A tech solution to crop insurance woes?

What is new in the PMFBY scheme?

The Pradhan Mantri Fasal Bima Yojana (PMFBY) was launched in 2016 to protect farmer incomes from weather shocks. On Wednesday, the Cabinet approved the continuation of PMFBY with an outlay of ₹69,516 crore for the five years to 2025-26. For large-scale technology diffusion, it approved a fund with a corpus of ₹825 crore.

Also read | Can India turn into a global hub for data centres?

The Centre expects technology adoption to help usher in transparency and hasten claim settlement, a major pain point for farmers. Under PMFBY, farmers pay 2% of the insurance premium for kharif crops and 1.5% for rabi crops. The rest is shared by the Centre and state governments.

What are the tech components?

The Yield Estimation System Using Technology, or YES-TECH, will deploy satellite-based remote sensing to assess crop yields and damage. The new tech will be given 30% weightage while calculating yields. The other intervention is to deploy automatic weather stations and rain gauges to collect hyper-local weather data at the block and panchayat levels. This will help in faster assessment of adverse weather and related damage to crops. Weather shocks like hailstorms and excess rainfall are often localized events, and a dense network of weather stations can quickly assess the extent of losses to farmers.

How many farmers are currently enrolled?

Between 2018 and 2024, the number covered by PMFBY grew from 21.6 million to 25.9 million for the kharif season. In the 2023 kharif season, over 33 million hectares of crop area was insured. Insurance firms collected a premium of ₹20,779 crore and settled claims worth ₹10,984 crore. Since its inception, claims worth ₹1.63 trillion have been paid till August 2024.

Also read | Happy New Year: How stocks may swing in 2025

What have been the glitches so far?

The parliamentary standing committee on agriculture (August 2021) said delays in settlement are the biggest challenge. This happens due to late release of crop yield data and delayed payment of the premium share by state governments. Insurance firms do not have functional offices at local levels, which are crucial to addressing farmers’ problems. Bihar, Telangana, Jharkhand, West Bengal and Gujarat have opted out of the scheme due to financial constraints, while Punjab did not implement the scheme.

What bad are weather-related losses?

As per the Met office, 87% of India’s districts are vulnerable to drought, 30% to flood and 46% to extreme rainfall. Between 2019 and 2023, over 23 million hectares of crop area was affected by floods. Besides flood, droughts also severely impact production, and an area of 35 million hectares was reportedly damaged between 2016 and 2022. Between 2019 and 2023, India suffered economic damages totalling $56 billion due to weather-related disasters, as per an assessment by the Asian Development Bank last year.

Also read | Climate targets: How do Nifty-50 companies fare?