Different Crop Insurance Schemes & Their Benefits

Kanika Dhamija
Kanika Dhamija

The Indian agriculture sector accounts for 18% of India's GDP, and provides employment to 50% of the countries workforce. India is the world’s largest producer of pulses, rice, wheat, spices and spice products, and has emerged as the second largest producer of fruits and vegetables in the world! Surely, it is safe to assume that agriculture is the backbone of Indian economy.

Most Indians are directly or indirectly dependent on agriculture - some directly in farming and others involved in business of agricultural goods. Unfortunately, agriculture can be a risky business because of unexpected natural disasters like floods, droughts, cyclones, earthquakes etc.; along with fluctuating market prices. Considering these, Crop Insurance plays a crucial role in ensuring the present and the future of farmers in the country.


At present, four crop insurance schemes have been rolled-out by the Government of India to support the farmers. The Government of India mandates coverage under PMFBY/WBCIS/CPIS/UPIS, if a farmer avails crop loan for notified crops. For others (non-loan candidates) coverage is voluntary. Let's take a look at the schemes and their main highlights:

Pradhan Mantri Fasal Bima Yojana (PMFBY)

  • Provides insurance to protect food crops, oilseeds, commercial crops notified by the state government authorities. Additionally, pilots for coverage are taken for those perennial horticultural/commercial crops for which standard methodology for yield estimation is obtainable.

  • Facilitates a uniform maximum premium for all farmers (of the total sum insured): Kharif - 2%; Rabi - 1.5%; annual commercial/horticultural crops - 5%. Basic cover under the scheme includes cover for the risk of loss of yield to standing crop (sowing to harvesting)due to non-preventable risks like drought, dry spells, flood, inundation, wide spread pest and disease attack, landslides, natural fire due to lightening, storm, hailstorm, and cyclone.

  • Covers loss in case of adverse seasonal conditions during the crop season, wherein expected yield during the season is likely to be less than 50% of the normal yield.

  • Coverage is available only up to a maximum period of two weeks from harvesting against specific perils of hailstorm, cyclone, cyclonic rains and unseasonal rains, for crops which are required to be dried in cut and spread / small bundled condition in the field after harvesting.

  • Loss/damage to insured crops resulting from occurrence of localized risks such as hailstorm, landslide, inundation, cloud burst and natural fire due to lightening in a specific area.

  • Under the scheme, the states can consider add-on coverage for crop loss due to attack by wild animals wherever the risk is perceived to be substantial and is identifiable.

  • The scheme promotes the use of remote sensing technology and drones.

  • Implementing agency is selected by the respective State Government through bidding process.


Weather-based Crop Insurance Scheme (WBCIS)

  • The scheme aims to mitigate the hardship of the insured farmers against the likelihood of financial loss on account of anticipated crop loss resulting from adverse weather conditions relating to rainfall, temperature, wind, humidity etc.

  • Weather parameters are used as“proxy‟ for crop yields in compensating the cultivators for crop losses.

  • Payout structures are developed to the extent of losses suffered using the weather triggers.

  • Coverage of Crops - Food Crops (Cereals, Millets and Pulses), Oilseeds, Commercial / Horticultural crops.

  • Major weather perils which cause “Adverse Weather Incidence”, leading to crop loss are covered under the scheme. These include,rainfall – deficit rainfall, excess rainfall, unseasonal rainfall, rainy days, dry-spell, dry days; temperature– high temperature (heat), low temperature; relative humidity; wind speed; hailstorm, cloud-burst may also be covered as ‘Add-on/Index-Plus’products for farmers who have already taken basic coverage under WBCIS.

  • Only adverse weather incidences which can cause substantial crop losses are covered or identified triggers that cause major loss.

 Coconut Palm Insurance Scheme (CPIS)

  • Provides exclusive insurance protection for Coconut Palm growers.

  • Premium rate per palm ranges from Rs. 9.00 (in the plant age group of 4 to 15 years) to Rs. 14.00 (in the plant age group of 16-60 years).

  • The scheme provides 50-75% subsidy of premium to all types of farmers.

  • In case of damage to the palm, the claim payable is equal to the input cost loss damage to the insured in notified areas.

Unified Package Insurance Scheme (UPIS)

(rolled out as a pilot scheme in 45 districts)

  • Scheme provides financial protection and comprehensive risk coverage of crops, assets, life and student safety to farmers.

  • All farmers are eligible for crop insurance under PMFBY/WBCIS in the age 18 to 70 years.

  • Scheme includes 7 sections - Crop Insurance (PMFBY / WBCIS), Loss of life (Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)), Accident Insurance (Pradhan Mantri Suraksha Bima Yojana - PMSBY), Student safety, Household, Agriculture implements and Tractor.Crop insurance has been made mandatory.

  • Through this scheme farmers will be able to get all requisite insurance products for farming through a single application form.

  • Two flagship schemes of the Government of India - PMSBY & PMJJBY, have been included in this scheme apart from the insurance of assets.

  • Processing of claims is done on the basis of individual claim report filed.

How to avail the benefit of these schemes?

Get in touch with your nearest branch of Bank; PACS; Cooperative Banks; Empanelled General Insurance Companies; District Agriculture Officer/Block Development Officer.

Visit the official web portal: Ministry of Agriculture & Farmers Welfare, Government of India.

Sources - Ministry of Agriculture & Farmers Welfare, Government of India

Report by Ministry of External Affairs - India in Business. Investment and Technology, Promotion Division, Govt. of India

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