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Crop Insurance – An important risk mitigation tool for India’s agrarian economy

The weather conditions all over the world have become volatile and India is no different, with floods and drought conditions becoming a regular phenomenon. Such conditions have a major impact on agriculture, which is the most important sector for the Indian economy.

Ashish Agrawal

The weather conditions across the world have become volatile and India is no different, with floods and drought conditions becoming a regular phenomenon. Such conditions have a major impact on agriculture, which is the most important sector for the Indian economy. Last year, while the flood has played havoc in more than half of the country, drought-like situation prevails in the other half. We witnessed heavy rainfall in August and release of water from the reservoirs in Maharashtra, which caused flood in most of the Northern districts in Karnataka and crops in more than 2000 villages got affected due to this.

The biggest victim of these natural hazards are farmers, whose entire efforts, source of income and hope gets wiped off with the floods. Though the State Government provides some relief to the affected farmers through the Disaster Relief Fund, it is not enough to cover the losses to the crop. In such a scenario, the Pradhan Mantri Fasal Bima Yojana (PMFBY), which is a Crop insurance scheme by the Central Government and State Government comes into the picture.

Coverage and loss assessment:

PMFBY is a comprehensive scheme which covers crop sowing failure, any kind of losses due to natural calamities (including floods) to the standing crops as well as post-harvest losses. In case of the widespread effect of flood, the local government notifies the list of affected villages, and the assessment of loss is done based on joint survey by the district authorities and insurance companies. If the effect of the flood is in limited fields, a farmer can send an intimation to the insurance company and the insurance company arranges for the loss survey and compensates the farmer based on the survey report.

Claim process:

Under PMFBY, there is also a provision for interim relief to the farmers, if the crop loss due to flood or drought reported is more than 50% area of the insurance units. In such cases, farmers get upfront claim of up to 25% of their estimated claims and the remaining gets settled after getting the final crop yield estimate from the State Government. Claims are also payable to an individual farmer due to landslide, inundation, hailstorm, cloud burst or natural fire event; but the farmers are required to intimate the insurance company within 72 hours of the event. To make the claim process faster, the Government has made it mandatory for an insurance company to settle the claims within 21 days after getting the Government subsidy and crop yield report.


To get the benefit of the scheme, it is mandatory for a farmer to reach out to their nearest banks or common service centres (CSCs) and enrol in the scheme by depositing a small premium (2% of the sum insured in the Kharif season and 1.5% in the Rabi season) along with the details of their land and bank documents. The details of the crops notified, the premium to be paid or coverage etc. is also available in all the Taluka and District level offices of the Agriculture Department.

Although, crop insurance is an important risk mitigation tool not many are aware about it. Government and insurance companies are conducting various awareness campaigns on crop insurance, adopting multiple distribution channels and leveraging technology which can pave way for deeper penetration of this insurance.

With the increasing climatic risk and the wide range of benefits being offered under the PMFBY, it is advisable for a farmer to opt for crop insurance as a one of the several inputs which they apply in their field for crop growth and mitigate the risk.

Various risks threaten the viability of every business, and each operation must determine how they can remove, reduce or at least moderate the risks that can put their business in jeopardy. India’s agrarian community is not adoption the crop insurance actively because of lack of awareness programmes, education about insurance and many more factors. Even the processes and guidelines of PMFBY are required to be communicated to them in their own regional language. There is a huge requirement of extension activities through out the country to make farmers aware about the insurance.

As one of the leading general insurers of India, Bajaj Allianz General Insurance caters to individuals across demographics of the country and the corporate sector with its wide range of products as well as services that go beyond insurance. ‘Services beyond the insurance’ makes a very strong intension to help our consumers; especially to the farmers for whom we have developed this unique platform i.e. “Farmitra”. Through “Farmitra”, our intention is to keep the farmers informed not only about their crop insurance policies, but also to help them to increase their crop production through customized information regarding their farming activities in no additional cost.  The “Farmitra” app, available in all regional languages, would be helpful for the farmers to know status of their insurance policies, surveyor appointment, document submission, claims payment etc.  Farmers can also raise any queries and get the answer from our experts in the pre-define time limit. It also enables the farmers to get information on various government schemes like PMFBY, PM-JAY, PMKSY, PMKVY, DBT etc. important agricultural events like Agri exhibitions, trainings etc.

Farmitra is also an effort to bring all the value chains of the Agri ecosystem at a common platform. Hence farmers would get access of the following services through this App – 

  1. Weather Forecast: Weather impacts the crop production, weather updates like the possibility of rainfall, temperature variations, Humidity levels, wind speed will be provided up to seven days at block level.
  2. Crop Advisory and Crop Doc: Advisories based on season, soil characters, weather, and planting dates in regional languages. Pest and diseases diagnostic tool for selected crops.
  3. Market Price: All India level markets (Local, State & National Level Markets) price for the selected commodity are available at Farmitra App.
  4. News: Information about recent developments in the agricultural field, Good Agriculture Practices, Govt. schemes, Agri Insurance & Loan related updates in regional language.  State specific articles of BAGIC for encouraging awareness about crop insurance among the farmers.
  5. Insurance Briefcase: This service will enable Farmer to have one single view about his policy and claims information. This service will also enable farmer to conduct self –Survey. Check Claim status and raise any grievances/queries.

We would also be integrating various other services like information about farm Credit institutes, Agriculture input companies, Health institutions, education institutes etc. to help the farming community. Thus, farmers will get a unique tool for finding out the best solutions for their worries at a single platform called “Farmitra” You can download Farmitra app by clicking on link https://bit.ly/2RbYfk8

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