•  Parliament’s committee on estimates has in its latest report called for re-formulation of the Pradhan Mantri Fasal Bima Yojana (PMFBY), seeking transparency in its working and asking for more financial allocations to attract increasing participation from farmers. The committee has observed that there are fundamental flaws in the design of the scheme that renders it rather ineffective.

Recommendations of report:

• At a time when farm gate prices had remained subdued over the past few years, and when fluctuating climatic conditions—drought, floods, as well as freak weather patterns, including hailstorm and strong winds—had flattened the standing crop at many places, PMFBY could have come as the much-needed safety net. But a badly designed crop insurance programme has failed to come to the rescue of the beleaguered farming community. e.g. in Haryana, where standing crops on 1.85 lakh acres across 15 districts were damaged in September due to heavy rains and resulting floods. Interestingly, while the revenue estimates of the crop damage are ready, the crop losses suffered do not tally with the crops that were insured by the private crop insurance companies. This is because the insurance companies just collected the premium amounts from the banks without actually doing a ground assessment to know what crops were under cultivation.
• The government perhaps did not visualize that there were serious problems in the way the scheme was designed. The methodology itself was faulty. No wonder, some estimates show the enrolment under PMFBY has declined by 17%, from 40.2 million in 2016 to 33.2 million by 2018. Instead of rectifying the forcible enrolment, as a result of which the premium amount is automatically deducted from the bank accounts of loanee farmers, the banks have now been asked to provide the premium amount (in case of irregular accounts) by giving an overdraft for which the farmers will also have to pay interest. The basic objective was to show an increase in the number of farmers enrolled.
• Once the premiums are collected, a threshold limit is ascribed for the maximum claim in the event of a crop loss. In other words, if the threshold limit is low, the claim a farmer makes would get him a fraction of the loss he incurs.

About PMFBY:

• In April, 2016, the government of India had launched Pradhan Mantri Fasal Bima Yojana (PMFBY) after rolling back the earlier insurance schemes viz. National Agriculture Insurance Scheme (NAIS), Weather-based Crop Insurance scheme and Modified National Agricultural Insurance Scheme (MNAIS).
• Premium: It envisages a uniform premium of only 2% to be paid by farmers for Kharif crops, and 1.5% for Rabi crops. The premium for annual commercial and horticultural crops will be 5%.
• The scheme is mandatory for farmers who have taken institutional loans from banks. It’s optional for farmers who have not taken institutional credit.