Question map
With reference to 'Pradhan Mantri Fasal Bima Yojana', consider the following statements : 1. Under this scheme, farmers will have to pay a uniform premium of two percent for any crop they cultivate in any season of the year. 2. This scheme covers post-harvest losses arising out of cyclones and unseasonal rains. Which of the statements given above is/are correct?
Explanation
The premium rates under PMFBY are not uniform across all seasons - farmers pay 2% for Kharif crops and 1.5% for Rabi crops, with horticulture and cotton crops having premiums up to 5%[1]. Therefore, **Statement 1 is incorrect** as it claims a uniform 2% premium for any crop in any season.
Statement 2 is correct - the scheme provides post-harvest loss coverage up to a maximum period of two weeks from harvesting for crops allowed to dry in cut and spread condition in the field, specifically against cyclones, cyclonic rains, and unseasonal rains[2]. This coverage is available for crops that need field-drying after harvest.
Since only Statement 2 is correct, **option B (2 only)** is the right answer. The scheme's premium structure varies by season and crop type, while post-harvest protection against specific weather events like cyclones and unseasonal rains is indeed a feature of PMFBY.
Sources- [1] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 10: Agriculture - Part I > 10.14 Pradhan Mantri FasalBima Yojana (PMFBY) > p. 321
- [2] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 10: Agriculture - Part I > Coverage of Risks: > p. 322
PROVENANCE & STUDY PATTERN
Full viewThis is a classic 'Flagship Scheme' question. Statement 1 is a 'Generalization Trap'—swapping specific tiered rates (2%, 1.5%, 5%) for a blanket 'uniform' rule. Statement 2 tests the specific 'USP' of the scheme (post-harvest coverage). Strategy: For major schemes, memorize the exact numbers (premiums, funding ratios) and the specific 'new' benefits added compared to the old scheme.
This question can be broken into the following sub-statements. Tap a statement sentence to jump into its detailed analysis.
- Statement 1: Under the Pradhan Mantri Fasal Bima Yojana (PMFBY), is the farmer premium rate fixed at 2%?
- Statement 2: Under the Pradhan Mantri Fasal Bima Yojana (PMFBY), is the premium charged to farmers uniform across all crops and all seasons?
- Statement 3: Under the Pradhan Mantri Fasal Bima Yojana (PMFBY), does the scheme cover post-harvest losses caused by cyclones and unseasonal rains?
- Explicitly states PMFBY has one premium rate per season and gives Kharif = 2% and Rabi = 1.5%.
- Says farmers' premium is fixed while Centre and States bear the remaining premium burden.
- Gives an operational example: if insurer's premium is 40%, farmers pay 2% (noting this is fixed for kharif) and Centre/State share the rest.
- Reinforces that 2% is the fixed farmer contribution for the Kharif season.
States a formal rule: 'Only one premium rate for each season for all food grains, oilseeds and pulses' and gives seasonal rates (Kharif 2%, Rabi 1.5%) while noting horticulture and cotton premiums may go up to 5%.
A student could combine this with knowledge of which crops are classified as foodgrains/oilseeds/pulses versus horticulture/cotton to judge if a single uniform rate applies to every crop/season.
Contains a past exam statement that PMFBY requires a 'uniform premium of two percent for any crop they cultivate in any season', showing a common simplification/misconception used in questions.
Compare this exam option with the scheme's official seasonal rates (from other snippets) to test whether the 'any crop any season' claim holds.
Gives an operational example: if insurer charges 40% total premium, farmers pay 2% (fixed for Kharif) and the remainder is shared by Centre/State, illustrating a fixed farmer-share for a given season.
Use this to infer that farmer contribution is defined per season (here Kharif) rather than varying by every crop, so check other seasons/crop categories for differing fixed shares.
Explains PMFBY replaced earlier schemes and follows 'One Nation-One Scheme' principle, suggesting standardized rules but not necessarily one identical premium for all crops/seasons.
Combine the 'One Nation-One Scheme' idea with the seasonal-rate rule to reason that standardization is at scheme level but may allow seasonal/crop category differences.
Lists operational revisions (e.g., interest for delayed claims) and budget allocation, indicating the scheme is administratively adjustable and subject to change.
A student could infer that premium rules might be revised and should be checked against the latest operational guidelines rather than assumed permanently uniform.
- Explicitly states post-harvest losses are covered for specific perils including cyclone/cyclonic rains and unseasonal rains.
- Specifies the conditional nature and time-limit (coverage only up to a maximum period of two weeks from harvesting) and crop drying condition (cut-and-spread in field).
- Directly links the named perils (cyclone, cyclonic rains, unseasonal rains) to post-harvest loss coverage under PMFBY.
- Describes PMFBY objective to provide insurance against failure due to natural calamities, supporting the scheme's coverage scope for calamity-related losses.
- Reinforces that natural calamities (category including cyclone) are within the scheme's intended cover, lending contextual support to post-harvest peril coverage.
- [THE VERDICT]: Sitter. PMFBY was the biggest agri-scheme launch of 2016. Covered in every standard Economy book (Vivek Singh, Singhania) and CA magazine.
- [THE CONCEPTUAL TRIGGER]: Agriculture > Government Schemes > Risk Management. The shift from NAIS/MNAIS to PMFBY.
- [THE HORIZONTAL EXPANSION]: Memorize the Matrix: Kharif (2%), Rabi (1.5%), Commercial/Horticulture (5%). Key Features: Removal of premium capping (Govt pays full balance), use of Technology (Drones/Smartphones for CCE), and the 2020 update making it voluntary for loanee farmers.
- [THE STRATEGIC METACOGNITION]: When a scheme replaces an older one, ask 'What is the upgrade?'. The upgrade here was the *lower* premium for farmers and *wider* coverage (post-harvest). UPSC tests the 'Upgrade Features' specifically.
The references state PMFBY sets one fixed farmer premium per season (e.g., Kharif 2%, Rabi 1.5%), which directly addresses the claim about a 'fixed 2%'.
High-yield for UPSC: crop insurance design, rates and seasonality are often asked in polity/economy and agriculture topics. Understanding the season-wise fixed rates helps answer questions on policy features and differentiate blanket claims from season-specific rules. Memorise the standard Kharif/Rabi rates and note exceptions.
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 10: Agriculture - Part I > 10.14 Pradhan Mantri FasalBima Yojana (PMFBY) > p. 321
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 10: Agriculture - Part I > Implementation of the Scheme: > p. 323
Evidence shows farmers pay a small fixed share while Centre and State equally finance the remaining premium, illustrating fiscal sharing under PMFBY.
Important for questions on fiscal federalism, budgetary implications and scheme financing. Helps link agriculture insurance to Centre–State fiscal responsibilities and to news on delayed state payments. Learn the sharing principle and example calculations (e.g., farmer 2% vs insurer 40%).
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 10: Agriculture - Part I > Implementation of the Scheme: > p. 323
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 10: Agriculture - Part I > 10.14 Pradhan Mantri FasalBima Yojana (PMFBY) > p. 321
References note horticulture and cotton premiums may be higher (up to 5%), so '2%' is not a universal rate across all crops.
Useful to avoid overgeneralisation in answers; UPSC often tests nuance and exceptions. Master the principle of 'one rate per season for food grains/oilseeds/pulses' versus higher ceilings for other crops and cite exceptions when asked about scheme scope.
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 10: Agriculture - Part I > 10.14 Pradhan Mantri FasalBima Yojana (PMFBY) > p. 321
Reference [1] states PMFBY sets one premium rate per season for food grains, oilseeds and pulses (Kharif 2%, Rabi 1.5%).
High-yield for UPSC: understanding scheme design often tests fixed/variable subsidy or premium structures. Connects to questions on agricultural risk mitigation and scheme comparisons. Prepare by memorising season-wise norms and examples, and practice applying them to policy-evaluation questions.
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 10: Agriculture - Part I > 10.14 Pradhan Mantri FasalBima Yojana (PMFBY) > p. 321
Reference [1] explicitly notes horticulture and cotton may attract higher premiums (up to 5%), indicating exceptions to uniformity.
Important for nuanced answers: UPSC favors balanced answers noting exceptions. Links to topics on crop categorisation, insurance coverage limits, and targeted subsidies. Study by listing standard rules alongside specified exceptions in major schemes.
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 10: Agriculture - Part I > 10.14 Pradhan Mantri FasalBima Yojana (PMFBY) > p. 321
Reference [7] explains farmers pay a fixed small share (example: 2% for Kharif) while the remaining premium is shared equally by Centre and State.
Crucial for questions on fiscal burden and intergovernmental finance in schemes. Helps answer how costs are allocated and fiscal implications for states/centre. Master by mapping beneficiary contribution, central subsidy and state responsibility across flagship schemes.
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 10: Agriculture - Part I > Implementation of the Scheme: > p. 323
Reference [6] directly explains that post-harvest losses are covered only under specific conditions (two-week limit and crops left to dry in-field) and for specified perils.
High-yield for UPSC: questions test not just whether schemes cover a risk but the conditionalities/limits. Understanding time-limits and crop-condition clauses helps distinguish correct/incorrect statements and interpret scheme operational rules. Prepare by memorising key conditional clauses and examples from official scheme summaries.
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 10: Agriculture - Part I > Coverage of Risks: > p. 322
The 'Beed Model' (Maharashtra Pattern): A potential future question. In this variant, insurance companies refund a portion of the premium to the State Govt if claims are low (e.g., <60%), and the State bears the burden if claims exceed a cap (e.g., >110%). It addresses the issue of insurance companies making windfall profits.
The 'Economic Logic' Hack: Stmt 1 claims a uniform rate for 'any crop' in 'any season'. Logic dictates that growing Rice in Monsoon (Kharif) is riskier than Wheat in Winter (Rabi), and Mangoes (Horticulture) have different values than Bajra. An insurance scheme charging the same premium for high-risk and low-risk assets would fail. Extreme absolutes ('any crop', 'any season') + Economic irrationality = Incorrect.
Mains GS3 (Environment & Economy): Link PMFBY to 'Climate Adaptation Finance'. Post-harvest loss coverage for cyclones (Stmt 2) is a direct policy response to the increasing frequency of Extreme Weather Events due to Climate Change.