Article - In Focus: Pradhan Mantri Fasal Bima Yojana | Perfect Mentors

In focus: Pradhan Mantri Fasal Bima Yojana

In focus: Pradhan Mantri Fasal Bima Yojana

India is majorly an agriculture based country with about two-third of its population dependent upon agriculture for their livelihood. The approximate share of agriculture in GDP is about 18%.

But even with a significant share of population dependent on it, the state of Farmers in India has always been far below from satisfactory. As agriculture in India is majorly dependent on natural factors, it is under the constant threat of risk associated with it.  

Marred often with adverse weather conditions like flood, droughts etc., farmers have to face the consequences in form of low productivity and income and thus burden of unpaid loans.


In the year of 1999, National Agricultural Insurance Scheme (NAIS) was launched, with the objective of providing coverage to farmers against the risk of crop losses due to natural calamities. The scheme which was implemented in 14 states failed to fulfil its objectives due to its limited scope and features.

Later in 2010, Modified National Agricultural Insurance Scheme (MNAIS) was implemented which was a better version of its predecessor, with features like government share in claim liability, better monitoring and performance assessment criteria.

But, again its implementation was limited and marred with many constraints like caps on the sum assured, delayed claim process, frauds, etc. Also, a major deterrent was that only those farmers who have taken loan for purchasing agriculture machineries, crop seeds, insecticides and pesticides etc., being targeted for the insurance benefit.

To overcome the shortcomings of the earlier schemes and provide insurance coverage and thus financial stability to increased number of farmers, a new scheme was conceptualized, which replaced National Agricultural Insurance Scheme and Modified National Agricultural Insurance Scheme.

However, the weather based crop insurance scheme is still running though with modified rates.

Details of the Scheme

  • The incumbent government launched crop Insurance Scheme “Pradhan Mantri Fasal Bima Yojana (PMFBY), in 2016.
  • This crop insurance scheme is being administered under Ministry of Agriculture and Farmers’ Welfare.

Scope and Objectives

The scheme aims at providing insurance support to the agricultural section of the society. The government aims to cover 40% of the agricultural are under PMFBY in FY 17-18 and had made provision of approximately 9000 crore for the same.

Highlights of the Scheme

  • Low premiums to be paid by customers for insurance coverage
  • Along with premium subsidy, government is also sharing loss risk beyond applicable ceiling
  • Scheme provides localized risk coverage and has added a number of natural calamities. For e.g. Post-harvest losses caused by rain or hailstorm, earlier which was restricted to cyclone prone regions
  • Use of technology to estimate losses and facilitate payments
  • Specific criteria mentioned for performance monitoring of insurance companies

Challenges/ Shortcomings

  • Low Coverage within the scheme - The scheme is still mainly availed by farmers taking agricultural loans, as they are mandatorily given coverage. However, awareness among the other farmers is quite low
  • Delay in payments due to lack of bank accounts/ required documents. Also though the scheme provisions promote usage on technology, on ground usage of the same is still below expectation
  • Lack of clarity and awareness about the provisions of the scheme, among the farmers as well as ground staff of implementing insurance companies

Summing up

No doubt, Pradhan Mantri Fasal Bima Yojana is a welcome move towards reducing uncertainty associated with agriculture. However, the true success of the scheme depends on increasing awareness among its target customers about its benefits, and making it more accessible.

The intermediary organizations and the implementing agencies/staff should be well trained to solve process related issues. Also, the localized agricultural problems and crops covered under scheme needs to be properly reviewed periodically to include majority of the farmers within the ambit of the scheme.