Page 37 - Insurance Times September 2021

three major changes in the
scheme.

Y Firstly, from Kharif 2020,
the scheme was made voluntary
and the farmers were given an
option to opt out of crop
insurance by submitting a written
request to the bank.
Y Secondly, like the
Modified National Agricultural
Insurance Scheme (MNAIS),
introduced by UPA II in 2010-11,
the government capped the Central government's
Reasons of losing Interest in the
liability in the premium at 30% for unirrigated areas and
Centre's Flagship Crop Insurance crops and 25% for irrigated areas or crops. Districts
Scheme: having 50% or more irrigated area are to be considered
as irrigated areas or districts (both under the PMFBY
Launched from Kharif 2016, the scheme has now been
and Restructured Weather Based Crop Insurance
implemented for four seasons each of kharif and rabi. Out
Scheme). It means that the states will have to bear
of all the 'Pradhan Mantri' schemes launched over the last additional premium subsidy if actuarial premium
few years - and there have been quite a few - none has exceeds the above limits. Normally, unirrigated areas
received as much criticism as the PM Fasal Bima Yojana and risky crops attracted higher rates of premium in
(PMFBY). Due to the variety of crops even within a cluster, the tenders. However, there is no capping of benefits
the small size of farms, differences in farming practices, to the farmers, unlike the earlier scheme of MNAIS.
uncertainty of weather and budgetary constraints of state
governments, there is no central scheme which is more Y Thirdly, the government decided to substantially
difficult to administer than this. To its credit, the enhance the use of modern technology (satellite, drone,
government has been responsive to the criticism and the mobile, etc.) for assessment of crop yield and estimation
scheme guidelines have undergone major changes twice, in of losses and claims. For this a two-step process is to be
September 2018 and February 2020. There have been three adopted based on a 'deviation matrix' using triggers like
major criticisms of the scheme. weather parameters etc. It was also decided that the
Y The first is that, at an all-India level, the claims paid by CCEs are to be conducted only in those areas in which
insurance companies are less than the gross premium there are strong deviations, noticed from use of remote
received by them and this, critics say, resulted in 'undue' sensing and other technologies.
enrichment.
Discontinuation of Scheme by States:
Y The second form of criticism is that the scheme is
compulsory for all farmers who avail crop loans on their Several states have decided to discontinue this centrally
Kisan Credit Cards. sponsored scheme, in which the states had to pay 50% of
premium subsidy. Bihar and West Bengal discontinued
Y The third major criticism is that the assessment of crop PMFBY from kharif 2018 and kharif 2019 respectively. From
losses is done through a large number of crop cutting
experiments (CCEs) conducted by state governments. Not rabi 2019-2020, Andhra Pradesh opted out. From kharif
only are these CCEs quite time-consuming, they are also not 2020, Telangana and Jharkhand have also decided to opt
out. Bihar and Jharkhand have started their own crop
reliable enough. In several cases, the yield data produced
insurance schemes under which farmers do not have to pay
by CCEs has been challenged by both farmers and insurance
any premium and they are eligible for crop insurance up to
companies. In several cases, the Government had to take
the services of Mahalanobis National Crop Forecast Centre 2 hectares, if shortfall in yield is more than 20% of threshold
to resolve the disputes on yield of a crop. yield. The insurance scheme in West Bengal is modeled on
PMFBY and the companies are selected through a tender.
The guidelines issued by the Centre in February 2020 have The state does not take any premium subsidy from the
sought to address the above criticisms by making at least Centre. Discontinuation of Scheme by several States:

The Insurance Times, September 2021 37