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Pradhan Mantri Fasal Bima Yojana (PMFBY)


Recently, the Union Agriculture Ministry announced that Andhra Pradesh has decided to rejoin the crop insurance scheme Pradhan Mantri Fasal Bima Yojana (PMFBY) from the ongoing kharif season.

  • Andhra Pradesh was one of six states that have stopped implementation of the scheme over the last four years. The other five, which remain out, are Bihar, Jharkhand, West Bengal, Jharkhand, and Telangana.


GS II- Welfare Schemes

Dimensions of the Article:

  1. Why did the states opt out?
  2. About Pradhan Mantri Fasal Bima Yojana (PMFBY)
  3. Risks covered under the scheme

Why did the states opt out?

Andhra Pradesh:
  • The state left the PMFBY from rabi season 2019-20.
  • State had mentioned several reasons:
    • That the scheme should be voluntary;
    • That states should be given options to choose the risks covered;
    • The scheme should be universal;
    • The cut-off date for enrolment should be flexible;
    • The state should be given option to use their own database of E-crop, an application used by the state government to collect information about crops.
  • The first state to opt out, from 2018-19, after implementing the scheme in 2016-17 (27.1 lakh farmers insured) and 2017-18 (23 lakh).
  • There were main three reasons for the state’s decision:
    • The state wanted universal coverage.
    • The state government wanted zero premium for farmers (meaning the entire premium should be paid by the government.)
    • The rate of premium was very high for Bihar because of the history of claims under earlier schemes.
  • It stopped implementing the scheme soon after the Centre revamped it in February 2020, effective from kharif 2020.
  • Under the revised guidelines, “The non-payment of the State Share of premium subsidy within the prescribed timelines as defined in the seasonality discipline will lead to the disqualification of the State Government to implement the scheme in the next season.”
  • Jharkhand’s share of premium subsidy was overdue for 2018-19 and 2019-20.
  • This was the main reason that Jharkhand opted out from 2020-21.
  • Besides, there were other “operational challenges” and “political reasons.
West Bengal:
  • The reason for West Bengal not implementing the PMFBY is purely “political”.
  • The state wants to implement the scheme without mentioning Pradhan Mantri in the scheme’s name, which is not possible.
  • West Bengal implemented the scheme for three years from 2016-17 to 2018-19, covering 41.3 lakh farmers in 2016-17, 40.4 lakh in 2017-18, and 51.3 lakh in 2018-19.
  • It implemented the PMFBY from 2016-17 to 2019-20, covering 19.8 lakh farmers in 2016-17, 17.6 lakh in 2017-18, 21.7 lakh in 2018-19, and 24.8 lakh in 2019-20.
  • After the scheme was revamped, Gujarat invited tenders for three years in 2020 but insurance companies quoted a very high premium, and hence the state opted out.
Telangana :
  • It implemented the PMFBY for the initial four years, covering 9.7 lakh, 11 lakh, 8 lakh in 2018-19 and 10.3 lakh farmers in successive yaers before stopping in 2020-21.
  • Telangana’s share of premium was overdue for 2018-19 and 2019-20, the main reason why it did not notify the scheme for 2020-21.

About Pradhan Mantri Fasal Bima Yojana (PMFBY)

  • The Pradhan Mantri Fasal Bima Yojana (PMFBY) launched on 2016 by Prime Minister Narendra Modi is an insurance service for farmers for their yields.
  • PMFBY is in line with One Nation – One Scheme theme.
  • The PMFBY will replace the existing two schemes National Agricultural Insurance Scheme as well as the Modified NAIS.
  • The Scheme shall be implemented through a multi-agency framework by selected insurance companies under the overall guidance & control of the Department of Agriculture, Cooperation & Farmers Welfare (DAC&FW), Ministry of Agriculture & Farmers Welfare (MoA&FW), Government of India (GOI) and the concerned State in co-ordination with various other agencies.
  • Premium cost over and above the farmer share is equally subsidized by States and the Central Government of India. However, the Central Government shares 90% of the premium subsidy for North Eastern States to promote the uptake in the region.
    •  Under the PMFBY, a farmer is required to pay as premium 2% of the sum insured or actuarial rate, whichever is less, for all kharif foodgrain and oilseed crops; 1.5% of sum insured or actuarial rate, whichever is less, for all rabi foodgrain and oilseed crops; and 5% for horticultural crops.
  • 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 continuance in farming.
  • To encourage farmers to adopt innovative and modern agricultural practices.
  • To ensure flow of credit to the agriculture sector.

Beneficiaries: All farmers growing notified crops in a notified area during the season who have insurable interest in the crop are eligible.

Coverage of Crops:
  • Oil seeds
  • Food crop
  • Annual Commercial / Annual Horticultural crops.
  • In addition, for perennial crops, pilots for coverage can be taken for those perennial horticultural crops for which standard methodology for yield estimation is available.

Risks covered under the scheme

  • Prevented Sowing/Planting/Germination Risk: Insured area is prevented from sowing/planting/germination due to deficit rainfall or adverse seasonal/weather conditions.
  • Standing Crop (Sowing to Harvesting): Comprehensive risk insurance is provided to cover yield losses due to non-preventable risks, viz. Drought, Dry spell, Flood, Inundation, widespread Pests and Disease attack, Landslides, Fire due to natural causes, Lightening, Storm, Hailstorm and Cyclone.
  • Post-Harvest Losses: Coverage is available only up to a maximum period of two weeks from harvesting, for those crops which are required to be dried in cut and spread / small bundled condition in the field after harvesting against specific perils of Hailstorm, Cyclone, Cyclonic rains and Unseasonal rains
  • Localized Calamities: Loss/damage to notified insured crops resulting from occurrence of identified localized risks of Hailstorm, Landslide, Inundation, Cloud burst and Natural fire due to lightening affecting isolated farms in the notified area.
  • Add-on coverage for crop loss due to attack by wild animals: The States may consider providing add-on coverage for crop loss due to attack by wild animals wherever the risk is perceived to be substantial and is identifiable.
  • General Exclusions: Losses arising out of war and nuclear risks, malicious damage and other preventable risks shall be excluded.

November 2023