Govt Revamps PMFBY Crop Insurance Scheme, Makes Farmer Registration Voluntary 

As The Wire has reported over the last year and a half, the PMFBY was of limited benefit to farmers in its erstwhile format.

New Delhi: The Union Cabinet on Wednesday made some major changes to the Pradhan Mantri Fasal Bima Yojana (PMFBY),  the most notable among which is that it is now voluntary for all farmers.

Earlier, all farmers who had availed themselves of loans on their Kisan Credit Card were registered for the PMFBY automatically and the amount of premium was deducted from their loan amounts. Farmers who were not in the formal credit system could choose to opt for the scheme. 

Now, even farmers who have taken loans can choose to not enrol themselves in the PMFBY. This had been one of the promises made by the Bhartiya Janata Party in its manifesto prior to the Lok Sabha elections of 2019. 

Over the period of implementation of PMFBY, on an average, around 70% of farmers who registered for the scheme were those who had taken loans, and who could have, potentially, chosen not to register for the scheme had the choice been available. 

Farmers and farmer organisations had demanded that the scheme be made voluntary as they argued that they see no benefit in the scheme and should not be made to pay the premium involuntarily. 

As The Wire has reported over the last year and a half, the PMFBY was of limited benefit to farmers as the claims raised remained pending for several months after the stipulated time period in which they ought to have been paid.

Also read: Under Modi’s Crop Insurance Scheme, Companies Owe Farmers a Whopping Rs 2,800 Crore

We had also reported that after the launch of PMFBY – which subsumed two existing schemes – premiums collected by insurance companies increased by 350% while the number of farmers covered by the scheme remained about the same. 

In its revamp, the government has also said that states which fail to pay their share of premium subsidy within the time allotted, will not be allowed to implement the scheme in subsequent seasons.

One of the reasons why insurance companies delayed making payments of claims to farmers was that in several cases, they had not received the premium amount that was supposed to be paid by states. The cut off dates will now be March 31 for kharif and September 30 for rabi. 

The new PMFBY also contains a provision for using ‘technology solution’ to arrive at yield data in case states fail to provide yield data beyond the cut off dates. It has not yet been made clear what exactly the ‘technology solutions’ will entail.

In another decision, the Cabinet also approved the formation 10,000 farmer producer organisations by 2024 which is set to cost Rs 4,496 crore. This will be implemented jointly by the Small Farmers Agri-business Consortium (SFAC), National Cooperative Development Corporation (NCDC) and National Bank for Agriculture and Rural Development (NABARD).