Why this matters now
Crop insurance is central to agricultural risk management and farmer welfare. PMFBY is examined for its premium structure, the risks it covers, and the operational issues (delayed claims, basis risk) that drive its periodic reform — and for the broader debate on protecting farmers from climate shocks.
The premium structure
Farmers pay a small, capped premium and the government subsidises the balance:
- 2% of the sum insured for kharif (monsoon) crops;
- 1.5% for rabi (winter) crops;
- 5% for commercial and horticultural crops.
The remaining actuarial premium is shared between the Centre and the states.
What it covers
PMFBY covers yield losses from non-preventable natural risks — drought, flood, pests and disease — assessed largely through crop-cutting experiments. It also covers localised calamities (hailstorm, landslide, inundation), prevented sowing, and post-harvest losses for a limited period. Enrolment is voluntary for both loanee and non-loanee farmers (made optional in a later revamp).
Technology and issues
Reforms have introduced satellite imagery, drones, smartphone-based crop-cutting and a digital platform to speed up assessment and claims. Persistent challenges: delayed claim payments, disputes over yield estimation, basis risk (individual loss differing from the area average), and some states opting out over cost. Strengthening timeliness and transparency is the ongoing reform priority.
UPSC angle
Memorise the premium caps (2% kharif, 1.5% rabi, 5% commercial) and the risks covered. For GS-3, discuss claim delays, basis risk and the tech-driven reforms.
Frequently asked questions
What is the PM Fasal Bima Yojana?
A 2016 crop-insurance scheme that protects farmers against crop loss from natural risks at a low fixed premium, with the government subsidising the rest.
What premium do farmers pay under PMFBY?
2% of the sum insured for kharif crops, 1.5% for rabi crops, and 5% for commercial/horticultural crops; the balance is subsidised by the Centre and states.
What risks does PMFBY cover?
Yield losses from drought, flood, pests and disease, plus localised calamities (hail, landslide, inundation), prevented sowing, and limited post-harvest losses.
What are the main problems with PMFBY?
Delayed claim payments, disputes over yield estimation, basis risk (individual vs area-average loss), and some states opting out over cost.