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Cabinet Approves Modifications in Crop Insurance Scheme

Last updated on January 2nd, 2025 Posted on January 2, 2025 by NEXT IAS Current Affairs Team  213

Syllabus: GS3/Agriculture

Context

  • The Union Cabinet has approved the continuation of Pradhan Mantri Fasal Bima Yojana and Restructured Weather Based Crop Insurance Scheme till 2025-26.

About

  • The Cabinet approved setting up of the Fund for Innovation and Technology (FIAT) for technology improvements in insurance schemes.
    • Key initiatives include Yield Estimation System using Technology (YES-TECH), which uses remote sensing for crop yield estimates.
    • Weather Information and Network Data System (WINDS) for augmenting weather data through automatic weather stations.

About Pradhan Mantri Fasal Bima Yojana

  • Launch: In 2016 by the Ministry of Agriculture & Farmers welfare.
  • Objectives: It is a crop insurance scheme that provides financial support to farmers in case of crop failure or damage due to natural calamities, pests, or diseases.
    • to stabilize the income of farmers to ensure their continuance in farming;
    • to encourage farmers to adopt innovative and modern agricultural practices;
    • to ensure flow of credit to the agriculture sector.
  • Coverage: All farmers including sharecroppers and tenant farmers growing the notified crops in the notified areas are eligible for coverage.
  • Coverage of Crops: Food crops (Cereals, Millets & Pulses), Oilseeds and Annual Commercial / Horticultural crops.
Coverage-of-Crops
  • Share between Centre and State: As the States have a major role in implementation of the scheme the premium subsidy is  shared by the Central and State Government on a 50 : 50 basis and  for North-Eastern States sharing pattern has been made 90 : 10.

About Restructured Weather Based Crop Insurance Scheme (RWBCIS)

  • It was launched in 2016 to mitigate the hardship of the insured farmers against the likelihood of financial loss on account of anticipated crop loss resulting from adverse weather conditions. 
    • While PMFBY is based on yield, RWBCIS uses weather parameters as “proxy‟ for crop yields in compensating the cultivators for deemed crop losses.
    • All standard Claims are processed and paid within 45 days from the end of the risk period. 

Agri Credit in India

  • Sources of Agricultural Credit: Public sector banks (like the State Bank of India), regional rural banks (RRBs), cooperatives, and NABARD (National Bank for Agriculture and Rural Development) provide most formal agricultural credit.
  • Types of Agricultural Credit:
    • Short-term Credit: Used for financing working capital needs like seeds, fertilizers, and pesticides.
    • Medium and Long-term Credit: Used for purchasing equipment, irrigation systems, and land development.
  • Challenges:
    • Low credit penetration in rural areas.
    • Dependency on informal credit sources with high interest rates.
    • Issues with loan recovery and defaults.
Other Relevant Government Schemes
– Kisan Credit Card (KCC) Scheme: Provides short-term credit to farmers for crop production and agricultural needs. Offers flexible repayment terms.
– Pradhan Mantri Kisan Samman Nidhi (PM-KISAN): Direct income support of ₹6,000 per year to small and marginal farmers in three installments.
– Interest Subvention Scheme: Subsidizes interest rates on crop loans up to ₹3 lakh, reducing financial burden on farmers.
– Farmers’ Development Loans (FDL): Long-term loans for land development, irrigation, and purchasing farm equipment.
– Rashtriya Krishi Vikas Yojana (RKVY): Provides funding to states for enhancing agricultural infrastructure and productivity.
– National Mission on Agricultural Extension and Technology (NMAET): Enhances agricultural productivity by supporting extension services and technology adoption.
– Credit Guarantee Fund Scheme (CGS): Offers credit guarantees to micro and small enterprises, including agri-businesses.
– Rural Infrastructure Development Fund (RIDF): Provides loans for rural infrastructure projects like irrigation and soil conservation.
– Kisan Rin Portal (KRP):  This digital platform aims to revolutionize access to credit services under the Kisan Credit Card Scheme (KCC) by offering a comprehensive view of farmer data & loan disbursement specifics and fostering seamless integration with banks. 

Source: PIB

 
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