The Central Government has approved a cheaper crop insurance scheme named Pradhan Mantri Fasal Bima Yojana (PMFBY) on 13th January 2016. The government’s move came in an attempt to check the problem of rising cases of suicide by the farmers. The premium rates to be paid by the farmers have been brought down substantially so as to enable more farmers to avail insurance cover against crop loss on account of natural calamities. The scheme will come into effect for the upcoming Kharif Season June 2016.
As per the data released by Ministry of Agriculture, over 3000 farmers committed suicides in last three years due to the crop failure in the country. Maharashtra followed by Telangana, Karnataka, Andhra Pradesh and Kerala among the badly affected states of India accounted for 3301 farmer suicides alone. The Centre’s move to bring down and cap these interest rates is being viewed as a major government policy outreach towards the farmers.
HISTORY OF CROP INSURANCE IN INDIA
A crop insurance scheme linking institutional credit (crop loan based on area approach) was suggested by Prof. Dandekar in 1976 and this scheme called as Comprehensive Crop Insurance Scheme was implemented from Kharif 1985 on an all-India level. The objectives of the scheme were:
Since NAIS brought forth its own problems, modified NAIS (MNAIS) was formulated and implemented on a pilot basis in 50 districts from the Rabi-Season of 2010–11. Meanwhile, public-and private-sector insurance companies also launched weather based crop insurance products on a pilot basis, as part of GoI’s crop insurance programme in 2007–08.
Why Agricultural Insurance is required
The Agriculture insurance is an important component in the wake of the changing monsoon cycles due to the global climate change. The Agriculture is one of the main focal points in WTO Talks and the Bilateral Agreements to increase the Productivity of the Agriculture. Farmers Suicide is the main reason behind these types of Insurance Schemes.
- To provide insurance coverage and financial support to the farmers in the event of failure of any of the notified crop as a result of natural calamities, pests & diseases.
- To stabilise the income of farmers to ensure their continuance in farming.
- To encourage farmers to adopt innovative and modern agricultural practices.
- To ensure the flow of credit to the agriculture sector.
Important features and advantages of the new scheme
The enrolment under the 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:
RISKS: Following risks leading to crop loss are to be covered under the scheme
YIELD LOSSES (standing crops, on notified area basis):
PREVENTED SOWING (on notified area basis):-
In cases where majority of the insured farmers of a notified area, having intent to sow/plant and incurred expenditure for the purpose, are prevented from sowing/planting the insured crop due to adverse weather conditions, shall be eligible for indemnity claims upto a maximum of 25% of the sum-insured
EXCLUSIONS: Risks and Losses arising out of following perils shall be excluded:-
War & kindred perils, nuclear risks, riots, malicious damage, theft, act of enmity, grazed and/or destroyed by domestic and/or wild animals, In case of Post–Harvest losses the harvested crop bundled and heaped at a place before threshing, other preventable risks.
Other Important Features
Kharif Crops: The crops which are grown during the monsoon (rainy season) are called kharif crops. Such as Paddy, maize, millet and cotton crops
Rabi crops (winter crops): Crops which are grown during the winter season (October-March) are called Rabi crops. Seeds of these crops are sown in the beginning of the winter season such as Wheat, Gram and Mustard.
Earlier the Government had launched such schemes also but due to the visionary lags in such schemes they were discontinued. The schemes like Comprehensive Crop Insurance Scheme (CCIS) which was effective from 1985 to 1999 and the Experimental Crop Insurance Scheme was launched in 1997-98 and stopped at 1999. The existing scheme like National Agricultural Insurance Scheme (NAIS) which was launched in 1999-00 but none of schemes succeeded to wipe out the distress of the famers.
Under PMFBY, there will no upper limit on government subsidy and even if balance premium is 90 per cent, it will be borne by the government. “Earlier, there was a provision of capping the premium rate which resulted in low claims being paid to farmers.
What More can be done
On the Basis of a Report of the Committee to Review the Implementation of Crop Insurance Schemes in India, which submitted its report in May 2014, following more can be done
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