Pradhan Mantri Fasal Bima Yojana (PMFBY)

The role of farmers is indispensable, as they serve as the backbone of our society. Acknowledging their immense contribution, the Government of India launched the Pradhan Mantri Fasal Bima Yojana (PMFBY) in 2016. This initiative primarily aims to provide insurance coverage and financial backing to farmers in case of crop failure due to natural calamities, pests, and diseases. In this detailed overview, we explore the various facets of PMFBY.

Objectives

The main objective of PMFBY is to protect farmers by insuring notified crops against potential losses. Additionally, the scheme endeavors to:

Stabilize farmer income, ensuring their sustained engagement in agriculture.
Encourage the adoption of innovative and modern agricultural practices.
Facilitate a steady flow of credit to the agricultural sector.

Salient Features of the Scheme

Mandatory for farmers who have taken loans.
Unified premium rates are 2% for Kharif crops, 1.5% for Rabi crops, and 5% for annual commercial and horticultural crops.
Indemnity levels of 70%, 80%, and 90% are provided, aligned with crop risk profiles.
Low premium rates for farmers, with the balance subsidized by the government to ensure full compensation.
Unlimited government subsidy on premium differences.
Elimination of caps to ensure complete compensation for farmers.
Use of smartphones for crop data collection, and remote sensing technologies to reduce crop cutting exercises. The technology costs are shared equally between State/UT and Central Governments.

Implementation Process

The scheme operates through a multi-agency framework involving selected insurance companies under the guidance of the Department of Agriculture, Ministry of Agriculture and Farmers Welfare, and respective state agencies. In instances of crop loss, compensation is determined by the gap between the threshold yield and the actual yield, with the threshold yield calculated as the average over the past seven years.

The scheme is implemented on an 'Area Approach Basis' for each notified crop affected by widespread calamities. In cases of localized calamities and post-harvest losses, the affected insured field of individual farmers is assessed. Learn more about ASEAN-India Science and Technology Development Fund.

The Aspect of Coverage

Coverage of Farmers

Farmers growing notified crops in designated areas are eligible for the scheme. Mandatory enrollment applies to the following farmers, provided they have an insurable interest in the cultivation:

Those in notified areas with a Crop Loan Account or KCC account eligible for the notified crop during the season.
Other farmers as included by the government.

Voluntary coverage is available for farmers not meeting the above criteria.

Coverage of Crops

Food crops: Cereals, Millets, and Pulses.
Oilseeds.
Annual commercial and horticultural crops.

Coverage of Risks

The scheme covers the following risk factors:

Yield losses from unavoidable risks like storms and cyclones.
Indemnity claims up to 25% of the insured sum.
Post-harvest losses coverage up to 14 days for crops dried in the field.
Loss or damage due to localized risks including landslides and hailstorms.

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Insurance Providers

The following companies provide insurance services under the PMFBY scheme:

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

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Frequently Asked Questions

Common questions about Pradhan Mantri Fasal Bima Yojana.

The Pradhan Mantri Fasal Bima Yojana (PMFBY) is a government-sponsored crop insurance scheme introduced in 2016 to provide financial support to farmers in case of crop failure due to natural calamities, pests, or diseases. It aims to stabilize farmers' income and promote the use of modern agricultural practices.

Farmers growing notified crops in notified areas are eligible for the PMFBY scheme. It is mandatory for farmers who have availed crop loans or Kisan Credit Card (KCC) accounts. Other farmers may opt for voluntary coverage under the scheme.

The PMFBY covers food crops (cereals, millets, and pulses), oilseeds, annual commercial crops, and annual horticultural crops.

The PMFBY covers yield losses caused by natural calamities, storms, cyclones, and other unavoidable risks. It also covers post-harvest losses within 14 days of harvesting and indemnity claims up to 25% of the sum insured.

Farmers have to pay a unified premium of 2% for all Kharif crops, 1.5% for all Rabi crops, and 5% for annual commercial and horticultural crops. The remaining premium is subsidized by the government.

Compensation is calculated based on the difference between the threshold yield (average yield of the last seven years) and the actual yield. The scale of risk for the notified crop determines the compensation amount.

The PMFBY follows an "Area Approach Basis" for widespread calamities, where the unit of insurance is a homogeneous risk profile region. For localized calamities and post-harvest losses, the unit of insurance is the affected insured field of the individual farmer.

Several insurance companies, including Agriculture Insurance Company, Cholamandalam MS General Insurance Company, Reliance General Insurance Co. Ltd., and others, are designated to provide insurance services under the PMFBY.

The PMFBY promotes the use of technology, such as smartphones to capture and upload crop-cutting data and remote sensing to reduce the number of crop-cutting experiences. The cost of using technology is shared between the state/UT and central governments.

The primary objective of the PMFBY is to provide financial support to farmers in case of crop failure due to natural calamities, pests, or diseases. It also aims to stabilize farmers' income, promote modern agricultural practices, and ensure a consistent flow of credit to the agricultural sector.