What is Pradhan Mantri Fasal Bima Yojana(PMFBY).

Pradhan Mantri Fasal Bima Yojana(PMFBY)

Pradhan Mantri Fasal Bima Yojana (Prime Minister's Crop Insurance Scheme) was launched by Prime Minister of India Narendra Modi on 18 February 2016 It envisages a uniform premium of only 2 per cent to be paid by farmers for Kharif crops, and 1.5 per cent for Rabi crops. The premium for annual commercial and horticultural crops will be 5 per cent.

Pradhan Mantri Fasal Bima Yojana (PMFBY) aims at supporting sustainable production in agriculture sector by way of - a) providing financial support to farmers suffering crop loss/damage arising out of unforeseen events b) stabilizing the income of farmers to ensure their continuance in farming c) encouraging farmers to adopt innovative and modern agricultural practices d) ensuring flow of credit to the agriculture sector; which will contribute to food security, crop diversification and enhancing growth and competitiveness of agriculture sector besides protecting farmers from production risks.

All farmers including sharecroppers and tenant farmers growing the notified crops in the notified areas are eligible for coverage.

All farmers availing Seasonal Agricultural Operations (SAO) loans from Financial Institutions (i.e. loanee farmers) for the notified crop(s) would be covered compulsorily.

Sum Insured /Coverage Limit . Sum Insured per hectare for both loanee and non-loanee farmers will be same and equal to the Scale of Finance as decided by the District Level Technical Committee, and would be pre-declared by SLCCCI and notified. No other calculation of Scale of Finance will be applicable. Sum Insured for individual farmer is equal to the Scale of Finance per hectare multiplied by area of the notified crop proposed by the farmer for insurance. ‘Area under cultivation’ shall always be expressed in ‘hectare’.

PMFBY may  replaces the existing two schemes National Agricultural Insurance Scheme and Modified NAIS.

Under the PMFBY, farmers' premium has been kept lower between 1.5-2 per cent for foodgrains and oilseed crops and up to 5 per cent for horticultural and cotton crops.

There will not be a cap on the premium and 25 per cent of the likely claim will be settled directly in farmers' accounts.

The new scheme aims to increase the insurance coverage to 50 per cent of the total crop area of 194.40 million hectares, from the existing level of about 25-27 per cent.