Finance minister Arun Jaitely has allocated R5,500 crore for the recently announced Pradhan Mantri Fasal Bima Yojana (PMFBY), which is aimed at providing crop insurance cover to at least half of country’s 14 million farmers by the end of FY19.
The new crop insurance scheme would be launched from next kharif season (2016-17).
Under PMFBY, the premia paid by farmers would be capped at 2% of the insured value for the more rain-dependent kharif crop and 1.5% for the rabi season, compared with 3.5-8% under the two existing schemes. In the case of horticultural crops, farmers’ premium burden will be 5% of the sum assured or 50% of the total premium.
Only 20 million of an estimated 140 million farmers in the country — earning for a population four to five times as many — had crop insurance cover in 2014-15, even as the facility was just against the cost of cultivation and barely provided any income protection. According to agriculture ministry data, most of the farmers who took crop insurance were in Rajasthan, Bihar, Uttar Pradesh, Maharashtra, Karnataka and Andhra Pradesh.
In terms of the value of the farm output, the existing schemes — the Modified National Agricultural Insurance Scheme and the Weather-based Crop Insurance Scheme — fare even more dismally, with a coverage of just 5.5%.
While formally launching the PMFBY in Sehore, Madhya Pradesh, Prime Minister Narendra Modi had said farmers were not joining the crop insurance scheme because of delay in settlement of claims and high premium rates given by the farmers. He said that on many occasions, the premium amount paid by farmers was as high as 8% to 14% of the insured amount.
Under PMFBY, losses incurred by them at any stage of the farming activity — from the sowing to the post-harvest season — would be covered.