Pradhan Mantri Fasal Bima Yojana (PMFBY)
Current Affairs & Government Schemes › Agriculture and Farmer Welfare Schemes · Topic 3.2
The Pradhan Mantri Fasal Bima Yojana (PMFBY) is the crop insurance scheme of the Ministry of Agriculture and Farmers Welfare, approved on 13 January 2016 and in force from the Kharif 2016 season, replacing the National Agricultural Insurance Scheme and the Modified National Agricultural Insurance Scheme. Farmers pay a low premium of 2 per cent of the sum insured for Kharif food and oilseed crops, 1.5 per cent for Rabi and 5 per cent for commercial and horticultural crops, while the Centre and states share the balance premium. It covers yield loss, prevented sowing, post-harvest loss and localised calamities.
6 min read · UPSC Prelims · Current Affairs & Government Schemes · Agriculture and Farmer Welfare Schemes
At a Glance
- Approved 13 January 2016, from Kharif 2016
- Ministry Agriculture and Farmers Welfare
- Farmer premium 2 per cent Kharif, 1.5 per cent Rabi, 5 per cent commercial and horticulture
- Replaced NAIS and MNAIS
- Latest Continued to 2025-26 with Rs 69,515 crore; revisions from Kharif 2026 (as reported)
- Exam link UPSC Prelims, Current Affairs and Government Schemes: Agriculture and Farmer Welfare Schemes
Where Does It Fit?
This is the second topic of the macro on agriculture and farmer welfare. It works as the risk cover for the farmer, alongside the cash support in PM-KISAN: Pradhan Mantri Kisan Samman Nidhi and the credit in Kisan Credit Card (KCC) Scheme. Previous topic: PM-KISAN (Pradhan Mantri Kisan Samman Nidhi). Next topic: Pradhan Mantri Krishi Sinchayee Yojana (PMKSY).
How Does PMFBY Work?
| Feature | Detail |
|---|---|
| Farmer premium | Maximum 2 per cent of the sum insured for Kharif food grains, pulses and oilseeds, 1.5 per cent for Rabi and 5 per cent for commercial and horticultural crops. The rest of the actuarial premium is paid by the government |
| Premium subsidy | Shared equally between the Centre and the state for most states, with the Centre paying 90 per cent in the north-eastern states |
| Risks covered | Prevented or failed sowing, standing crop loss from drought, flood, pests, disease, fire, lightning, storm and hailstorm, and post-harvest loss for up to 14 days for crops that are left to dry in the field |
| Localised calamities | Hailstorm, landslide, inundation and cloudburst are assessed at the individual farm level |
| Yield loss | Assessed on an area approach using crop cutting experiments at the level of a defined unit such as a village or block |
| Mid-season adversity | If a large share of the area cannot be sown or there is a major weather shock, an advance claim of up to 25 per cent of the likely claim can be paid |
| Coverage and choice | Compulsory for loanee farmers in the early years and voluntary for all farmers since Kharif 2020 |
| Claim period | Claims are expected within two months of the end of the harvest |
What Technology and Reforms Support the Scheme?
- Crop cutting: smartphone based capture and remote sensing are used to cut errors and disputes in yield estimates
- YES-TECH: a yield estimation system using technology, which gives weight to satellite based estimates
- Drones: used for claims assessment in some areas
- Crop Insurance App and portal: farmers can enrol, check status and report loss within 72 hours through the app or helpline
- Digital claim transfer: claims are paid by direct transfer to the bank accounts of farmers through a national portal
- Fund for Innovation and Technology: a fund of about Rs 824 crore approved in January 2025 for technology use and for farmer awareness
- Continuation: On 1 January 2025 the Cabinet approved continuation of PMFBY and the Restructured Weather Based Crop Insurance Scheme up to 2025-26 with an outlay of about Rs 69,515 crore
- Revisions in 2026: As reported, a revised design from Kharif 2026 adds cover for attacks by wild animals and paddy inundation, and several states, including West Bengal, rejoined, so check the official notice
What Else Should You Remember?
- Full name: Pradhan Mantri Fasal Bima Yojana, known as PMFBY, means the Prime Minister Crop Insurance Scheme. It also covers post-harvest losses for a short period after cutting, for crops left to dry in the field
- Earlier schemes: The National Agricultural Insurance Scheme began in 1999 and the Modified scheme in 2010. They had high premium and slow claims, which led to PMFBY
- Season dates: Kharif enrolment usually ends on 31 July and Rabi on 31 December, with state wise changes
- Implementing companies: State governments select insurance companies by tender and the Agriculture Insurance Company of India is a major insurer
- Size: As reported by the Ministry in August 2025, about 78 crore farmer applications were insured and claims of over Rs 1.83 lakh crore had been paid since 2016, so quote with a date
- State exits: Several states left the scheme over high central premium subsidies and low claim ratios, such as Andhra Pradesh, Gujarat and Bihar, and some have since returned
- Weather based scheme: The Restructured Weather Based Crop Insurance Scheme pays on weather index triggers and not yield loss, and it runs alongside
- Criticism: Delayed claims, low claims to small farmers, disputes over crop cutting data, high insurer profits in some years and low awareness
- Fiscal: The premium subsidy is a large central burden and grew with rising coverage
- Constitutional link: Agriculture and insurance are shared fields, and the Centre and states pay the subsidy together
- Climate link: Crop insurance is part of climate adaptation for farmers, but cannot replace better irrigation and seeds
- Exam trap: Farmers do not pay the full premium, and the 2, 1.5 and 5 per cent rates are caps on the farmer share
Why Does It Matter for the Exam?
- Rates: 2 per cent, 1.5 per cent and 5 per cent
- Predecessors: NAIS and MNAIS
- Coverage: prevented sowing, yield loss, post-harvest and localised
- Approach: area approach for yield and individual approach for local risks
- Current: continued to 2025-26 and changes from Kharif 2026
As an analytical point, crop insurance works only when claims are quick and measurement is fair. The key reform is better data on yields, through satellite and mobile tools, and fast payment. A clean design can protect farmers without large insurer profits.
Why Is This Topic Important?
- Risk cover Insurance for crops
- Rates Premium numbers
- Updates Continuation and changes
What Came Next?
The next topic covers the irrigation scheme that brings water to farm fields. Next topic: Pradhan Mantri Krishi Sinchayee Yojana (PMKSY).
Key People and Terms
- Sum insured Maximum cover
- Actuarial premium Full premium rate
- Area approach Claim by unit yield
- CCE Crop cutting experiment
- Prevented sowing Failed to sow due to weather
- RWBCIS Weather based insurance scheme
Exam Corner
Points to Remember
- Approved 13 January 2016; from Kharif 2016.
- Premium: 2, 1.5 and 5 per cent.
- Replaced NAIS and MNAIS.
- Voluntary since Kharif 2020.
- Continued to 2025-26, Rs 69,515 crore.
Do Not Confuse With
- PMFBY and RWBCIS Yield based insurance versus weather index insurance
- Area approach and individual approach Unit level yield versus single farm loss
- PMFBY and KCC Insurance versus credit
Memory Hook
Two, one and a half, five: the farmer pays little, the state pays the rest.
Mains Angle
Questions ask about agricultural risk and how well insurance protects farmers. These points give a balanced frame.
- Merits Low premium, wider cover, technology use
- Demerits Claim delays, data disputes, insurer profits
- Way ahead Better yield data, quick claims, state participation
A Question You May Face
An original practice question, not a past paper question.
“Assess the performance of PMFBY in managing agricultural risk and suggest reforms to make crop insurance more farmer friendly.”
How to Answer
- Intro Scheme of 2016 and design.
- Merits Low premium and coverage.
- Issues Delays and disputes.
- Way Data, speed, trust.
GS Relevance
Frequently Asked Questions
What is PMFBY?
The Pradhan Mantri Fasal Bima Yojana is the crop insurance scheme of the Ministry of Agriculture and Farmers Welfare, approved on 13 January 2016 and applied from Kharif 2016. It gives financial protection against crop loss from natural calamities, pests and diseases at a low premium paid by the farmer.
What premium do farmers pay under PMFBY?
Farmers pay at most 2 per cent of the sum insured for Kharif food grains, pulses and oilseeds, 1.5 per cent for Rabi crops and 5 per cent for commercial and horticultural crops. The remaining premium is shared by the Centre and the state, equally in most states and 90:10 in the north-east.
Which risks are covered under PMFBY?
The scheme covers prevented sowing, loss of the standing crop from drought, flood, pests, disease, fire, lightning, storm and hailstorm, post-harvest loss up to 14 days for crops drying in the field, and localised calamities like hailstorm, landslide and inundation, assessed at the individual farm level.
Is PMFBY compulsory for farmers?
No. PMFBY was compulsory for farmers who took crop loans in its early years, but since Kharif 2020 it has been voluntary for all farmers, including loanees. Farmers can enrol through banks, common service centres, insurance agents or the national crop insurance portal before the cut-off date.
What is the latest status of PMFBY?
On 1 January 2025 the Cabinet approved continuation of PMFBY up to 2025-26 with an outlay of about Rs 69,515 crore and a technology fund of about Rs 824 crore. As reported, changes such as cover for wild animal attacks are planned from Kharif 2026, so check the official notice.
PYQ Practice — Statement Analysis
1 PMFBY replaced NAIS and MNAIS.
Approved in January 2016.
2 Farmers pay 5 per cent premium for Kharif food crops under PMFBY.
It is 2 per cent. 5 per cent is for commercial and horticultural crops.
3 PMFBY has been voluntary for all farmers since Kharif 2020.
Earlier it was compulsory for loanees.
4 PMFBY covers post-harvest losses for a limited period.
Up to 14 days for crops drying in the field.
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