The role that farmers play has long been underestimated, but as the saying goes ‘they are the backbone of the society we live in’. The Indian government introduced Pradhan Mantri Fasal Bima Yojana in 2016 with the aim of backing them up with important financial support when there are failures of any of their crops either owing to natural disasters or pest and diseases, and the primary objective of the Government is to insuring the farmers. We will be looking at PMFNY in this article.
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The primary objectives of this scheme are to insure farmers in the failure of any notified crops. Also, it seeks to accomplish the following objectives;
- To encourage the utilization of innovative and contemporary agricultural practices.
- Ensuring the flow of credit to the agricultural sector.
- To stabilize the income of farmers and to ensure continuous farming.
Salient Features of the Scheme
The following are the features of this scheme;
- It is mandatory for farmers who have availed loans
- They merely need to pay for a unified premium of 2% for all Kharif crops, 1.5% for all Rabi crops and 5% for annual and horticultural crops.
- Three levels of repayment which corresponds to crop risks in the area that is available to all crops (70%, 80% and 90%).
- Premium rates paid by the farmers are very low, and the premium balance is been paid by the government to provide the complete insured amount to the farmers against loss on crops on account of natural calamities.
- The subsidy given by the government has no upper limits.
- Removal of caps to provide complete compensation to the farmers.
- To benefit the sector with advancement in technology, smartphones are used to take and upload data of crop cutting and remote sensing will be used to reduce the number of crop cutting experiences.
- The cost of using this technology will be shared equally between the state/UT and Central Governments.
This will be processed through a multi-agency framework by selected insurance companies under the guidance and control of the Department of Agriculture, Corporation, and Farmers welfare (DAC&FW), Ministry of Agriculture and Farmers Welfare (MoA&FW), Government of India and the concerned state in coordination with the pertinent agencies.
Using the example of a crop loss, the compensation given will be determined by the difference between the threshold yield and the actual yield. The threshold yield is based on the average yield of the last seven years; the compensation is therefore based on the risk for the notified crop.
The Pradhan Mantri Fasal Bima Yojana scheme will be implemented on an ‘Area Approach Basis’ for each notified crop for widespread calamities. The unit of insurance could be mapped out demographically with the region which has a homogeneous risk profile for a particular crop. Concerning risk that pertains to localized calamities and post-harvest losses one, the account of the peril, the unit of insurance for loss assessment shall be affected the insured field of the individual farmer.
ASPECT OF COVERAGE
There are several aspects of coverage which we will understand in respect to farmers, crops and risks.
COVERAGE OF FARMERS: Farmers that grow notified crops in notified areas are considered to be selected for this scheme, the scheme must be importantly availed by the following category of a farmer, subject to the possession of insurable interest on the cultivation of the notified crop in the notified area:
- Farmers in the notified areas holding a crop loan account in whose favour the credit limit is sanctioned or renewed for the notified crop during the dry season.
- Some other farmers whom the government may decidedly include.
COVERAGE OF CROPS
The following crops are covered under the scheme:
- Annual commercial/Annual horticultural crops
- Food crops.
COVERAGE OF RISKS
The following risk factor is covered under the Pradhan Mantri Fasal Bima Yojana scheme:
- Yield losses that could not be prevented which resulted out of risk. Examples include storm, cyclone etc.
- Repayment claims up to 25% of the sum insured.
- Post-harvest losses can be availed within 14 days from harvesting for those crops which are kept in “cut and spread’ condition to make sure they dry in the field.
- Occurrences of loss and damage due to unidentified localized risk such as Landslide, Hailstorm etc.
The following companies are designated to provide insurance services;
- Bajaj Allianz
- Agricultural Insurance Company
- United insurance co.
- Tata AIG General insurance co. Ltd
- Cholamandalam MS General Insurance Company
- Reliance General Insurance Co.Ltd
- Future Generali India Insurance Co. Ltd
- HDFC ERGO General Insurance Co.Ltd
- IFFCO Tokio General Insurance Co. Ltd
- ICICI Lombard General Insurance Co. Ltd
- Univeral Sampo General Insurance Company.
- SBI General Insurance.
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