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Pradhan Mantri Fasal Bima Yojana Decoded

Agriculture contributes only 17% to our GDP, but still India is an agrarian economy because it is the agrarian income which determines the fate of other sectors of our economy. So it is very important that India safeguards its agri sector from price and yield risk, for which the govt has now introduced Pradhan Mantri Fasal Bima Yojana by replacing NAIS and Modified NAIS.

FASALBIMA

Pradhan Mantri Fasal Bima Yojana will offer more insurance with less premium, and purchasing capacity of farmers will rise.

– Rajnath Singh (Minister of Home Affairs)

The Union Cabinet has approved Pradhan Mantri Fasal Bima Yojana, a new crop insurance scheme to boost farming sector in the country.

It is farmers’ welfare scheme that aims to reduce the premium burden on farmers and ensure early settlement of crop assurance claim for the full insured sum.

For many years now, a number of complex crop insurance schemes have existed. Farmers, however, have been unable to avail the benefits of these schemes. The Pradhan Mantri Fasal Bima Yojna has now replaced all other crop insurance schemes and integrated the benefits in one single yojana.

 PROBLEMS WITH OLD INSURANCE SCHEME 

1) High premium, with average premium of 15% and even higher for horticulture.
2) State govt’s apathy by not providing its share of contribution.
3) Delay in assessment of damage
4) No disbursement within time frame of 45 days of risk assessment
5) Low or no post harvest coverage
6) No social security

 HOW NEW SCHEME WILL WORK ? 

1) Farmers will pay uniform premium of 2 per cent for all Kharif crops and 1.5 percent for all Rabi crops. In case of annual horticultural and commercial crops, farmers will pay 5 per cent premium. These premium rates are very low.
2) It is a Bottom Up Design
3) Centre – State will share the Subsidy Burden equally (50% both)
4) To assess crop damage for early settlement of the claims, the government will adopt modern technology.
5) Farmers will get claim against full sum insured without any reduction.
6) Smart phones, remote sensing technology and even drones shall be used to estimate losses, assess compensation, and settle claims without much delay.
7) Earlier schemes such as the National Agricultural Insurance Scheme (NAIS) and Modified National Agricultural Insurance Scheme (MNAIS) will no longer be available.
8) The government has decided to get rid of the “capping” mechanism that did not allow farmers to derive legitimate benefits previously.
9) Govt will spend 8800cr for 3 years assuming 50% coverage, against current 3100 cr per year with 23% coverage.

 HOW IT WILL BENEFIT THE FARMERS ? 

1) With Low Premium rates and Total Coverage of Insurance of Crops, Farmers will benefit financially.
2) Widening of the term Disaster (like Flooding of Crops and Damage after Harvest) ,will widen the Protection base and hence beneficial to farmers.
3) Post Harvest Losses are also Included, So it will provide safety and confidence to the Farmers.
4) Time Bound Payment of Losses will prevent delays and further worsening of Farmers’s Distress.
5) Will Reduce Farmers’ Suicide (Since Crop Failure and Financial Distress earlier was undressed but now ensured).
6) Easy usage of technology like mobile phone, quick assessment of damage and disbursement within a time frame.
7) This will integrate and spread financial integration and farmers will move from moneylenders to institutional finance.
8) Even if state govt won’t contribute, the central govt will fill the void.

 A RAW EXAMPLE 

fasal bima yojna

Suppose you are a farmer growing rice… in a hectare. You took 30,000 as loan (From Banks) to grow it… If you didn’t take loan… The finance you made on a hectare….( Government estimate the value a farmer can made. you should not quote more than that). Now 2% on this is your premium its is 600rs Government estimates the loss percentage earlier and tell you it’s approx. 70% can be loss If loss happened due to drought, floods, ill production etc… You can claim 70% of 30,000 i.e. 21,000 rs/hectare Remaining 30% of output you have in your hand you can sell it for cheap rates to minimize the risk. Hence, Farmers are at safe side to get guaranteed income( majority percentage ) even if it is loss.

-Example submitted by a Reader on Public Forum

The policy is well designed and if implemented well with use of technology as envisaged then it will help in strengthening socio-economic justice as stated in preamble, DSP, and will give an impetus in growth.

References:
Public Forums

IAS Forum
mygov.in
Various News Papers
mapofindia

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