Rural Banking -- Updates

Pradhan Mantri Fasal Bima Yojana (PMFBY)

The scheme will help in decreasing the burden of premiums on farmers who take loans for their cultivation and will also safeguard them against the inclement weather.

This scheme will be implemented in every state of India, in association with respective State Governments. The scheme will be administered under theMinistry of Agriculture and Farmers Welfare, Government of India.

OBJECTIVES OF THE SCHEME

  • To provide insurance coverage and financial support to the farmers in the event of failure of any of the notified crop as a result of natural calamities, pests & diseases.
  • To stabiles the income of farmers to ensure their continuous process in farming.
  • To encourage farmers to adopt innovative and modern agricultural practices.
  • To ensure flow of credit to the agriculture sector.

Highlight of the Scheme

  • There will be a uniform premium of only 2% to be paid by farmers for all Kharif crops and 1.5% for all Rabi crops. In case of annual commercial and horticultural crops, the premium to be paid will be only 5%.
  • The premium rates to be paid by farmers are very low and balance premium will be paid by the Government to provide full insured amount to the farmers against crop loss in any natural calamities.
  • There is no upper limit on Government subsidy. Even if balance premium is 90%, it will be borne by the Government.
  • Earlier, there was a provision of capping the premium rate which is low claims being paid to farmers. Now this is removed and farmers will get claim against full sum insured without any reduction.
  • The use of technology will be encouraged to a great extent. Smart phones, Remote sensing drone and GPS technologies will be used to capture and upload data of crop cutting to reduce the delays in the claim payment.
  • Allocation of the scheme presented in budget 2016-2017 isRs.5, 550 cores.
  • The insurance plan will be handled under a single insurance company,Agriculture Insurance Company of India (AIC).
  • PMFBYis a replacement scheme ofNational Agriculture Insurance Scheme (NAIS)andModified National Agriculture Insurance Scheme (MNAIS)and hence exempted from the service tax.
  • The rate of Insurance Charges payable by the farmer will be as per the following table:

The difference between premium rate and the rate of Insurance charges payable by farmers shall be treated as Rate of Normal Premium Subsidy, which shall be shared equally by the Centre and State.

Unit of Insurance

The Scheme shall be implemented on an'Area Approach Basis' (i.e., Defined Areas) for each notified crop for widespread calamities. The assumption that all the insured farmers, in a Unit of Insurance, should be defined as "Notified Area" for a crop, face similar risk exposures, incur to a large extent, identical cost of production per hectare, earn comparable farm income per hectare, and experience similar extent of crop loss due to the operation of an insured peril, in the notified area. The Unit of Insurance can be demographically mapped with region having homogenous Risk Profile for the notified crop.

For Risks of Localized calamities and Post-Harvest losses on account of defined peril, the Unit of Insurance for loss assessment shall be the affected insured field of the individual farmer.

KrishiVigyanKendras( KVK )

The first KVK was established in 1974 at Puducherry. The number of KVKs has risen to 645 and 106 more KVKs are to be established in the newly created districts and some larger districts. The KVK scheme is 100% financed by Govt. of India and the KVKs are sanctioned to Agricultural Universities, ICAR institutes, related Government Departments and Non Government Organizations (NGOs) working in Agriculture.

KVK is an integral part of the National Agricultural Research System (NARS) and aims at assessment of location specific technology modules in agriculture and allied enterprises, through technology assessment, refinement and demonstrations. KVKs have been functioning as Knowledge and Resource Centre of agricultural technology supporting initiatives of public, private and voluntary sector for improving the agricultural economy of the district and are linking the NARS with extension system and farmers.

KVK System: Mandate and Activities

The mandate of KVK isTechnology Assessment and Demonstrationfor itsApplicationandCapacity Development.

To implement the mandate effectively, the following activities are envisaged for each KVK
1.On-farm testing to assess the location specificity of agricultural technologies under various farming systems.
2.Frontline demonstrations to establish production potential of technologies on the farmers’ fields.
3.Capacity development of farmers and extension personnel to update their knowledge and skills on modern agricultural technologies.
4.To work as Knowledge and Resource Centre of agricultural technologies for supporting initiatives of public, private and voluntary sector in improving the agricultural economy of the district.
5.Provide farm advisories using ICT and other media means on varied subjects of interest to farmers

In addition, KVKs produce quality technological products (seed, planting material, bio-agents, livestock) and make it available to farmers, organize frontline extension activities, identify and document selected farm innovations and converge with ongoing schemes and programs within the mandate of KVK.

Soil Health Card (SHC) Scheme

What is Soil Health Card (SHC) scheme?

It is a Government of India’s scheme promoted by the Department of Agriculture & Co-operation under the Ministry of Agriculture. It will be implemented through the Department of Agriculture of all the State and Union Territory Governments. A SHC is meant to give each farmer soil nutrient status of his holding and advice him on the dosage of fertilizers and also the needed soil amendments, that he should apply to maintain soil health in the long run.

What is a Soil Health Card?

SHC is a printed report that a farmer will be handed over for each of his holdings. It will contain the status of his soil with respect to 12 parameters, namely N,P,K (Macro-nutrients) ; S (Secondary- nutrient) ; Zn, Fe, Cu, Mn, Bo (Micro - nutrients) ; and pH, EC, OC (Physical parameters). Based on this, the SHC will also indicate fertilizer recommendations and soil amendment required for the farm.

How can a farmer use a SHC?

The card will contain an advisory based on the soil nutrient status of a farmer’s holding. It will show recommendations on dosage of different nutrients needed. Further, it will advise the farmer on the fertilizers and their quantities he should apply, and also the soil amendments that he should undertake, so as to realize optimal yields.

Will the farmer get a card every year and for every crop?

It will be made available once in a cycle of 3 years, which will indicate the status of soil health of a farmer’s holding for that particular period. The SHC given in the next cycle of 3 years will be able to record the changes in the soil health for that subsequent period.

What are the norms of sampling?

Soil samples will be drawn in a grid of 2.5 ha in irrigated area and 10 ha in rain- fed area with the help of GPS tools and revenue maps.

Who will draw the soil sample?

The State Government will collect samples through the staff of their Department of Agriculture or through the staff of an outsourced agency. The State Government may also involve the students of local Agriculture / Science Colleges.

What is the ideal time for soil sampling?

Soil Samples are taken generally two times in a year, after harvesting of Rabi and Kharif Crop respectively or when there is no standing crop in the field.

How will soil samples be collected from a farmer’s field?

Soil Samples will be collected by a trained person from a depth of 15-20 cm by cutting the soil in a “V” shape. It will be collected from four corners and the centre of the field and mixed thoroughly and a part of this picked up as a sample. Areas with shade will be avoided. The sample chosen will be bagged and coded. It will then be transferred to soil test laboratory for analysis.

What is a soil test laboratory?

It is a facility for testing the soil sample for 12 parameters as indicated in reply to question number 2. This facility can be static or mobile or it can even be portable to be used in remote areas.

Who and Where will the soil sample be tested?

The soil sample will be tested as per the approved standards for all the agreed 12 parameters in the following way:

  1. At the STLs owned by the Department of Agriculture and by their own staff.
  2. At the STLs owned by the Department of Agriculture but by the staff of the outsourced agency.
  3. At the STLs owned by the outsourced agency and by their staff.
  4. At ICAR Institutions including KVKs and SAUs.
  5. At the laboratories of the Science Colleges/Universities by the students under supervision of a Professor/ Scientist.

How will the quality of soil sample test be ensured?

The State Government will refer 1% of all the samples in a year to a ‘Referral Laboratory’ to analyze and certify on the results of Primary Laboratory. The State Government will be supported to establish ‘Referral Laboratories as required.

What is the payment per sample?

A sum of Rs. 190 per soil sample is provided to State Governments. This covers the cost of collection of soil sample, its test, generation and distribution of soil health card to the farmer.

What is the total outlay of the scheme? Has the scheme been rolled out?

The total outlay of the scheme is Rs. 568.54 crore for a period of 3 years. The scheme has been rolled out in the field during the current year i.e, 2015-16.

How many soil samples will be tested in three years to generate Soil Health Cards?

As per grid pattern adopted by the Ministry, 253 lakh soil samples will be tested every three years to generate approximately 14 crore Soil Health Cards.

Is there any software for generation of uniform soil health cards across the country?

Yes, National Informatics Center (NIC) has developed a web portal ( for generation of uniform soil health card and fertilizer recommendation, which has four modules:

a)Registration of Soil Samples.

b)Testing of Samples in Soil Testing laboratory.

c) Fertilizer recommendation based on Soil Test Crop Response (STCR) equations.

d)MIS Reports.

Which Division in the Ministry of Agriculture will guide the State Governments regarding implementation of the scheme?

Integrated Nutrient Management (INM) Division; Department of Agriculture & Cooperation will visit the States regularly and provide guidance in technical matters.

NATIONAL AGRICULTURE MARKET (NAM) FAQs

1. What is the National Agriculture Market (NAM) ?

NAM is envisaged as a pan-India electronic trading portal which seeks to network the existing APMC and other market yards to create a unified national market for agricultural commodities. NAM is a “virtual” market but it has a physical market (mandi) at the back end.

2. What is the difference between NAM and the existing mandi system?

NAM is not a parallel marketing structure but rather a device to create a national network of physical mandis which can be accessed online. It seeks to leverage the physical infrastructure of the mandis through an online trading portal, enabling buyers situated even outside the State to participate in trading at the local level.

3. Why is NAM necessary?

It is necessary to create NAM to facilitate the emergence of a common national market for agricultural commodities. Current APMC regulated market yards limit the scope of trading in agricultural commodities at the first point of sale (i.e. when farmers offer produce after the harvest) in the local mandi, typically at the level of Taluka / Tahsil or at best the district. Even one State is not a unified agricultural market and there are transaction costs on moving produce from one market area to another within the same State. Multiple licences are necessary to trade in different market areas in the same State. All this has led to a highly fragmented and high-cost agricultural economy, which prevents economies of scale and seamless movement of agri goods across district and State borders. NAM seeks to address and reverse this process of fragmentation of markets, ultimately lowering intermediation costs, wastage and prices for the final consumer. It builds on the strength of the local mandi and allows it to offer its produce at the national level.

4. How will NAM operate?

The NAM electronic trading platform has been created with an investment by the Government of India (through the Ministry of Agriculture & Farmers’ Welfare). It offers a “plug-in” to any market yard existing in a State (whether regulated or private). The special software developed for NAM is available to each mandi which agrees to join the national network free of cost with necessary customization to conform to the regulations of each State Mandi Act.

5. Are there any conditions for joining NAM?

States interested to integrate their mandis with NAM are required to carry out following reforms in their APMC Act.

a) Specific provision for electronic trading .

b) Single trading licenses valid for trading in all mandis of the State.

c) Single point levy of transaction fee.

6. Will the APMC mandis lose out business due to NAM?

No. NAM basically increases the choice of the farmer when he brings his produce to the mandi for sale. Local traders can bid for the produce, as also traders on the electronic platform sitting in other States. The farmer may chose to accept either the local offer or the online offer. In either case the transaction will be on the books of the local mandi and they will continue to earn the transaction fee. In fact, the volume of business will significantly increase as there will be greater competition for specific produce, resulting in higher transaction fees for the mandi.

7. Who will bear the costs of NAM?

The national level platform has been developed by the Ministry of Agriculture & Farmers’ Welfare, which will also bear the maintenance costs. As stated above, the integration costs for local mandis and customization of software, training etc. will also be paid for by the Ministry of Agriculture & Farmers’ Welfare as a one-time grant at the time of accepting the mandi in the national network. Thereafter, the running costs of the software at the local level, staff costs for quality check etc. will be met from the transaction fee to be generated through the sale of produce. The intention is to avoid any upfront investment by the mandi when it integrates into NAM, and also enable it to support the running cost through additional generation of revenue.

8. Who will actually operate the NAM platform?

Ministry of Agriculture & Farmers’ Welfare, Govt. of India has appointed Small Farmers’ Agribusiness Consortium (SFAC) as the Lead Implementing Agency of NAM. SFAC will operate and maintain the NAM platform with the help of a Strategic partner selected for the purpose.

9. What are the likely benefits of NAM?

NAM is envisaged as a win-win solution for all stakeholders. For the farmers, NAM promises more options for sale at his nearest mandi. For the local trader in the mandi, NAM offers the opportunity to access a larger national market for secondary trading. Bulk buyers, processors, exporters etc. benefit from being able to participate directly in trading at the local mandi level through the NAM platform, thereby reducing their intermediation costs. The gradual integration of all the major mandis in the States into NAM will ensure common procedures for issue of licenses, levy of fee and movement of produce. In the near future we can expect significant benefits through higher returns to farmers, lower transaction costs to buyers and stable prices and availability to consumers. The NAM will also facilitate the emergence of integrated value chains in major agricultural commodities across the country and help to promote scientific storage and movement of agri commodities.

10. Current Status

So far, Ministry of Agriculture, Cooperation & Farmers’ Welfare, GOI has accorded in principle approval to the proposals of 12 States /UTs for integration of 365 mandis with e-NAM namely Himachal Pradesh (19 mandis) Haryana (54 mandis), Chandigarh (1) mandi, Rajasthan (25 mandis), Gujarat (40 mandis), Maharashtra (30 mandis), Madhya Pradesh (50 mandis), Chhattisgarh (5 mandis), Andhra Pradesh(12 mandis), Telangana (44 mandis), Jharkhand (19 mandis), and Uttar Pradesh (66 mandis).

11. How soon will NAM be functional?

Pilot trading of 24 Commodities namely Apples, Potato Onion, Green Peas, Mahua Flower, Arhar whole (Red Gram), Moong Whole (green gram), Masoor whole (lentil), Urad whole (black gram), Wheat, Maize, Chana whole, Bajra, Barley, Jowar, Paddy, Castor Seed, Mustard Seed, Soya bean, Ground nut, Cotton, Cumin, Red Chillies and Turmeric has been launched on 14th April, 2016 in 21 mandis across 8 States. Another 02 mandis namely Ambala and Shahabad of Haryana has been integrated with e-NAM on 1st June 2016. Based on this, first 200 mandis in the country will be integrated with NAM by September 2016.