India is a country where almost 50 percent people depend on agriculture as an occupation. India is naturally endowed with one of the most fertile alluvial soil in its plains, and also receives a good amount of rainfall which plays an important role in the agriculture production of the country. However, most of the rainfall in India is concentrated in the 4 months of the monsoon season. Both floods and droughts are a part and parcel of the Indian climatic conditions, negatively affecting the crop production in India.
In this background, crop insurance becomes an important hedge instrument to secure the lives of farmers. Towards this goal, Prime Minister Narendra Modi had launched the Pradhan Mantri Fasal Bima Yojana (PMFBY) which aims to insure crops across the country in return of a very small contribution paid by farmers as premium.
Comparison of Premium Rates under the Previous Scheme, National Agriculture Insurance Scheme (NAIS) & the Current Scheme, Pradhan Mantri Fasal Bima Yojana (PMFBY)
|Kharif (Monsoon Season)
3.5% – Oilseeds and Bajra
2.5% – Cereals, Millets, and Pulses
Rabi (Winter Season)
1.5% – Wheat
2.0% – Other Food and Oilseeds crops
2% – Food and Oilseed crops
1.5%- Food and Oilseed Crops
Annual/ Horticultural Crops
5% of the sum insured
NAIS – National Agriculture Insurance Scheme; PMFBY – Pradhan Mantri Fasal Bima Yojana
Under the Pradhan Mantri Fasal Bima Yojana, premium rates have been markedly reduced due to which crop insurance is now increasingly being picked up by farmers. There is a huge increase in the number of farmers opting for the crop insurance under the new scheme launched by Prime Minister Narendra Modi. A comparison between the number of farmers covered under the two different crop insurance schemes, in the Rabi season of 2011-12 and Rabi season of 2016-17 is shown below:
Above graph clearly reflects the popularity and acceptance of the new scheme among the farmers. Under National Agriculture Insurance Scheme, during Rabi 2011-12, a total of 0.5 crore farmers were covered with Rs. 11283 crore of the total sum insured whereas under the Pradhan Mantri Fasal Bima Yojana, during Rabi 2016-17, about 1.6 crore farmers were covered with Rs. 71552 crore.
Not only the number of farmers covered under the crop insurance and the sum insured to them have increased, the claims for their crop losses paid to them have also increased.
|Season||Claims Paid (In Rs Crore)||No. of Farmers Insured|
The above graph and table clearly depicts that the amount in claims paid to farmers have increased by about 45% between the two kharif seasons. Importantly, this growth in claims paid to farmers have been achieved despite the decline in the number of insured farmers mainly due to the debt waiver schemes announced in Maharashtra and Uttar Pradesh. This reflects that serious effort put in by the Modi government which has ensured that the claims of the farmers are duly cleared and are credited into their bank account.
Crop Insurance is one of the most significant instruments that can help farmers survive the distressed times. The incidents of farmer’s suicides have already shaken the nation. The new crop insurance scheme, Pradhan Mantri Fasal Bima Yojana is proving to be a boon to the farmers in India, as explained above. More than 13 crore farmers have so far been covered under the scheme as per the government data. In terms of the claims paid, PMFBY has so far benefitted about 4.15 crore farmers in the hour of crisis. Not only the benefits to the individual farmers, but our country as a whole is currently witnessing a large part of its gross cropped area coming under the crop insurance coverage. Crop Insurance can not only be promoted by lowering the premium rates but also by bringing in a behavioural change. The current government should be lauded for its efforts to have been able to significantly increase the penetration of crop insurance which is reflected in the comparative study presented above.