Pradhan Mantri Fasal Bima Yojana: Scheme Details

Published on Thursday, December 01, 2016


PMFBY is a technology based crop insurance scheme launched on 13th January 2016 by GOI to benefit farmers in a direct manner through Direct Benefit Transfer (DBT)

Need for PMFBY

  • Agriculture is facing increased natural risks 
  • The frequency of natural disasters is on the rise making insurance mandatory
  • Increasing occurrence of farmer suicides due to crop failure
  • Prevailing drought conditions across the country
  • Failing monsoons
  • Uncertainty in agriculture production
  • The new PMFBY scheme is well catered to address and cover the crop loss in the current situation


  • PMFBY replaces the National Agriculture Insurance Scheme (NAIS) and modified NAIS 
  • This scheme is implemented by Ministry of Agriculture from this Kharif season (April 1, 2016) 
  • The scheme aims to cover nearly 50 percent of the total cropped area in our country in the next three years 
  • Initially in 2015-2016, the budget for crop insurance was fixed at 2823 crore rupees and eventually raised to 7750 crore rupees in 2018-2019

Features of PMFBY 

  • The premium for the crops is uniform throughout the country 
  • The premium subsidy is equally shared between the state and the centre 
  • The scheme offers a uniform premium rate of 2 percent for kharif crops 
  • 1.5 percent for Rabi crops 
  • 5 percent for commercial and horticulture crops 
  • The crop insurance premium to be paid by farmers is low 
  • The low premium feature forms a significant aspect in penetrating the agriculture insurance market and increase enrolment. 
  • The low premium aspect is likely to attract many farmers to enroll thereby covering a wide population 
  • Government pays the rest premium and provides full insured amount against crop loss due to natural calamities 
  • Another added feature is that the insurance scheme covers post-harvest losses 
  • Farmers feel confident and safe due to this added feature 

Advantage of PMFBY over the previous schemes

  • This new crop insurance scheme gains relevance in solving the two major issues with old insurance schemes 
  • First is the delayed compensation for crop damage (may even take a year) 
  • Second is the lack of transparency in crop damage assessment 
  • The scheme employs satellite technology for speedy claim settlement and facilitates accurate assessment of crop damage 
  • Technology in the form of smart phones is used to assess the crop damage by taking pictures and uploading the crop cutting data 
  • This also reduces the delay in claim compensation and enhances the level of transparency 
  • The loss assessment is done at individual farms after harvesting and damage due to hailstorm, inundation, landslide, cyclonic rains is assessed 

Limitations of PMFBY

  • There are certain uncertainties associated with the new crop insurance 
  • The subsidy sharing between state and centre on equal basis is unclear as most of the states have not agreed 
  • The land owner’s grievances are addressed but there is no mention about the tenant farmers problems in the scheme 
  • In most of the agricultural lands, crop damage occurs due to the destruction caused by wild animals 
  • This risk of crop damage by animals is not addressed in the scheme 

Way Forward 

  • PMFBY is a sign of progress but the key lies in the implementation of the scheme in a transparent manner 
  • Most of the farmers are illiterates and the concept of technology especially smart phone based crop damage assessment will require a lot of training and awareness 
  • Direct benefit transfer is a major success of the present government and this must be extended to the crop insurance in such a way that the farmer gets the compensation directly in bank account 
  • Overall, the scheme has set high standards with technology application and the real success of the scheme lies in the farmer adapting to the scheme.

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