Maharashtra may follow several other big states and opt-out Pradhan Mantri Fasal Bima Yojana (PMFBY), the government’s much-highlighted crop insurance scheme.

Why do many states want to opt-out?

• The major reasons are denial and delay of claims along with a huge subsidy burden on state governments.
• The farmers are facing a problem with timely claim settlement.
• Maharashtra is studying the Beed Model for insurance settlement.

Who else has stepped out?

• Andhra Pradesh, Jharkhand, Telangana, Bihar, Gujarat (PM’s home state), Punjab and West Bengal — all predominantly agriculture states — have already opted out of the scheme.
• Some of these states have their own insurance schemes.

What is PMFBY?

• The PMFBY was launched in February 2016. It is being administered by Ministry of Agriculture.
• It provides a comprehensive insurance cover against failure of the crop thus helping in stabilising the income of the farmers.
• It is implemented by empanelled general insurance companies.
• The scheme is compulsory for loanee farmers availing Crop Loan /KCC account for notified crops and voluntary for other others.

Its functioning

• PMFBY insures farmers against all non-preventable natural risks from pre-sowing to post-harvest.
• Farmers have to pay a maximum of 2 per cent of the total premium of the insured amount for kharif crops, 1.5 per cent for rabi food crops and oilseeds as well as 5 per cent for commercial / horticultural crops.
• The balance premium is shared by the Union and state governments on a 50:50 basis and on a 90:10 basis in the case of northeastern states.

Farmers covered

• All farmers growing notified crops in a notified area during the season who have insurable interest in the crop are eligible.
• To address the demand of farmers, the scheme has been made voluntary for all farmers from Kharif 2020.
• Earlier to Kharif 2020, the enrolment under the scheme was compulsory for following categories of farmers:

1. 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. and
2. Such other farmers whom the Government may decide to include from time to time.

Risks covered under the scheme

• Comprehensive risk insurance is provided to cover yield losses due to non-preventable risks, such as Natural Fire and Lightning, Storm, Hailstorm, Cyclone, Typhoon, Tempest, Hurricane, Tornado.
• Risks due to Flood, Inundation and Landslide, Drought, Dry spells, Pests/ Diseases also will be covered.
• In post-harvest losses, coverage will be available up to a maximum period of 14 days from harvesting for those crops which are kept in “cut & spread” condition to dry in the field.
• For certain localized problems, Loss/damage resulting from the occurrence of identified localized risks like hailstorm, landslide, and Inundation affecting isolated farms in the notified area would also be covered.

Back2Basics: Beed Model

• The model of crop insurance in place in Maharashtra’s Beed district is being studied by a central government panel set up to suggest suitable working models for PMFBY.
• In the Beed model, there is a cap on the profit of the insurance companies.
• If the claims exceed the insurance cover, the state government pays the bridge amount.
• If the claims are less than the premium collected, the insurance company keeps 20 per cent of the amount as handling charges and reimburses the rest to the state government.
• This is expected to reduce burden of subsidies from state.

UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

Attend Now