PMFBY is an actuarial premium based scheme under which farmer has to pay maximum premium of 2% for Kharif, 1.5% for Rabi food & oilseed crops and 5% for annual commercial/horticultural crops and remaining part of the actuarial/bid premium is shared equally by the Centre and State Government.
One of the objectives of the scheme is to facilitate prompt claims settlement. The claims must be settled within two months of harvest subject to timely provision of both yield data and share of premium subsidy by the State Government.
It is the new crop insurance scheme launched by Central Government in January 2016 to replace the existing two schemes National Agricultural Insurance Scheme (NAIS) as well as Modified NAIS which have had some inherent drawbacks.
It will be implemented in every state of India, with association with the respective State Governments. This crop insurance scheme will be administered under the Ministry of Agriculture and Farmers’ Welfare, Government of India.
Previous Crop Insurance Schemes
- 1985- Comprehensive Crop Insurance scheme
- 1999- National Agricultural Insurance Scheme
- 2007- Weather based crop insurance scheme
- 2010- Modified National Agricultural Insurance Scheme
Improvements via PMFBY to overcome the problems and the weaknesses of the NAIS and MNAIS
- A technical committee was proposed to be set up in each district to decide the scale of finance for the sum insured.
- The premiums are to be decided on an actuarial basis which would give credibility to the process of setting premiums.
- Bids are invited from public and private insurance companies to decide the premiums, thus adding an element of competition which would work in the favor of the farmers.
- The farmers were required to pay the premiums at a subsidized rate and rest is paid by the government as mentioned above.
- Use of technology such as smart phones, GPS, drones and satellites to ensure accuracy, transparency, and;
- Faster assessment of damages and settling claims.
Unit of Insurance
The Scheme shall be implemented on an ‘Area Approach Basis’. For major crops, the Unit of Insurance shall ordinarily be Village/Village Panchayat level and for minor crops may be at a higher level depending upon the requirement.
Farmers to be covered
All farmers growing notified crops in a notified area during the season who have insurable interest in the crop are eligible.
The enrolment under the Pradhan Mantri Fasal Bima Yojana scheme, subject to possession of insurable interest on the cultivation of the notified crop in the notified area, shall be compulsory for following categories of farmers:
- Farmers in the notified area who possess a Crop Loan account/KCC account (called as Loanee Farmers) to whom credit limit is sanctioned/renewed for the notified crop during the crop season.
- Such other farmers whom the Government may decide to include from time to time.