Pradhan Mantri Fasal Bima Yojana: Challenges and Way Forward

Abstract

The Indian agricultural environment has undergone numerous structural changes due to changes in the government policies. One new government policy, Pradhan Mantri Fasal Bima Yojana (PMFBY) could have wide-ranging effects. The study covered the opportunities and constraints for agricultural insurance in India, how PMFBY will be supported and governance will be maintained, and the best strategy for technology to increase farmer’s awareness and successful implementation. Under PMFBY, the government’s focus will be to bring in more farmers without loans (which comprise merely 5 per cent of total farmers at present) under the scheme. A total of 5,000 automated weather stations will be set up across the country. The IRDA (Insurance Regulatory and Development Authority), AIC (Agricultural Insurance Company), and 11 private and four state-owned non-life insurers have expressed their interest to participate in the scheme. Opportunities for agricultural insurance in India are numerous and insurance can be a risk transfer mechanism for Indian farmers that depend heavily on rains especially with the increasing influence of climate change. There is room for experiments and expansion of new insurance products since penetration is low and there also a favorable political environment for insurance and support of agricultural livelihoods.