States allowed to set up crop insurance firms

Why in News?

The Centre has allowed states to set up their own insurance companies for implementing Pradhan Mantri Fasal Bima Yojana (PMFBY).

 

FACTS FOR PRELIMS

Rationale

Comptroller and Auditor General (CAG) in its 2017 report said that old crop insurances schemes which have now been merged with PMFBY were poorly implemented during 2011-2016.

PMFBY

In 2016, the government of India had launched Pradhan MantriFasalBimaYojana (PMFBY) after rolling back the earlier insurance schemes viz. National Agriculture Insurance Scheme (NAIS), Weather-based Crop Insurance scheme and Modified National Agricultural Insurance Scheme (MNAIS). Thus, at present, PMFBY is the only flagship scheme of the government for agricultural insurance in India.

This scheme covers following crops:

i)Food crops (Cereals, Millets and Pulses)

ii)Oilseeds

iii)Annual Commercial / Annual Horticultural crops

The scheme is mandatory for farmers who have taken institutional loans from banks. It’s optional for farmers who have not taken institutional credit the government under this system has migrated from claim-based insurance scheme to an upfront subsidy for premium based system. It is a demand driven scheme, therefore no targets are fixed. However, it was decided to increase the coverage up to 50% of the total cropped area.

All funds for this scheme come from Krishi Kalyan Kosh.

Risks Covered under this Scheme

i)Yield Losses

ii)Post Harvest Losses

iii)Localised calamities such as hailstorms, landslides etc.

 

Source-The Indian Express.