Crop insurance is a type of insurance that protects against loss of crops due to natural calamities or loss of revenue that rose from a price reduction of agricultural commodities. The Government of India introduced one such crop insurance named Pradhan Mantri Fasal Bima Yojana (PMFBY).

Read on to learn about PMFBY in detail!

The Government of India launched the Pradhan Mantri Fasal Bima Yojana (PMFBY), a large scale crop subsidy insurance scheme to protect farmers. This scheme replaced the existing two schemes, i.e., National Agricultural Insurance Scheme (NAIS) and the Modified NAIS (MNAIS). This new crop insurance aligns with the One Nation – One Scheme Theme.

Pradhan Mantri Fasal Bima Yojana extends coverage for the whole cropping cycle, i.e. pre-sowing to post-harvest and midseason adversities. In addition, it also covers the financial loss that can occur due to unforeseen events such as crop failure due to unexpected rainfall, pest infestations and so on.

The Government of India has designed this new crop insurance with the best features and eliminated all the shortcomings of the previous operating schemes.

The Department of Agriculture, Cooperation and Farmers’ Welfare under the Ministry of Agriculture, along with partnered general insurance companies, administrates PMFBY.

The Pradhan Mantri Fasal Bima Yojana aims to achieve the following targets:

• Offer economical insurance coverage against crop failure, damage, loss and financial support.
• Ensure steady incomes among farmers and continuity in agricultural production.
• Motivate farmers to adopt innovative and latest agricultural practices.
• Ensure enough credit to the agriculture sector.

Here are the highlights of the Pradhan Mantri Fasal Bima Yojana:

• To avail benefits offered under PMFBY, farmers have to pay premiums (very low, ranging from 1.5% -to 5%). The Government (Central and State) will share the balance premium even if the balance is 90%.
• Farmers will get a claim against the full sum insured without any deduction.
• This scheme focuses on the use of technology. Smartphones are used to upload data of crop cutting so that there will be fewer delays in claim payment to individuals involved in farming. In addition, PMFBY stresses the usage of remote sensing for decreasing crop cutting experiments.

The Pradhan Mantri Fasal Bima Yojana covers the following risk:

• Yield Losses (Standing Crops): The Government provides this insurance coverage for yield losses that fall under the non-preventable risks, such as Natural Fire and Lightning: Storm, Hailstorm, Tornado etc.:  Flood, Inundation and Landslide;  Pests/ Diseases, etc.; Drought etc.
• Prevented Sowing: Cases may arise where most of the farmers (insured )of notified areas may want to plant or sow. In such cases, they have to bear the expenditure for that cause and are restricted from planting or sowing insured crops because of unfavourable weather conditions. These farmers will then become eligible for the indemnity claims of up to a maximum of 25% of the sum insured.
• Post-harvest Losses: The Government provides for post-harvest losses on an individual farm basis. The Government offers coverage of up to 14 days (maximum) from harvesting for crops that are stored in “cut and spread” condition. It means that the Government covers farmers who have put the crops to become sun-baked in the field after harvesting that have been destroyed due to cyclone or cyclonic rains occurred across the country.
• Localised Calamities: The Government provides for localised calamities on an individual farm basis. Risks such as loss or damage arising from identified localised hazards, such as hailstorms, landslides, and inundation impacting separated farmlands in the notified area comes under this coverage.

As per the eligibility parameters set by the Government, all farmers, including sharecroppers and tenant farmers cultivating notified crops in the notified areas, can get coverage under PMFBY, given they have insurable interest for the insured crops.

Here is a step-by-step guide on the application procedure for PMFBY online.

Step 1 – Visit the official website of Pradhan Mantri Fasal Bima Yojana.

Step 2 – Click on ‘Farmer’s Corner’ to apply for crop insurance yourself.

Step 3 – Log in with your mobile number. Alternatively, you can log in as Guest Farmer if you do not have an account.

Step 4 – Provide required details.

Step 5 – Follow the instructions and click on submit to complete the application procedure.

Following is a list of documents farmers have to gather while applying for the Pradhan Mantri Fasal Bima Yojana.

• Address proof like driving licence, voter ID card, passport or Aadhaar card
• Identity proof of the farmer such as PAN card, driving licence, voter ID card, passport, Aadhaar card.
• Photocopy of field Khasra number or account number.
• Proof of sowing of crops in the field.
• A cancelled cheque is required along with all the papers.

The process of reporting crop loss and claim insurance is very simple and straightforward. Farmers can easily report crop loss within 72 hours of such an incident at CSC Centre or to the nearest Agricultural office. Alternatively, they can complete the report through the Crop Insurance App.

After verification, eligible farmers will receive claim benefits in the bank account sent electronically.

The Government modified the operational guidelines that came to effect on 1st October 2018. 

The new guidelines are as follows:

• Insurance Companies (ICs) and Banks will pay a 12% interest rate to farmers for late (exceeding two months of the prescribed cut-off date) settlement claims. 
• The same rule applies to the State Government. The State's higher authority will have to pay a 12% interest rate for late release (beyond three months) of the State’s share.
• Adding of Perennial horticultural crops under PMFBY. This inclusion must occur on a (on a pilot basis.
• Hailstorms must be included in the post-harvest losses along with other causes.
• Cloud burst and natural fire must be added in the localised calamities along with  other causes.
• Additional coverage for crop loss because of wild animals attack (on a pilot basis). The concerned State Government will bear these additional financial liabilities as well.
• Thorough SOP for Performance evaluation of ICs and their de-empanelment.
• Capturing of Aadhaar number is mandatory  for reducing duplicacy.
• Non-loanee farmers must get a 10% incremental increase in coverage.
• Definition of Major Crops, Unseasonal rainfall and Inundation are there to enhance clarity of these terms and give proper coverage.
• Respective authority must release an upfront premium subsidy based on 50% of, 80% of the total share of subsidy of the corresponding season of the last year as GOI/State subsidy at the beginning of the season.

Note: In such cases, companies need not provide any projections for the advance subsidy. However, during the second instalment – the calculation of balance premium will occur on the basis of  an approved business statistics on the portal for claims settlement. Lastly, final instalment will occur  after reconciliation of whole coverage data on the portal on the basis of final business statistics available on the portal.

• The States has given permission to take a decision for including crops with high premium for calculation of L1 calculation and for notification.
• Rationalising the calculation procedure of TY is essential
• Moving average of best 5 out of 7 years for calculation of claim amount.
• Separate Budget Allocation for Administrative expenses (at least 2% of the budget of the scheme).
• Timeline for declaration of prevented sowing
• Penalties/ Incentives for States, ICs and Banks
• Performance evaluation of ICs and their de-empanelment.
• Detailed SOP for dispute redressal regarding yield data/crop loss.
• Detailed SOP for claims estimation w.r.t. Add on products, i.e. Midseason adversity, prevented/failed sowing, post-harvest loss and localised claims
• A detailed plan for publicity and awareness- earmarked expenditure-0.5% of Gross premium per company per season.
• Detailed SOP for Area Correction factor
• Detailed SOP for Multi picking crops.
• Use of RST in clustering/Risk classification.
• Settlement of claims without waiting for the Second instalment of final subsidy.
• The settlement of Yield based claims must be based on the subsidy provided on provisional business data.
• To determine the cut-off date for enrollment, creating a district and crop-wise crop calendar is necessary. This is applicable for major crops only.
• More time will be given for changing crop names for insurance.
• The insured farmer will get additional time to inform individual claims. Now farmers will get 72 hours (instead of 48 hours) to inform their claims directly on a portal or via any stakeholders.