CLIMATE RISK AND CROP INSURANCE

Key Highlights:

• Pradhan Mantri Fasal Bima Yojana (PMFBY) and Restructured Weather Based Crop Insurance Scheme (RWBCIS) operate on an 'Area Approach' for general yield loss.
• Localized risks and post-harvest losses under these schemes are assessed on an 'individual insured farm basis'.
• State Disaster Response Fund (SDRF) and National Disaster Response Fund (NDRF) provide relief for natural calamities, distinct from crop insurance claims.
• National Crop Insurance Portal (NCIP) serves as a central platform for scheme management, farmer enrollment, and electronic claim transfer.
• The Digiclaim Module has been operationalized since Kharif 2022 for timely and transparent claim disbursal.
• Penalties of 12% are levied on insurance companies for delayed payments (from Kharif 2024) and on state governments for delayed subsidy release (from Kharif 2025).
• Mandatory ESCROW Account for states' premium share and the Crop Loss Assessment App (CLAP) have been introduced from Kharif 2025 and for all States/UTs respectively.

Detailed Insights:

• The 'Area Approach' for PMFBY and RWBCIS calculates claims based on yield shortfall using Crop Cutting Experiment (CCE) and YES-TECH.
• Individual farm assessment for specific localized risks involves a joint committee of State Government and insurance company representatives.
• SDRF and NDRF are disaster management funds, with NDRF providing additional assistance for 'severe nature' disasters after an Inter-Ministerial Central Team (IMCT) visit.
• Loss assessment under SDRF and NDRF is for specific natural calamities, requiring 33% or more crop loss for input subsidy.
• NCIP facilitates online enrollment, data management, and electronic transfer of claim amounts directly to farmers' bank accounts.
• The Digiclaim Module integrates NCIP with Public Finance Management System (PFMS) for streamlined claim processing.
• Delinking Central and State premium subsidy shares ensures farmers receive proportionate claims even if the state share is delayed.
• Mandatory ESCROW Account for states aims to improve financial discipline and ensure timely premium deposits.
• CCE-Agri App and CLAP are digital tools enhancing the accuracy and efficiency of crop loss assessments at the field level.

Key Concepts Involved:

• Pradhan Mantri Fasal Bima Yojana (PMFBY): A government-sponsored crop insurance scheme providing financial support to farmers suffering crop loss/damage.
• Restructured Weather Based Crop Insurance Scheme (RWBCIS): An insurance scheme providing coverage against weather-related crop losses based on weather parameters.
• Crop Cutting Experiment (CCE): A method used to estimate crop yield by harvesting a small plot and extrapolating the yield for a larger area.
• State Disaster Response Fund (SDRF): Primary fund available with state governments for disaster response and relief measures.
• National Disaster Response Fund (NDRF): A fund managed by the Central Government to supplement SDRF in case of severe calamities.
• National Crop Insurance Portal (NCIP): A centralized online platform for managing crop insurance data, farmer enrollment, and claim processing.
• Digiclaim Module: A digital system for transparent and timely processing and payment of crop insurance claims.
• ESCROW Account: A temporary account held by a third party during a transaction, ensuring funds are released only upon fulfillment of conditions.
• Crop Loss Assessment App (CLAP): A mobile application for digital assessment of localized crop losses for individual farms.