Inadequate Cover

Context:  A truly farmer-friendly PMFBY is essential for Indian agriculture which is more hazardous due to climate change-driven factors and waning farmers’ risk-bearing capacity due to smaller landholdings.

Unique features of PMFBY

• Comprehensive coverage of risks: Covers sowing to post-harvest loss of the produce.
• Huge subsidy by the government: Farmers have to pay only a nominal premium of 5 % (of the sum insured) for rabi crops and 2 % for Kharif crops while the rest is borne by the centre and states.

Problems associated with PMFBY

• Delayed payments: often due to states’ inability - They release their share of premium subsidy with a time lag and in instalments and delay the generation of yield-loss data.
• Related to insurance companies:
  • Inadequacies in settling claims: They are not settling (to the desired extend) the claims according to space technology-based yield assessment.
  • Loss of trust between farmers and insurers: due to
    • The compulsion on farmers to report the losses to the insurance companies within 72 hours.
    • The need for farmers to deal with different insurance companies for different crops every year that may also breed distrust.
  • Unease of doing business: Many companies have withdrawn from the programme.