Why in NEWS
Despite expanded farmer coverage under PMFBY, states have defaulted on ₹6,450 crore in claim settlements since FY20, raising concerns about timely support to farmers.
Key Concepts and Terms
| Term | Explanation |
|---|---|
| PMFBY – Pradhan Mantri Fasal Bima Yojana | Flagship crop insurance scheme to support farmers during crop loss due to natural calamities or pests. |
| Premium Sharing | Farmers pay 1.5–5%; rest shared by Centre and State (50:50 or 90:10 in NE States). |
| Digiclaim | A digital module that processes claims via integration with PFMS and NCIP. |
| YES-TECH | Technology-based yield estimation using remote sensing, mandatory for major crops. |
| Escrow System | A mechanism ensuring states deposit their premium shares in advance to avoid default. |
PMFBY at a Glance
| Component | Details |
|---|---|
| Launch | 2016 by Ministry of Agriculture |
| Farmer Benefit | ₹500 claim for every ₹100 premium paid |
| Coverage | 4.19 crore farmers in 2024–25 |
| Claim Paid | ₹1.78 lakh crore since inception |
| Premium Cap | 2% for Kharif, 1.5% for Rabi, 5% for commercial crops |
| Technology Use | Satellite, drone, mobile apps, YES-TECH, WINDS |
| Farmer Awareness | Campaigns like Fasal Bima Saptah, Meri Policy Mere Haath |
Challenges Faced by PMFBY
| Challenge | Impact |
|---|---|
| State Defaults | ₹6,450 crore unpaid claims; delays erode farmer trust |
| Payout Delays | Undermine scheme’s credibility and timely risk mitigation |
| Manual Assessments | Lead to inefficiencies and claim disputes |
| Low Private Sector Interest | High claim ratios and defaults deter insurers |
| Low Inclusion of Tenants & Marginals | Majority are loanee farmers (48%), tenants only 6.5% |
Recent Reforms and Measures
| Reform | Purpose/Impact |
|---|---|
| Digiclaim + NCIP | Unified digital platform for enrolment to payout |
| 12% Delay Penalty | Imposed on insurers from Kharif 2024 |
| CCE Agri App | Digitised yield data directly uploaded to portal |
| YES-TECH | Mandatory for paddy, wheat, soybean since 2023–24 |
| WINDS Network | Real-time weather data to support drought/claim estimation |
| Escrow-Based Premiums | Ensures state compliance and timely fund flow from FY26 |
| Proportional Claim Rule | Farmers get Centre’s share of claims even if states default |
In a Nutshell
Mnemonic: SAFE-CROP
S – State Defaults persistent
A – Awareness improved
F – Faster Claims via Digiclaim
E – Escrow model ensures funding
C – CCE + YES-TECH for digital assessment
R – Reform-led trust rebuilding
O – Outflow delays hurt marginal farmers
P – Proportional payout regardless of state share
Prelims Questions
- Which of the following crops is NOT covered under mandatory YES-TECH yield estimation as of Kharif 2024?
a) Paddy
b) Wheat
c) Soybean
d) Sugarcane - Under PMFBY, how much premium does a farmer pay for insuring commercial or horticultural crops?
a) 2%
b) 1.5%
c) 5%
d) 10% - What is the significance of the Escrow-Based Premium System introduced in PMFBY?
a) Allows private banks to pay premiums
b) Ensures Centre pays both shares
c) States must deposit their premium share in advance
d) Farmers get loans directly from insurance firms
Mains Questions
- PMFBY has made great strides in farmer coverage but continues to face implementation bottlenecks. Discuss with recent examples. 10 Marks
- Can digitisation ensure timely claim settlement and restore farmer trust in agricultural insurance schemes? Evaluate. (GS3: Agriculture, Technology) 10 Marks
Prelims Answer Key
| Q | Answer | Explanation |
|---|---|---|
| 1 | d | Sugarcane is not listed under YES-TECH-mandated crops yet. |
| 2 | c | 5% is the capped premium rate for commercial/horticultural crops. |
| 3 | c | Escrow-based system ensures states pay their share in advance to avoid delays. |
