The Pradhan Mantri Fasal Bima Yojana is a comprehensive crop insurance scheme launched by the Government of India on February 18, 2016. The scheme operates under the administrative control of the Ministry of Agriculture and Farmers Welfare. It replaced the previously existing National Agricultural Insurance Scheme and the Modified National Agricultural Insurance Scheme to formulate a single, robust mechanism for mitigating agricultural risks. The initiative aims to provide financial support to farmers suffering crop loss or damage arising out of unforeseen events, thereby stabilizing their income and ensuring their continuous engagement in agriculture.
Core Objectives of the Scheme
- The scheme aims to provide financial support and comprehensive insurance cover to farmers suffering crop loss or damage due to unpreventable natural risks.
- It seeks to stabilize the income of farmers to ensure their continuous engagement in agricultural activities.
- The initiative encourages farmers to adopt innovative and modern agricultural practices by reducing the financial risks associated with crop failure.
- The program ensures the steady flow of credit to the agriculture sector, which protects farmers from falling into debt traps due to unforeseen crop failures.
Premium Structure and Financial Architecture
A hallmark of the Pradhan Mantri Fasal Bima Yojana is its uniformly low premium rates for farmers across the country, while the balance premium is heavily subsidized by the government. There is no upper limit on the government subsidy, meaning farmers receive full insured amounts even if the balance premium is extremely high.
Risks and Stages Covered Under the Scheme
The scheme provides holistic coverage extending from the pre-sowing stage to the post-harvest stage.
Prevented Sowing and Planting Risk
- The scheme provides insurance cover to farmers in cases where a majority of the insured area is prevented from sowing or planting due to deficit rainfall or adverse seasonal conditions.
- Farmers are eligible to receive up to 25 percent of the sum insured, after which the insurance policy for that specific crop is terminated for the season.
Standing Crop Coverage (Sowing to Harvesting)
- The scheme offers comprehensive risk coverage to cover yield losses due to non-preventable risks.
- These non-preventable risks include drought, dry spells, flood, inundation, pests and diseases, landslides, natural fire and lightning, storm, hailstorm, and cyclone.
Post-Harvest Losses
- The insurance cover is available for a maximum period of 14 days from harvesting for those crops which are kept in “cut and spread” condition to dry in the field.
- This coverage specifically protects against specific perils of cyclone, cyclonic rains, and unseasonal rains affecting the harvested crop.
Localized Calamities
- The scheme addresses localized risks resulting in occurrence of identified localized hazards like hailstorm, landslide, and inundation affecting isolated farms within a notified area.
- The assessment for localized calamities is conducted on an individual farm basis rather than a wide-area approach.
Major Revamp and Policy Modifications (2020)
The Government of India introduced structural modifications to the scheme effective from the Kharif season of 2020 to address operational challenges and improve farmer autonomy.
- The scheme was made entirely voluntary for all farmers, including those with existing crop loans (loanee farmers), whereas it was previously mandatory for loanee farmers.
- The Central subsidy was capped at 30 percent for un-irrigated areas and 25 percent for irrigated areas, meaning the Centre limits its premium subsidy share to these thresholds, with the state governments bearing the remaining subsidy burden.
- The funding pattern for North Eastern States was modified to a 90:10 ratio between the Centre and the State, easing the financial burden on these geographically distinct states.
- States were given the flexibility to implement the scheme with options to select specific additional risk covers like localized calamities or post-harvest losses.
- A strict provision was introduced stating that states failing to release their share of the premium subsidy by specific deadlines will not be allowed to participate in subsequent seasons.
Technological Interventions in Implementation
- The scheme mandates the widespread use of remote sensing technology, drones, Artificial Intelligence, and satellite imagery to reduce the number of Crop Cutting Experiments required for yield estimation.
- The integration of the National Crop Insurance Portal provides a centralized digital platform for the seamless registration of farmers, premium collection, and claim settlement.
- The introduction of the Crop Insurance Mobile App allows farmers to easily report crop losses, track their application status, and access policy details in real time.
- The government launched the “Meri Policy Mere Hath” initiative, which involves a massive door-to-door campaign to deliver crop insurance policies directly to the farmers while explaining the scheme’s grievance redressal mechanism.
Exclusions Under the Scheme
- Losses arising out of war, nuclear risks, riots, and malicious damage are completely excluded from the insurance coverage.
- The scheme does not cover losses resulting from preventable risks such as theft, domestic animal grazing, or intentional destruction of the crop by the farmer.
- Yield losses caused by non-adoption of standard agricultural practices or due to negligence are not compensated under the scheme guidelines.