The performance of PMFBY and other crop insurance models in India
Agriculture in India is varied, diversified and prone to a variety of risks. Recent upsurge in protests and demonstrations have again pointed out at persistent agrarian crisis. Most farmers are small and marginal. Agriculture, in most areas, is rain fed, leading to a greater degree of yield variability and risk. Agriculture is more vulnerable and prone to risks than ever before. An increasing trend of declining investment in agriculture, coupled with a trend of increase in variation of temperatures and occurrence of disasters is being observed. Crop insurance, which aims at addressing yield risk is subject to structural, design and financial problems. Problems of asymmetry of information, moral hazard and adverse selection and co-variability are more pronounced in crop insurance amongst other forms of insurance. Various crop insurance models in India have been continuously modified solving the recognized lacunae. Sometimes, new schemes were introduced on a pilot basis even before the ongoing scheme stabilized. One such response was schemes based on the area approach in the 1980s which replaced the earlier practiced individual farm approach. More recent insurance schemes are based on weather, and adopt technology of remote sensing. The recent modification in this area is Pradhan Mantri Fasal Bima Yojana (PMFBY), launched on Jan, 2016 and implemented since June,2016. This paper seeks to review the provisions, performance and improvements of the scheme in comparison with the other models on completion of one year of the scheme.