• The domestic general insurance companies are gradually reducing their exposure to the Pradhan Mantri Fasal Bima Yojana (PMFBY) to cut down their losses on account of high claims even as the Centre made the scheme optional and slashed its contribution.
  • PMFBY and the Restructured Weather Based Crop Insurance Scheme (RWBCIS) were revamped in 2020.

Important points:

  • Launched in 2016 and is being administered by the Ministry of Agriculture and Farmers Welfare.
  • Replaced the National Agricultural Insurance Scheme (NAIS) and Modified National Agricultural Insurance Scheme (MNAIS).
  • To provide a comprehensive insurance cover against the failure of the crop thus helping in stabilising the income of the farmers.
  • All food & oilseed crops and annual commercial/horticultural crops for which past yield data is available.
  • The prescribed premium is 2% to be paid by farmers for all Kharif crops and 1.5% for all rabi crops. In the case of annual commercial and horticultural crops, the premium is 5%.
  • Premium cost over and above the farmer share was equally subsidized by States and GoI.
  • However, GoI shared 90% of the premium subsidy for North Eastern States to promote the uptake in the region.
  • By empanelled general insurance companies. The selection of the Implementing Agency (IA) is
  • Earlier, it was compulsory for loanee farmers availing Crop Loan/Kisan Credit Card (KCC) account for notified crops.
  • Limit to Central Subsidy: The Centre has decided to limit the PMFBY premium rates – against which it would bear 50% of the subsidy – to a maximum of 30% in un-irrigated and 25% in irrigated areas.
  • More Flexibility to States: The government has given the flexibility to states/UTs to implement PMFBY and given them the option to select any number of additional risk covers/features.
  • Investing in ICE Activities: Insurance companies have to now spend 0.5% of the total premium collected on information, education and communication (IEC) activities.

Restructured Weather Based Crop Insurance Scheme:

  • Launched in 2016 and is being administered by the Ministry of Agriculture and Farmers Welfare.
  • 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 relating to rainfall, temperature, wind, humidity etc.
  • WBCIS uses weather parameters as “proxy‟ for crop yields in compensating the cultivators for deemed crop losses.

Way Forward

  • Awareness Generation: Awareness generation will be one of the major challenges in the smooth implementation of the scheme.
  • The Government is also seeking active involvement of all stakeholders especially States and implementing insurance companies for the conduct of publicity campaign/awareness programmes in the rural areas to build farmer awareness about crop insurance schemes.
  • Bringing Behavioural Change: A lot more needs to be done in bringing about a behavioural change regarding the cost of insurance being a necessary input and not a money-back investment.


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