Pradhan Mantri Fasal Bima Yojana – PMFBY (Crop Insurance Scheme) Complete Details

Complete Details and material about Pradhan Mantri Fasal Bima Yojana PMFBY - Crop Insurance Scheme

Complete Details about the Pradhan Mantri Fasal Bima Yojana – PMFBY (Crop Insurance Scheme)

In this post, we are providing the complete details and material about the Pradhan Mantri Fasal Bima Yojana – PMFBY, a Crop Insurance Scheme for candidates preparing for UPSC Civil Services, APPSC and TSPSC Group -1, Group -2 and Group -3 exams.


The Government of India launched the PBFBY on 13th January, 2016 to provide comprehensive crop insurance coverage to the rural farmers in India. It replaced the earlier National Agriculture Insurance Scheme (NAIS) and Modified National Agriculture Insurance Scheme (MNAIS).

Highlights of the PMFBY:

  • There will be a uniform premium of only 2% to be paid by farmers for all Kharif crops and 1.5% for all Rabi crops. In case of annual commercial and horticultural crops, the premium to be paid will be only 5%.
  • The premium rates to be paid by farmers are very low and balance premium will be paid by the Government to provide full insured amount to the farmers against crop loss in any natural calamities.
  • There is no upper limit on Government subsidy. Even if balance premium is 90%, it will be borne by the Government.
  • Earlier, there was a provision of capping the premium rate which is low claims being paid to farmers. Now this is removed and farmers will get claim against full sum insured without any reduction.
  • The use of technology will be encouraged to a great extent. Smart phones, Remote sensing drone and GPS technologies will be used to capture and upload data of crop cutting to reduce the delays in the claim payment.
  • Allocation of the scheme presented in budget 2016-2017 is Rs.5, 550 cores.
  • The insurance plan will be handled under a single insurance company, Agriculture Insurance Company of India (AIC).

Objectives of this Scheme:

  • To provide insurance coverage and financial support to the farmers in the event of failure of any of the notified crop as a result of natural calamities, pests & diseases.
  • To stabilise the income of farmers to ensure their continuous process in farming.
  • To encourage farmers to adopt innovative and modern agricultural practices.
  • To ensure flow of credit to the agriculture sector.

Important Provisions of this Crop Insurance Scheme:

  • Coverage of the farmers: All farmers including sharecroppers and tenant farmers growing the notified crops in the notified areas are eligible for coverage. The non-loanee farmers are required to submit necessary documentary evidence of land records prevailing in the State Records of Right (RoR), Land possession Certificate (LPC) etc. moreover, applicable contract, agreement details, other documents notified permitted by concerned State Government.
  • Coverage of the crops: Food crops (Cereals, Millets and Pulses), Oilseeds and Annual Commercial / Annual Horticultural crops
  • Coverage of the Risk: Following stages of the crop and risks leading to crop loss are covered under the Scheme.
    • Prevented Sowing/ Planting Risk: Insured area is prevented from sowing planting due to deficit rainfall or adverse seasonal Conditions.
    • Standing Crop (Sowing to Harvesting): Comprehensive risk insurance is provided to cover yield losses due to non- preventable risks, viz. Drought, Dry spells, Flood, Inundation, Pests and Diseases, Landslides, Natural Fire and Lightening, Storm, Hailstorm, Cyclone, Typhoon, Tempest, Hurricane and Tornado.
    • Post-Harvest Losses: coverage is available only up to a maximum period of two weeks from harvesting for those crops which are allowed to dry in cut and spread condition in the field after harvesting against specific perils of cyclone and cyclonic rains and unseasonal rains.
    • Localized Calamities: Loss/ damage resulting from occurrence of identified localized risks of hailstorm, landslide, and Inundation affecting isolated farms in the notified area.

  • Exclusion of the Risk: The insurance cover will not be applicable in the damage of crops due to any of the following reasons.
    • War & kindred perils
    • Nuclear risks
    • Riots
    • Malicious damage
    • Theft or act of enmity
    • Grazed and/or destroyed by domestic and/or wild animals and other preventable risks shall be excluded.
  • Sum Insured/Limits of Coverage: In case of Loanee farmers under Compulsory Component, the Sum Insured would be equal to Scale of Finance for that crop as fixed by District Level Technical Committee (DLTC) which may extend up to the value of the Threshold Yield of the insured crop at the option of insured farmer. The value of the threshold yield is lower than the Scale of Finance; higher amount shall be the Sum Insured.
  • Unit of Insurance: The Scheme shall be implemented on an ‘Area Approach Basis‘ (i.e., Defined Areas) for each notified crop for widespread calamities. The assumption that all the insured farmers, in a Unit of Insurance, should be defined as “Notified Area” for a crop, face similar risk exposures, incur to a large extent, identical cost of production per hectare, earn comparable farm income per hectare, and experience similar extent of crop loss due to the operation of an insured peril, in the notified area. The Unit of Insurance can be demographically mapped with region having homogenous Risk Profile for the notified crop.
  • Implementing Agency: The overall control on implementation of insurance companies will be under Ministry of Agriculture & Framers Welfare. The Ministry designated empanelled AIC and some private insurance companies presently to participate in the Government sponsored agriculture, crop insurance schemes. The choice of which private company is left to the states. There will be one insurance company for the whole state.

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