Model Answer

Introduction

Indian agriculture is excessively dependent on monsoons, with only 35% of the total area under cultivation being irrigated as of 2010, according to the World Bank. This heavy reliance on monsoon rains, coupled with fluctuations and natural calamities such as droughts, floods, and hailstorms, has severely impacted farmers’ livelihoods. Even in years of abundant production, farmers often face price volatility, making crop insurance essential for stabilizing their income and production.

Need for Crop Insurance

1. Protection Against Crop Failure: Crop insurance safeguards farmers from losses due to crop failures, ensuring stability in their income.
2. Yield Protection: It provides coverage against reduced production and post-harvest losses, helping farmers recover from adverse conditions.
3. Revenue Protection: The insurance offers a safety net against price fluctuations, guaranteeing a minimum assured income during bumper harvests when prices may crash.
4. Reduced Government Expenditure: By minimizing the need for reactive relief measures during natural calamities, crop insurance serves as a proactive financial tool.
5. Encouragement of Investment: With reduced risk, farmers are more likely to invest in innovative agricultural practices, enhancing productivity.

Recognizing these needs, the government introduced the Pradhan Mantri Fasal Bima Yojana (PMFBY) to replace the outdated National Agriculture Insurance Scheme (NAIS) and Modified National Agricultural Insurance Scheme (MNIAS), aiming to cover 47% of farmers within a year.

Salient Features of PMFBY

• Comprehensive Coverage: PMFBY covers Rabi, Kharif, and horticultural crops, including protection against various natural calamities and post-harvest losses.
• Affordable Premium Rates: The scheme offers a uniform premium rate of 2% for Kharif crops, 1.5% for Rabi crops, and 5% for commercial and horticultural crops, with the government subsidizing the remaining amount.
• Technological Integration: The use of remote sensing, smartphones, and drones facilitates quick assessment of crop losses.
• Area Approach Implementation: The scheme is executed on an area basis, focusing on homogenous crop cultivation and risk assessment at the village level.
• Optional Enrollment: Since 2020, enrollment in the scheme has been made optional for all farmers, moving away from the previous mandatory requirement for loanee farmers.

Conclusion

The increasing frequency of climate-induced extreme weather events and market fluctuations has heightened the distress among farmers, underscoring the urgent need for effective crop insurance. The PMFBY represents a significant step towards safeguarding farmers’ interests and promoting sustainable agricultural practices in India.