Overview
Pradhan Mantri Fasal Bima Yojana (PMFBY) is the world’s third-largest crop insurance scheme by farmer enrolment and premium volume. Launched on 13 January 2016, it replaced the National Agricultural Insurance Scheme (NAIS) and Modified NAIS to provide comprehensive, affordable crop insurance to Indian farmers.
Key Statistics (as of February 2025 — 9th anniversary)
| Parameter | Figure |
|---|---|
| Total farmer applications enrolled (2016–2025) | 72.61 crore |
| Claims disbursed | ₹1.75 lakh crore to 23.22 crore farmer applications |
| Enrolment growth | 32% increase — 3.17 crore (2022-23) to 4.19 crore (2024-25) |
| Budget (2021-26 cycle) | ₹69,515.71 crore (Cabinet approved Jan 2025) |
| Budget 2025-26 (annual) | ₹12,242 crore |
| Implementing agencies | 18 insurance companies (public + private) |
Objectives
- Provide insurance coverage and financial support to farmers in the event of crop failure due to natural calamities, pests, and diseases
- Stabilise income of farmers to ensure continuance in farming
- Encourage adoption of innovative and modern agricultural practices
- Ensure flow of credit to the agriculture sector
Premium Structure
| Season | Farmer’s Premium | Crops Covered |
|---|---|---|
| Kharif | 2% of sum insured | All food grains, oilseeds, annual commercial & horticultural crops |
| Rabi | 1.5% of sum insured | All food grains, oilseeds |
| Annual commercial/horticultural | 5% of sum insured | Cotton, sugarcane, jute, fruits, vegetables, spices |
- The difference between actuarial premium and farmer’s share is the subsidy, shared equally (50:50) by Centre and State
- No upper limit on government subsidy — even if balance premium is 90%, the government bears it
- Premium subsidy for NE states: 90% Centre, 10% State
Coverage of Risks
- Yield losses due to non-preventable risks: natural fire, lightning, storm, hailstorm, cyclone, typhoon, tornado, flood, inundation, landslide, drought, dry spells, pests/diseases
- Prevented sowing/planting due to adverse weather conditions
- Post-harvest losses up to 14 days against cyclone, unseasonal rains, and hailstorm
- Localised calamities: hailstorm, landslide, inundation affecting isolated farms
- Wild animal attacks (added in 2020 revamp as add-on cover)
Key Features
- Area-based insurance unit: All farmers in a notified area pay the same premium and receive the same claim amount — reduces moral hazard and adverse selection
- Coverage of farmers: Loanee farmers (with crop loans — voluntary since 2020), non-loanee farmers (voluntary), tenant farmers, and sharecroppers
- Technology integration: Drones for remote sensing crop cutting experiments (CCEs), satellite imagery, mobile apps for real-time data upload, weather stations
- PMFBY portal and app: Single-window digital platform for enrolment, premium calculation, and claim tracking
- Claim settlement timeline: Within 2 months of harvest (target)
Cup-and-Cap Model (2025 Update)
From Kharif 2025, 11 out of 23 participating states adopted the Cup-and-Cap (80:110) model:
- If claims-to-premium ratio exceeds 110%, the excess liability shifts to the state government
- If claims-to-premium ratio falls below 80%, the insurance company returns the balance to the state exchequer
- This model reduces insurance company windfall profits in normal years and caps state liability in disaster years
States That Opted Out
Several states have exited PMFBY citing high premium subsidy burden:
- Gujarat — exited August 2020 (launched own Mukhyamantri Kisan Sahay Yojana)
- Bihar — runs own Bihar Rajya Fasal Sahayata Yojana
- West Bengal — runs Bangla Shasya Bima scheme
- Andhra Pradesh, Telangana, Jharkhand — exited after initial participation
- Punjab — never joined PMFBY
As of 2025, 23 states/UTs participate in PMFBY for Kharif season.
Evolution and Reforms
| Year | Reform |
|---|---|
| 2016 | PMFBY launched, replacing NAIS and MNAIS |
| 2018 | Aadhaar seeding made mandatory for faster claim settlement |
| 2020 | Made voluntary for all farmers (earlier mandatory for loanee farmers); companies allowed 3-year tender cycle |
| 2020 | Add-on covers introduced: wild animal attack, cloud burst, frost, hailstorm |
| 2022 | WINDS (Weather Information & Network Data Systems) portal launched for real-time weather data |
| 2023 | Drones mandated for crop loss assessment in all states |
| 2025 | Cup-and-Cap model introduced; scheme extended till 2025-26 with ₹69,515 crore budget |
Latest Developments
- March 2026: Rabi 2025-26 season enrolment completed (December 2025 deadline); data being compiled
- January 2025: Union Cabinet approved continuation of PMFBY and RWBCIS till 2025-26 with total budget of ₹69,515.71 crore
- February 2025: PMFBY marked 9th anniversary — 72.61 crore farmer applications enrolled, ₹1.75 lakh crore claims disbursed
- Kharif 2025: 11 out of 23 states adopted the Cup-and-Cap (80:110) premium model
- Budget 2025-26: ₹12,242 crore allocated (22.8% reduction from previous year’s revised estimate of ₹15,864 crore)
- 2024-25: Enrolment rose 32% from 3.17 crore (2022-23) to 4.19 crore
- 2023: Drones mandated for crop cutting experiments (CCEs) across all participating states
- Ongoing: WINDS portal operational for real-time weather data integration with claim processing
Prelims Importance
- Launch year: 2016 | Replaced: NAIS and Modified NAIS
- Premium rates: Kharif 2%, Rabi 1.5%, Commercial/Horticulture 5%
- Subsidy sharing: 50:50 Centre-State (90:10 for NE states)
- Voluntary for all farmers since Kharif 2020 (earlier mandatory for loanee farmers)
- Implementing ministry: Ministry of Agriculture & Farmers Welfare
- World’s third-largest crop insurance scheme by premium
- Claims of ₹1.75 lakh crore to 23.22 crore farmer applications (2016–2025)
- Technology: Drones for CCEs, satellite imagery, WINDS portal
- States opted out: Gujarat, Bihar, West Bengal, Andhra Pradesh, Telangana, Jharkhand, Punjab
- Cup-and-Cap model (80:110): Introduced from Kharif 2025
Mains & Interview Importance
GS3 — Agriculture, Economy:
- Analyse the role of PMFBY in de-risking Indian agriculture. Has it achieved its objective of income stabilisation for farmers?
- Critically examine why several states have opted out of PMFBY. What does this reveal about Centre-State fiscal dynamics in cooperative federalism?
- Evaluate the Cup-and-Cap model — does it strike the right balance between private sector participation and government liability?
Interview angles:
- “Is insurance the right approach for small and marginal farmers, or should India move towards income support models like PM-KISAN?”
- “How can technology (drones, AI, satellite imagery) improve crop loss assessment and reduce fraudulent claims?”
- “Compare PMFBY with crop insurance models in USA (Federal Crop Insurance) and China — what lessons can India draw?”
Essay connection: Agriculture distress, farmer suicides, climate change adaptation in agriculture, technology in governance