Pradhan Mantri Fasal Bima Yojana (PMFBY)

Pradhan Mantri Fasal Bima Yojana (PMFBY)

Pradhan Mantri Fasal Bima Yojana (PMFBY), which will come into force from  Apr 2016, is apparently a good scheme.  Approximately 50% of India’s population is directly or indirectly dependant on agriculture. Agriculture’s contribution to the GDP is only 16%.Farmers face yield as well as price risks. With heavy dependence on Monsoons, high risks,large number of suicides by distressed farmers and great impact of the sector on the overall economy it is a long overdue action.

Salient Features of PMFBY

  • Plan is to reach 50% of the farmers in the next three years.
  • The scheme will have a uniform premium of only 2% for all “Kharif” crops and 1.5% for all “Rabi” crops. In the case of commercial crops such as cotton and horticulture crops, the premium will be only 5%.
  • It entails an outgo of Rs 8,800 crores.
  • The government’s liability on premium would be shared by the central and state governments on 50:50 percent sharing basis.
  • There is no upper limit on government subsidy.
  • If a state government does not fulfill its commitment of the 50% subsidy share, the Centre would step in, but not allow the scheme to falter.
  • All the districts in India have been divided into clusters for distribution among insurance companies on a long-term basis to bring about uniformity in premium rates.
  • The scheme covers all crops and includes small and marginal farmers.
  • It will merge all farm related insurance schemes under one umbrella.
  • Pre-harvest as well as post-harvest crop losses will be covered under this scheme.
  • Modern technology will be used get speedy recovery.


PMFBY:Better than Earlier Schemes

PMFBY is better than the earlier schemes because of the following aspects:

  • Reduced premium will increase coverage.
  • There is no cap on subsidy on premium.
  • Reduced chances of leakages by avoidance of intermediaries and hence more efficient.
  • It covers localized calamities.
  • It should reduce farmer suicides.
  • By reducing the risk in the agriculture sector it would make it more attractive.

Conclusion: PMFBY

PMFBY is apparently a great scheme and was very much needed. Effective promotion of the scheme and then efficient implementation will be the challenges for the Centre and state administration.

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