Pradhan Mantri Fasal Bima Yojana - Revamping of PMFBY [UPSC Notes]

The government of India in 2016, launched the Pradhan Mantri Fasal Bima Yojana (PMFBY) after scraping down the earlier insurance schemes viz. Modified National Agricultural Insurance Scheme (MNAIS), Weather-based Crop Insurance scheme, and the National Agriculture Insurance Scheme (NAIS). 

The Union Cabinet in February 2020 has approved to revamp the PMFBY. Enrolment by the farmers in the scheme to be made voluntary after the modification in the existing parameters. The modified parameters will be made operational across the country from Kharif 2020 season onward.

This scheme unburdens the farmers of crop insurance which makes it an important topic when it comes to government welfare schemes for UPSC Syllabus under the General Studies Paper-2 section.

What is Pradhan Mantri Fasal Bima Yojana?

Pradhan Mantri Fasal Bima Yojana is the flagship scheme of the government for agricultural insurance in India in line with the One Nation- One Scheme theme.

  • Annual Commercial / Annual Horticultural crops, oilseeds, and food crops (Cereals, Millets, and Pulses) are covered under the scheme.
  • PMFBY is optional for the farmers who have not availed institutional credit, while all the farmers who have borrowed institutional loans from banks are covered under the scheme mandatorily. (This to be modified and enrolment to be made voluntary post-Kharif season 2020.)
  • The scheme is administered by the Ministry of Agriculture.

Candidates can know the detailed information about the Pradhan Mantri Fasal Bima Yojana on the Official Website (

Revamping the Pradhan Mantri Fasal Bima Yojana

To address the challenges in the implementation of the crop insurance scheme, the Union Cabinet has approved to revamp the PMFBY and to bring modifications to its existing provisions. The major parameters set to be modified are:

  1. For north-eastern states, the centre’s share in premium subsidy to be increased to 90% from 50% earlier.
  2. A separate scheme to be brought out for 151 highly water-stressed districts.
  3. Information, Communication and Education (ICE) Activities – 0.5% of the total premium collected by the insurance companies to be spent on ICE activities.
  4. Flexibility to states:
    • States/UTS to be given an option to choose their scale of finance for any district crop combination.
    • States/UTs given option to run the scheme with the selection of additional risk covers.
  5. Cap on Centre’s Premium Subsidy:
    • For unirrigated areas/crops, the central subsidy to be limited for premium rates up to 30%
    • For irrigated area/crops, the central subsidy to be limited for premium rates up to 25%.
  6. Those districts that will have an area under irrigation for more than 50% will be considered as an irrigated district.
  7. Penalty on states:
    • If a state delays to release requisite premium subsidy to insurance companies beyond a set time-limit (March 31 – For Kharif Season; September 30 – For Rabi Season), states will not be allowed to run the scheme in subsequent seasons. 
  8. To conduct Crop Cutting Experiments (CCEs), there will be the adoption of technology solutions including Smart Sampling Technique (SST).

Why is Pradhan Mantri Fasal Bima Yojana being revamped?

  1. To make farmers’ self-sufficient to manage risk in agriculture production.
  2. To stabilise the farm income.
  3. To enable farmers of North-Eastern states to manage agriculture risks.
  4. Enable faster claims settlements through quick and accurate yield estimation.

What is covered under PMFBY?

The Pradhan Mantri Fasal Bima Yojana will cover the following cases under crop insurance:

  • Local natural calamities like landslides, hailstorms, etc.
  • Calamities leading to loss of yield like floods, dry spells, droughts, etc. Pest infestation that causes yield loss is also covered by PMFBY.
  • Losses occurred after harvesting crops can also be covered under this scheme. These circumstances may befall due to cyclones, unseasonal rains, cyclonic rains, etc.
  • Nevertheless, PMFBY does not provide any safety against the following circumstances:
    • Losses occurred due to war or similar hazardous activities.
    • Loss of yield due to the act of enmity or riots.
    • Yield destruction caused by domestic and/or wild animals
    • Contamination due to nuclear risks.
    • Malicious damage leading to yield carnage.
  • It is proposed by the scheme to use remote sensing technology, smartphones, or drones to expedite the crop loss estimation.

PMFBY Objectives

Pradhan Mantri Fasal Bima Yojana (PMFBY) aims at providing support for the sustainable production of yield in the agricultural sector. PMFBY will achieve this by implementing the following:

  • Financial support will be provided to farmers in distress due to loss and damage to crops caused by unexpected calamities.
  • Making sure the income of farmers is stabilized for them to continue their farming activities.
  • Promoting farmers to adopt and use modern equipment and agricultural practices for efficient and high yield farming.
  • Ensuring the flow of credit to the agriculture sector which contributes to food security, crop diversification, and enhancing growth and competitiveness of the agriculture sector besides protecting farmers from production risks.

Read about other important government schemes at the linked article.

Pradhan Mantri Fasal Bima Yojana (PMFBY):- Download PDF Here

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