Why in news?
The Pradhan Mantri Fasal Bima Yojana (PMFBY), India’s flagship crop insurance scheme, completed nearly nine years of implementation by the end of 2025. Ongoing debates about its effectiveness and a recent extension of the scheme until 2026 have kept it in the news.
Background
Launched on 18 February 2016, PMFBY replaced earlier insurance schemes such as the National Agricultural Insurance Scheme and the Weather‑Based Crop Insurance Scheme. Its goal is to provide affordable insurance cover to farmers for losses arising from natural calamities, pests and diseases. The scheme follows the principle of “One Nation, One Crop, One Premium” and is implemented by the Department of Agriculture, Cooperation and Farmers’ Welfare in partnership with general insurance companies.
Features
- Comprehensive coverage: Insurance covers the entire cropping cycle—from pre‑sowing to post‑harvest—against risks such as drought, flood, hailstorm, cyclone, pests and diseases. For crops that are cut and dried in the field, post‑harvest losses within two weeks of harvest are also covered.
- Premium rates: Farmers pay a uniform premium of 2 percent of the sum insured for Kharif crops, 1.5 percent for Rabi crops and 5 percent for commercial and horticultural crops. The balance of the actuarial premium is shared equally by the central and state governments. For the North‑Eastern states the central share can be as high as 90 percent.
- Eligibility: Both loanee farmers (those with crop loans) and non‑loanee farmers growing notified crops in notified areas can enrol. Initially compulsory for loanee farmers, participation has been voluntary for all farmers since the Kharif 2020 season.
- Technology integration: Digital platforms record farmers’ enrolment, land records and premium payments. Remote sensing, drones and mobile apps aid crop monitoring and yield assessment. The government reimburses states for procuring smartphones and setting up automatic weather stations.
- Flexibility for states: Under PMFBY 2.0 states can choose additional coverage options and decide the level of subsidy up to a limit of 30 percent of the total premium in rain‑fed areas and 25 percent in irrigated areas. Insurance companies must spend part of the premium on awareness campaigns.
Performance and issues
- Scale: Between 2016 and 2024 the scheme processed over 56 crore farmer applications and disbursed claims worth more than ₹1.7 lakh crore. It is considered the world’s largest crop insurance programme by farmer enrolment.
- Delays and disputes: Farmers and states have complained about delayed claim settlements, insufficient compensation and insurance companies hesitating to operate in high‑risk regions.
- Financial burden on states: Some states temporarily withdrew from the scheme because they struggled to pay their share of the premium subsidy.
- Reform suggestions: Experts recommend faster bidding for insurance clusters, better yield assessment methods, distinguishing between small and large farmers and models like the “Beed model” in Maharashtra where insurers share both profits and losses with the government.
Conclusion
PMFBY has improved the safety net for Indian farmers by providing subsidised insurance against crop losses. However, timely claim settlement, technological enhancements and addressing the concerns of both farmers and states remain essential to realise the scheme’s full potential. Ongoing reforms aim to make the scheme more farmer‑centric, transparent and sustainable.
Source: HT
