Study Notes - Pradhan Mantri Fasal Bima Yojana

·         The Pradhan Mantri Fasal Bima Yojana (Prime Minister's Crop Insurance Scheme) was launched by Prime Minister of India Narendra Modi on 18 February 2016.

·         The scheme aims to reduce the premium rates to be paid by the farmers so as to enable more farmers avail insurance cover against crop loss on account of natural calamities.

·         Under the new scheme, farmers will have to pay a uniform premium of 2% for all kharif crops and 1.5% for all rabi crops. For annual commercial and horticultural crops, farmers will have to pay a premium of 5 %. The remaining share of the premium, as in previous schemes, will continue to be borne equally by the Centre and the respective state governments.

·         Under PMFBY, there will no upper limit on government subsidy and even if balance premium is 90%, it will be borne by the government.

·         Earlier, there was a provision of capping the premium rate which resulted in low claims being paid to farmers. This capping was done to limit government outgo on the premium subsidy. This capping has now been removed and farmers will get claim against full sum insured without any reduction.

·         Under the scheme, the use of technology will be encouraged to a great extent. Smart phones will be used to capture and upload data of crop cutting to reduce the delays in claim payment to farmers. Remote sensing will be used to reduce the number of crop cutting experiments.

·         The new Crop Insurance Scheme will also seek to address a long standing demand of farmers and provide farm level assessment for localised calamities including hailstorms, unseasonal rains, landslides and inundation.

·         This scheme will act like a “safety shield” for the farmers and will protect them against the vagaries of nature.

·         The new Crop Insurance Scheme is in line with One Nation – One Scheme theme. 

·         With farmers having been required to pay a premium share of as high as 15% in several areas in the country, there has been a long-standing discussion on the need to bring down these rates. The Centre’s move to bring down and cap these interest rates is being viewed as a major government policy outreach towards the farmers.

·     With the new scheme, the Centre’s financial liability is estimated to go up to Rs 5,700 crore. 
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