharif 2020, enrolment under the scheme was compulsory for following categories of farmers:
• Farmers in notified area who possess a Crop Loan account/KCC account (called as Loanee Farmers) to whom credit limit is sanctioned/renewed for notified crop during the crop season.
• Other farmers whom Government may decide to include from time to time.

Risks covered under the scheme

• Comprehensive risk insurance is provided to cover yield losses due to non-preventable risks such as Natural Fire and Lightning, Storm, Hailstorm, Cyclone, Typhoon, Tempest, Hurricane, Tornado.
• Risks due to Flood, Inundation and Landslide, Drought, Dry spells, Pests/ Diseases are also covered.
• Post-harvest losses coverage will be available for maximum period of 14 days from harvesting for those crops which are kept in “cut & spread” condition to dry in field.
• For localized problems such as loss/damage from identified localized risks like hailstorm, landslide, and Inundation affecting isolated farms in notified area would also be covered.

Reasons by states that opted out

• The scheme should be voluntary.
• States should be given options to choose the risks covered and the scheme should be universal.
• State should be given the option to use their own database of E-crop, an application used by the state government to collect information about crops.
• Many state government wanted zero premium for farmers (meaning the entire premium should be paid by the government.
• The non-payment of the State Share of premium subsidy within the prescribed timelines as defined in the seasonality discipline lead to the disqualification of the State Government.
• West Bengal: Reason is purely “political” as it wants to implement the scheme without mentioning Pradhan Mantri in the name.

How was the scheme structured, and what has changed since?

• Initially, the scheme was compulsory for loanee farmers; in February 2020, the Centre revised it to make it optional for all farmers.
• Now states and UTs are free to extend additional subsidy over and above the normal subsidy from their budgets.
• In February 2020, the Centre decided to restrict its premium subsidy to 30% for unirrigated areas and 25% for irrigated areas (from the existing unlimited). Earlier, there was no upper limit.
• Food crops (cereals, millets and pulses); oilseeds; and annual commercial / annual horticultural crops are broadly covered under the scheme.