• The Pradhan Mantri Fasal Bima Yojana (PMFBY), established in 2016, replaced the earlier National Agricultural Insurance Scheme (NAIS) and Modified NAIS.
  • Designed to aid farmers in mitigating crop losses from unseasonal and extreme weather, PMFBY plays a vital role as a safety net for farmers facing such challenging circumstances.

Decline in Coverage and State Withdrawals:

  • Over the past two years, there has been a notable decrease in the participation of farmers and the coverage of crops under PMFBY.
  • Several states have also chosen to withdraw from the scheme due to various reasons, affecting its reach and effectiveness.

Reasons for Failure:

Poor Awareness and Infrastructure:

  • The lack of concerted efforts by state governments and insurance companies to raise awareness among farmers about PMFBY has hindered its implementation.
  • Absence of direct communication between insurance companies and farmers, leading to a lack of proper documentation and policy-related information.

Delayed Claims Settlement:

  • Numerous factors contribute to delays in settling farmers’ claims, including delays in state subsidy payments, Crop Cutting Experiments (CCEs), and processing of claims by insurance firms.
  • Yield-related disputes between insurance companies and states and incomplete account details for claim transfers have further aggravated the issue.

Inadequate Crop Loss Assessment:

  • The inadequacy of sample sizes for assessing crop loss at the village level has resulted in an incomplete understanding of the extent and variety of losses.
  • Formalities being completed on paper without proper on-ground assessments by district or block-level agricultural officials.

Non-Adoption by States:

  • Some states have opted out of PMFBY due to the substantial increase in premiums, shifting the financial burden to the central government.
  • States like Bihar, West Bengal, and Andhra Pradesh have suspended or initiated their own crop insurance programs.

Reluctance of Insurance Companies:

  • Insurance companies show reluctance to participate in smaller clusters or areas with higher risk levels, affecting coverage.
  • A reduced number of insurance enterprises involved in the scheme due to various challenges.

Lack of Training and Capacity Building:

  • Stakeholders’ inadequate training and capacity to address knowledge gaps contribute to delays and inefficiencies in the claims settlement process.

Additional Factors:

  • Initiatives like debt waiver programs introduced by states and limited publicity due to farmers’ low literacy rates and socioeconomic conditions have also impacted the scheme’s success.

Suggested Revamp Measures:

  • Enhanced Crop Loss Assessment: Strengthen assessment through capacity building of state governments, involving PRIs and farmers, utilizing technology like remote sensing and drones.
  • Infrastructure Strengthening: Establish functional insurance company offices in each Tehsil as per PMFBY requirements to ensure efficient scheme delivery.
  • Technology Integration: Widespread use of technology for yield evaluation, incorporating remote sensing and weather data for quicker assessment and settlements.
  • Strict Performance Monitoring: Regularly assess insurance companies’ performances and enforce penalties for defaulting companies within specified timeframes.
  • Robust Monitoring System: Monitor compliance with the requirement for companies to allocate 0.5% of the gross premium for publicity and awareness.
  • Enhanced Insurance Penetration: Elevate agricultural crop insurance penetration by prioritizing it along the lines of priority sector loans and extending coverage to remote areas.

Given the challenges posed by climate change, a comprehensive and subsidized agricultural insurance system like PMFBY remains essential to safeguard farmers’ livelihoods. However, a thorough reform of PMFBY is necessary, focusing on transparency, fairness, and farmer-centric provisions to make it truly effective in the face of evolving agricultural risks.

Legacy Editor Changed status to publish March 18, 2024