Model Answer
0 min readIntroduction
Indian agriculture, the backbone of the Indian economy, contributes significantly to the GDP and employs a large section of the population. However, it remains highly vulnerable to natural calamities like droughts, floods, cyclones, and pest attacks. These vagaries of nature often lead to substantial crop losses, pushing farmers into debt and distress. Crop insurance, therefore, emerges as a crucial risk mitigation tool, providing financial support to farmers in times of unforeseen events. The Pradhan Mantri Fasal Bima Yojana (PMFBY), launched in 2016, is the government’s flagship scheme aimed at providing comprehensive crop insurance coverage to farmers across the country.
Need for Crop Insurance in India
The necessity of crop insurance stems from the inherent risks associated with Indian agriculture:
- Monsoon Dependency: Approximately 55% of India’s net sown area is rain-fed, making agricultural production heavily reliant on the monsoon. Erratic rainfall patterns lead to frequent droughts or floods.
- Climate Change: Increasing frequency and intensity of extreme weather events due to climate change pose a significant threat to crop yields.
- Small Landholdings: The majority of Indian farmers are small and marginal, with limited financial resources to absorb crop losses.
- Debt Burden: Crop failure often leads to indebtedness, pushing farmers into a vicious cycle of poverty.
- Market Volatility: Fluctuations in market prices can also impact farmers’ income, even with a good harvest.
Crop insurance acts as a safety net, protecting farmers from financial losses and ensuring their continued engagement in agricultural activities. It promotes agricultural stability and contributes to food security.
Pradhan Mantri Fasal Bima Yojana (PMFBY) – Salient Features
PMFBY replaced the earlier schemes like National Agricultural Insurance Scheme (NAIS) and Weather Based Crop Insurance Scheme (WBCIS) with the aim of providing a more comprehensive and effective insurance cover.
Key Features:
- Coverage: PMFBY provides coverage against yield losses due to natural calamities, pests and diseases.
- Premium: The premium rates are subsidized, with farmers paying only 2% for Kharif crops, 1.5% for Rabi crops, and 5% for commercial/horticultural crops. The remaining premium is shared by the Central and State Governments.
- Sum Insured: Sum insured is calculated based on the threshold yield, average yield of the past three years, and the market price of the crop.
- Risk Coverage: Covers pre-sowing and post-harvest losses due to localized calamities like hailstorms, landslides, and inundation.
- Technology Integration: Utilizes remote sensing technology for yield estimation and loss assessment.
- Direct Benefit Transfer (DBT): Claim settlement is done directly into the bank accounts of the farmers.
Recent Modifications (2020 & 2024):
- Voluntary Enrollment: The scheme was made voluntary for all farmers, addressing concerns about compulsory enrollment.
- Central Sector Scheme: PMFBY was converted into a Central Sector Scheme, giving more flexibility to states.
- Focus on Perishable Crops: Increased coverage for perishable crops and horticulture.
- Improved Claim Settlement: Streamlined claim settlement processes and reduced delays.
- Integration with Digital Platforms: Enhanced use of digital platforms for enrollment, premium payment, and claim tracking.
Comparison with NAIS:
| Feature | NAIS | PMFBY |
|---|---|---|
| Premium | Higher, varying by crop and region | Subsidized, fixed at 2%/1.5%/5% |
| Coverage | Yield losses only | Yield losses, localized calamities, pre & post-harvest losses |
| Claim Settlement | Often delayed | Faster through DBT |
| Voluntary/Compulsory | Often Compulsory | Voluntary |
Conclusion
Crop insurance is indispensable for safeguarding Indian agriculture against the increasing risks posed by climate change and natural disasters. The PMFBY, with its subsidized premiums and comprehensive coverage, represents a significant step towards providing financial security to farmers. However, challenges remain in ensuring timely claim settlement, expanding coverage to more farmers, and addressing regional disparities. Continuous monitoring, technological advancements, and effective implementation are crucial for realizing the full potential of PMFBY and building a resilient agricultural sector.
Answer Length
This is a comprehensive model answer for learning purposes and may exceed the word limit. In the exam, always adhere to the prescribed word count.