PMFBY Rebuttal: All the five gov and 13 other insurance companies are empanelled

Pradhan Mantri Fasal Bima Yojana (PMFBY) was formulated after detailed consultation with all stakeholders with a view to addressing major shortcomings in the existing schemes. Some of these were higher premium rates to be paid by farmers, low risk coverage, reduction in sum insured due to capping of premiums and sum insured lower than the cost of production resulting in low payout in the event of a calamity, coupled with delayed payment of claims.

Not only does PMFBY address all these shortcomings but is also simple and easy on farmers because they are to pay fixed low rate of premium for all crops in a particular season across the country. Premiums are as low as 2 per cent for Kharif, 1.5 per cent for Rabi and 5 per cent for commercial horticultural and plantation crops.

Further, the risk coverage has been substantially enlarged to cover all the natural non-preventable uncertainties right from pre-sowing to post-harvest stages of crop life.

The insurance unit has also been reduced to village level to provide relief as per more realistic loss experienced by the farmers with provision for farm level assessment for localised calamities like hailstorm, inundation etc. as well as for post harvest losses.

The first year of implementation of the scheme witnessed record coverage of 574 lakh farmers and 581 lakh hectare of sown area which corresponds to 30 per cent of the Gross Cropped Area (GCA) which is an impressive performance when considered in the context of two overall good seasons for the country with record production of foodgrains. The roadmap targets a GCA coverage of 40 per cent and 50 per cent for the years 2017-18 and 2018-19 respectively.

All the five Government General Insurance Companies besides 13 other insurance companies are empanelled and entrusted with the task of implementation for ensuring more competitive price discovery and better services. Use of technology is central to the scheme to ensure more accurate and faster assessment of crop losses and quicker payment of claims to farmers.

The technology package includes use of Smartphones, Remote Sensing Technology (RST) and drones. A beginning has been made in the first year itself and the intended accuracy of yield loss estimates, credibility of estimates and timelines are far superior to the corresponding status under pre-PMFBY schemes. Further, the performance on these parameters is much better in states with robust deployment of technology package. A comprehensive web based platform was put in place for better co-ordination, transparency and seamless flow of information.

The Centre has set up an elaborate co-ordination and monitoring mechanism including weekly video conferencing with all stakeholders — states, insurance companies, banks, technology providers. Series of physical meetings with states, banks and insurance companies also form part of the implementation strategy.

In Kharif 2016, gross premium amount of Rs 16,675 crore was collected from all states/UTs across the country. This was primarily due to substantial increase in sum insured from Rs 1,15,000 crore in 2015-16 to Rs 2,04,000 crore in 2016-17 because of equating sum insured with cost of cultivation.

Higher sum of insurance will result in more substantive payouts to the farmers when they become eligible for claims during the season that turns out to be a bad one.