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Insurance Flow

The document outlines the insurance flow for farmers under the Pradhan Mantri Fasal Bima Yojana (PMFBY), which provides affordable crop insurance against natural disasters. It details the enrollment process, premium rates, coverage for various crops, and the financial implications for farmers, including expenses and potential profits. The scheme aims to protect farmers from crop loss while offering a structured claim process for compensation.

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sourav.vishwakarma
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6 views2 pages

Insurance Flow

The document outlines the insurance flow for farmers under the Pradhan Mantri Fasal Bima Yojana (PMFBY), which provides affordable crop insurance against natural disasters. It details the enrollment process, premium rates, coverage for various crops, and the financial implications for farmers, including expenses and potential profits. The scheme aims to protect farmers from crop loss while offering a structured claim process for compensation.

Uploaded by

sourav.vishwakarma
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Insurance Flow

1. Insurance Enrollment → Farmer selects insurance when listing crops.


2. Payment → Buyer pays the farmer, and premium is deducted.
3. Natural Calamity → Crop destroyed, farmer reports damage.
4. Claim Process → Insurance provider assesses the claim.
5. Payout → Farmer receives compensation from the insurer.
6. Refund → Farmer refunds buyer using the insurance payout.

Pradhan Mantri Fasal Bima Yojana (PMFBY)


1. Launched: 2016 by the Government of India.
2. Objective: Provide affordable crop insurance to farmers to protect against crop loss due
to natural disasters, pests, or diseases.

Coverage: Includes both pre-harvest and post-harvest losses.

Premium Rates:

• 2% for Kharif crops.

• 1.5% for Rabi crops.

• 5% for horticultural/commercial crops.

• Remaining premium subsidized by the government.

Insurance Coverage: PMFBY insures against natural calamities such as floods, droughts, hailstorms,
pests, and diseases.

Sum Insured for Wheat: The sum insured is calculated based on the cost of cultivation. Let’s assume
the government-defined sum insured per acre for wheat is ₹35,000 (this varies by state and district).

Coverage Percentage: Typically, the scheme covers up to 80-90% of the sum insured, depending on
the severity of the damage and local guidelines.

• For 100% crop loss, the insurance payout could be:

o ₹28,000 to ₹31,500 (80-90% of ₹35,000).

Farmer’s Premium Payment

• Premium Rate for Wheat (Rabi Crop): 1.5% of the sum insured under PMFBY.

• Annual Premium: If the sum insured is ₹35,000, the farmer would pay:

o ₹525 per year (1.5% of ₹35,000).

o The rest of the premium is subsidized by the government.


Farmer Expenses and Profit Margin for 1 acre Land

1. Land Preparation → ₹3,000-5,000 for plowing and leveling.


2. Seed Sowing → ₹1,500 for wheat seeds, manual/machine sowing.
3. Irrigation → 4-5 irrigations, ₹1,500 per irrigation.
4. Fertilizer & Pesticides → ₹4,000 total cost for fertilizers and pesticides.
5. Labor → ₹2,000-3,000 for maintenance and weeding.
6. Harvesting → ₹2,000-4,000 cost for labor or machine harvesting.
7. Yield → 20-25 quintals per acre, total production of 2,000-2,500 kg.
8. Selling → ₹36,000-50,000 based on wheat price.
9. Net Profit → ₹20,000-30,000 after expenses.

Estimated Loss Due to Natural Calamities


• Selling – Net Profit

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