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Link Tech and JAM to Farm Insurance

Crop insurance has been beset by problems like high premium, delay in conducting crop-cutting experiments and delay in settling claims. The penetration of agricultural insurance was low and stagnant in terms of area insured and farmers covered, while the country has had crop insurance since 1972.

The high premium rates, of 8-10% under Modified National Agriculture Insurance Scheme and Weather-based Crop Insurance Scheme, had left a vast majority of farmers without any significant insurance coverage.

The government launched the Pradhan Mantri Fasal Bima Yojana (PMFBY) from Kharif 2016, to fix these issues. The scheme provides farmers the maximum financial protection against non-preventable natural risks.

As compared with 4.75 crore in 2015-16, in 2016-17, around 5.72 crore farmers were covered under the scheme. The sum insured grew 74%, to Rs 2 lakh crore, and the premium paid grew 298%, to Rs 21,882 crore.

The new insurance scheme removed capping of premium rates, which led to higher sums insured and fixing of premium rates at 2% in the Kharif season and 1.5% in Rabi season and thus helped farmers.

During its first year of implementation, the scheme has faced several challenges, like extension of cut-off dates for registration and delay in submission of yield data. For assessment and faster settlement of claims, a report by Icrier recommends use of technology and JAM to link land records of farmers with Aadhaar and bank accounts.


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