Why has PMFBY adoption remained uneven despite revisions and government subsidies?

Direct Answer

The Pradhan Mantri Fasal Bima Yojana (PMFBY) has seen uneven adoption primarily due to a combination of structural, operational, and financial challenges. Key issues include delays in claim settlement, inadequate and delayed damage assessment, high premium costs for states leading to their withdrawal, and a lack of awareness and trust among farmers, particularly small and marginal ones. Despite being a significant improvement over previous schemes, these implementation gaps have hindered its universal acceptance across all states and farmer groups.

Background

Launched on 18th February 2016, the Pradhan Mantri Fasal Bima Yojana (PMFBY) is a flagship central government crop insurance scheme. It replaced the earlier National Agricultural Insurance Scheme (NAIS) and Modified National Agricultural Insurance Scheme (MNAIS). The primary objective of PMFBY is to provide comprehensive insurance coverage and financial support to farmers in the event of crop failure due to natural calamities, pests, and diseases, thereby stabilising their income.

The scheme features heavily subsidised premiums for farmers: a uniform maximum of 2% for all Kharif food and oilseed crops, 1.5% for Rabi food and oilseed crops, and 5% for annual commercial/horticultural crops. The balance premium is shared equally between the Central and State governments.

Core Explanation

The uneven adoption of PMFBY can be attributed to several interconnected factors:

1. State Government Financial Burden and Withdrawal: The premium subsidy is shared 50:50 between the Centre and the states. High premium rates quoted by insurance companies in certain regions have made the subsidy burden unsustainable for several states. This has led to states like Gujarat, Andhra Pradesh, Telangana, and West Bengal withdrawing from the scheme and launching their own, more localised insurance models. As per a Parliamentary Standing Committee on Agriculture report (2021-22), the high premium rates and delays in subsidy release were major reasons for states opting out.

2. Delayed Claim Settlement: This is a persistent issue that erodes farmer trust. Delays are often caused by disputes between insurance companies and state governments over yield data, late submission of yield data by states, and complex claim processing procedures. The very purpose of insurance—providing timely relief—is defeated when claims are not settled before the next sowing season.

3. Inaccurate and Untimely Loss Assessment: PMFBY relies on 'Crop Cutting Experiments' (CCEs) to estimate yield loss at the village panchayat level. This process is often manual, prone to errors, and insufficient in number to accurately capture localised losses (e.g., from hailstorms or wild animal attacks). While the scheme has provisions for using technology like drones and satellite imagery (part of the 2020 Revamped PMFBY guidelines), their on-ground implementation remains patchy.

4. Low Farmer Awareness and Trust: Despite government efforts, awareness about the scheme's procedures, deadlines, and benefits is low, especially among small and marginal farmers. Past negative experiences with delayed or rejected claims have created a significant trust deficit.

5. Compulsory vs. Voluntary Nature: Initially, the scheme was mandatory for all loanee farmers. This led to high enrolment but also resentment, as premiums were deducted without explicit consent. The scheme was made voluntary for all farmers from Kharif 2020. While this was a pro-farmer move, it led to a drop in enrolment, as many farmers (especially in low-risk areas) opted out. As per the Ministry of Agriculture & Farmers Welfare, farmer applications dropped from 5.5 crore in 2018-19 to 4.2 crore in 2021-22 after the scheme was made voluntary.

Comparative Analysis: PMFBY vs. Predecessor Schemes

Why It Matters

Uneven adoption of a critical risk-mitigation tool like PMFBY leaves a large segment of India's agricultural sector vulnerable to climate shocks and price volatility. This has direct implications for:

• Farm Income: Lack of insurance perpetuates the cycle of indebtedness and distress migration.
• Food Security: Crop failures without a safety net can impact national food production and availability.
• Fiscal Stability: Ad-hoc disaster relief and farm loan waivers, often demanded in the absence of effective insurance, place a significant, unplanned burden on the exchequer, impacting fiscal policy.

Related Concepts

• Agricultural Distress: The multifaceted problem of low farm income, indebtedness, and farmer suicides. Crop insurance is a key tool to mitigate this.
• Minimum Support Price (MSP): A price support mechanism, which, unlike crop insurance, addresses price risk but not production/yield risk.
• Kisan Credit Card (KCC) Scheme: A scheme to provide adequate and timely credit to farmers, often linked with crop insurance enrolment.
• Fiscal Federalism: The financial relations between the Centre and states, highlighted by the disputes over premium subsidy sharing in PMFBY.

UPSC Angle

Examiners expect a nuanced and multi-dimensional answer on PMFBY. They look for:

1. Knowledge of Evolution: Mentioning the shift from NAIS/MNAIS to PMFBY and the rationale behind it.
2. Critical Analysis: Not just listing problems, but explaining why they exist (e.g., why states are withdrawing – fiscal burden).
3. Data-Driven Arguments: Quoting figures and sources (e.g., Parliamentary Committee reports, Ministry data) to substantiate claims.
4. Understanding of Reforms: Awareness of recent changes like making the scheme voluntary (from Kharif 2020) and the push for technology (WINDS portal, YES-Tech manual).
5. Balanced Perspective: Acknowledging the scheme's strengths (lower farmer premium, wider risk coverage) alongside its implementation challenges.
6. Way Forward: Suggesting practical solutions like improving assessment technology, ensuring timely subsidy release, and building state capacity.