Vaisakhi Offer- Use Code VAISAKHI24

Register Now

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.

ebook store

About us

ramandeep singh

Ramandeep Singh is a seasoned educator and banking exam expert at BankExamsToday. With a passion for simplifying complex concepts, he has been instrumental in helping numerous aspirants achieve their banking career goals. His expertise and dedication make him a trusted guide in the journey to banking success.

  • Follow me:
Close Menu
Close Menu