Pradhan Mantri Fasal Bima Yojana (PMFBY)
What is PMFBY and Why Was It Needed?
India’s agriculture sector is highly vulnerable to risks—climatic uncertainties, pest attacks, unseasonal rainfall, and so on. Farmers, especially small and marginal ones, face huge losses without any financial cushion.
Earlier insurance schemes like NAIS and Modified NAIS had serious limitations (low coverage, delayed payouts). To reform crop insurance and make it farmer-friendly, the government launched PMFBY in 2016.
Quick Overview
Feature | Details |
Type | Central Sector Scheme |
Purpose | To provide comprehensive crop insurance from pre-sowing to post-harvest |
Nature | Demand-driven and voluntary for both States and farmers |
Coverage | All farmers (including sharecroppers and tenant farmers) growing notified crops in notified areas |
🎯 Objectives of PMFBY
- Financial protection to farmers from crop loss or damage
- Income stability and risk mitigation in farming
- Encourage credit flow into agriculture
- Promote modern practices and crop diversification
Salient Features Explained
1. Scheme Evolution
- Replaces:
- NAIS (National Agricultural Insurance Scheme)
- MNAIS (Modified NAIS)
- However, RWBCIS (Restructured Weather-Based Crop Insurance Scheme) continues for weather-triggered losses.
- Uses weather parameters as proxy for crop loss (e.g., rainfall deficit)
2. Crop Coverage
- All major food crops for both Rabi and Kharif:
- Cereals, pulses, millets, oilseeds
- Premium rates (Farmer’s Share):
Crop Type | Premium |
Kharif crops | 2% |
Rabi crops | 1.5% |
Commercial/horticultural crops | 5% |
✳️ Rest of the premium is subsidized by Centre and State governments.
3. Subsidy Structure
Region | Centre: State Subsidy |
North-Eastern States | 90:10 |
Other States | 50:50 |
This keeps the scheme affordable while encouraging state ownership.
4. Sum Insured Calculation
- For crops with MSP: States can choose either:
- Scale of finance (input cost estimates) or
- Average notional yield × MSP
- For crops without MSP: Farm gate price is considered
5. Coverage of Risks
🌧️ Basic Coverage (Mandatory):
- Yield losses during sowing to harvesting, due to:
- Drought, flood, inundation, dry spells, pests, diseases, etc.
🌱 Add-On Coverage (Optional for States):
- Prevented Sowing/Planting
- Germination Failure
- Localized Calamities (hailstorm, landslide, etc.)
- Post-Harvest Losses (within 14 days) from:
- Cyclone
- Unseasonal rain
- Hailstorms
🐗 Wild Animal Attack (Optional)
- States may cover crop damage from wild animals, especially in forest-proximate areas
❌ What is Not Covered?
- War, nuclear risks
- Deliberate/malicious damage
- Negligence-related preventable losses
6. Operational Model: Area Approach
- Insurance applied to a unit area (Insurance Unit/IU), not individual fields
- Risk is assessed collectively, reducing cost and fraud
- Aadhaar is mandatory for enrolment
Innovative Tech-Based Enhancements
- DigiClaim: Claims processed via National Crop Insurance Portal (NCIP) and directly credited to farmer accounts
- SMS Tracking: Real-time updates for farmers
- YES-TECH Manual: Uses technology for yield estimation at Gram Panchayat level
- WINDS Portal: Hyper-local weather data for risk forecasting
- FASAL Project: Uses satellite & agro-meteorology for agricultural forecasting
- ISRO’s Bhuvan & NADAMS: Tools for drought, pest, and crop health monitoring
- NeGPA Integration: Helps bring ICT-based information to farmers under the Digital Agriculture Mission
- CROPIC App: Real-time field data & photo-based crop tracking via door-to-door surveys (AIDE/Sahayak app)
📘 Summary for UPSC Mains
- PMFBY is one of the largest crop insurance programs globally
- It reflects a shift from compensation to insurance
- Can be used as a model case for:
- Climate-resilient agriculture
- increasing farmer income
- Digital governance in agriculture