Pradhan Mantri Fasal Bima Yojana (PMFBY)

The Pradhan Mantri Fasal Bima Yojana (PMFBY) is the flagship crop insurance programme of the Government of India, launched in April 2016 to provide comprehensive risk coverage and financial support to farmers against crop loss or damage arising from unforeseen natural calamities, pests, and diseases. The scheme replaced the earlier crop insurance programmes—National Agricultural Insurance Scheme (NAIS), Modified National Agricultural Insurance Scheme (MNAIS), and Weather-Based Crop Insurance Scheme (WBCIS)—to create a unified, efficient, and technology-driven system for agricultural risk management.

Background and Evolution

Before the introduction of PMFBY, multiple insurance schemes operated independently, often resulting in overlapping coverage, delayed compensation, and low participation rates among farmers. The government launched PMFBY in 2016 under the Ministry of Agriculture and Farmers’ Welfare to simplify crop insurance processes and make the system more inclusive and affordable.
The scheme marks a shift from a claim-based compensation model to a premium-based subsidy mechanism, where the government subsidises insurance premiums upfront. Funds for premium subsidies are channelled through the Krishi Kalyan Kosh, ensuring dedicated financial resources for agricultural insurance. PMFBY is now the only flagship crop insurance scheme in India, offering uniform guidelines and nationwide applicability.

Objectives of the Scheme

PMFBY aims to promote sustainable agricultural production and protect farmers against income fluctuations. The key objectives are:

• To provide financial support to farmers suffering crop loss or damage due to unforeseen natural events.
• To stabilise farmers’ income and ensure their continued participation in farming activities.
• To encourage farmers to adopt modern and innovative agricultural practices that enhance resilience and productivity.
• To ensure credit flow to the agriculture sector by protecting farmers’ repayment ability, thereby strengthening food security, crop diversification, and competitiveness in Indian agriculture.

Crops Covered under PMFBY

The scheme provides insurance coverage for the following categories of crops:

• Food Crops: Cereals, millets, and pulses.
• Oilseeds: All major and minor oilseed crops.
• Annual Commercial and Horticultural Crops: Such as cotton, sugarcane, potato, onion, banana, and others as notified by state governments.

The notified crops may vary between states depending on climatic conditions, cropping patterns, and local economic priorities.

Eligibility and Enrolment

PMFBY covers both loanee and non-loanee farmers:

• Loanee farmers: It is mandatory for all farmers who have availed institutional credit for notified crops.
• Non-loanee farmers: Participation is voluntary for those who have not taken loans but wish to insure their crops.

Farmers can enrol through banks, Common Service Centres (CSCs), or directly on the National Crop Insurance Portal (NCIP).

Sum Insured and Coverage Limit

The Sum Insured under PMFBY is determined on a per-hectare basis and is equal for both loanee and non-loanee farmers. It is calculated as follows:

• The Scale of Finance, decided by the District Level Technical Committee (DLTC) and notified by the State Level Coordination Committee on Crop Insurance (SLCCCI), serves as the basis.
• The Sum Insured for an individual farmer = Scale of Finance per hectare × area under cultivation (in hectares).
• Separate scales of finance may be fixed for irrigated and unirrigated areas to reflect differential cost structures.

This ensures transparency, standardisation, and uniformity across districts.

Premium Rates and Subsidy Structure

PMFBY maintains a highly subsidised and uniform premium structure to make insurance affordable:

• Kharif crops: 2% of the sum insured (farmer’s share).
• Rabi crops: 1.5% of the sum insured.
• Annual commercial and horticultural crops: 5% of the sum insured.

The remaining premium amount is shared equally between the Central and State Governments (50:50). For Northeastern states, the cost-sharing ratio is 90:10 in view of their higher vulnerability to natural calamities.

Funding Source

All government contributions to the scheme are drawn from the Krishi Kalyan Kosh, ensuring a dedicated corpus for premium subsidy and claim payments. The scheme functions on a demand-driven basis, without fixed targets, though it aims to cover up to 50% of India’s total cropped area.

Risks Covered under PMFBY

PMFBY provides comprehensive coverage against a wide range of risks, broadly classified as follows:

• Yield Losses:Covers natural fire, lightning, storms, cyclones, floods, droughts, dry spells, landslides, pests, and diseases that affect crop yield.
• Post-Harvest Losses:Provides protection up to 14 days after harvest for crops kept in “cut and spread” condition to dry in the field. It covers losses from unseasonal rainfall, cyclonic rain, or cyclones.
• Localised Calamities:Covers damage due to isolated events such as hailstorms, landslides, inundation, or cloudbursts affecting individual farms within a notified area.

However, the scheme excludes losses arising from war, nuclear risks, riots, malicious damage, theft, or destruction by animals, as well as damage to harvested crops stored or bundled before threshing.

Insurance Providers under PMFBY

Both public and private sector insurance companies are empanelled to implement the scheme. Major insurers include:

• Agriculture Insurance Company of India Ltd.
• ICICI Lombard General Insurance Co. Ltd.
• HDFC ERGO General Insurance Co. Ltd.
• IFFCO Tokio General Insurance Co. Ltd.
• Bajaj Allianz General Insurance Co. Ltd.
• Reliance General Insurance Co. Ltd.
• Future Generali India Insurance Co. Ltd.
• SBI General Insurance Co. Ltd.
• Universal Sompo General Insurance Co. Ltd.
• Tata AIG General Insurance Co. Ltd.
• United India Insurance Co. Ltd.
• Cholamandalam MS General Insurance Co. Ltd.

Each insurance company is allotted clusters of districts through competitive bidding for a minimum period of three years to ensure continuity and accountability.

Use of Technology and Digital Innovations

PMFBY mandates the use of modern technology to enhance accuracy, reduce delays, and ensure transparency in claim settlement. Key technological measures include:

• Remote sensing and satellite imagery for crop yield assessment.
• Drones and GPS-enabled mobile applications for real-time monitoring of crop conditions and damage reporting.
• Smartphone-based data collection during crop cutting experiments (CCEs).
• National Crop Insurance Portal (NCIP) for paperless enrolment, claim submission, and grievance redressal.

These digital initiatives have streamlined the claim verification process, minimised fraudulent claims, and accelerated compensation payments.

Implementation and Governance

The PMFBY is implemented in coordination between:

• Central Government: Provides policy guidance, financial assistance, and national monitoring.
• State Governments: Notify crops, fix scales of finance, and conduct yield estimations through CCEs.
• Insurance Companies: Handle farmer enrolment, underwriting, and claim settlement.
• Banks and Financial Institutions: Facilitate premium collection and automatic enrolment of loanee farmers.

At the operational level, District Level Technical Committees (DLTCs) and State Level Coordination Committees on Crop Insurance (SLCCCI) oversee planning and monitoring.

Achievements and Impact

Since its inception, PMFBY has become one of the largest crop insurance programmes in the world, achieving the following milestones:

• Coverage of more than 50 million farmers annually.
• Insurance claims of over ₹1.5 lakh crore disbursed to beneficiaries since 2016.
• Coverage of around 30–35% of India’s gross cropped area.
• Adoption of digital yield assessment methods, reducing the claim settlement cycle.
• Greater participation by non-loanee farmers, indicating growing trust and awareness.

The scheme has provided timely financial relief to farmers affected by floods, droughts, and cyclones across various states, thereby stabilising rural incomes and enhancing agricultural resilience.

Challenges and Criticism

Despite its successes, PMFBY faces certain challenges:

• Delayed claim settlements due to administrative delays in yield estimation and fund release.
• Low awareness among small and marginal farmers regarding enrolment procedures and coverage benefits.
• State government withdrawal in some cases due to high financial burden and cost-sharing disagreements.
• Perceived dominance of private insurers, raising concerns about accountability and profit motives.
• Inconsistent implementation across states owing to varying administrative capacities.

Efforts are being made to strengthen real-time monitoring, improve data accuracy, and ensure timely compensation through automation and strict timelines.

Significance and Way Forward

The Pradhan Mantri Fasal Bima Yojana is a cornerstone of India’s agricultural risk management framework and aligns with the government’s vision of Doubling Farmers’ Income. By integrating modern technology, institutional accountability, and financial inclusion, it ensures that farmers remain resilient against the vagaries of nature.