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How to Get the Benefit of Pradhan Mantri Fasal Bima Yojna

Chander Mohan
Chander Mohan

The Pradhan Mantri Fasal Bima Yojna (PMFBY) was launched on 18 February 2016 by Prime Minister Narendra Modi. PMFBY provides a comprehensive insurance cover against failure of the crop thus helping in stabilizing the income of the farmers. The Government after introducing the scheme is now aiming to increase the number of insured farmers from the present 20 percent to 50 percent in the next two to three years time. The scheme would enable farmers to have crop insurance by paying the lowest premium. The balance premium amount would be borne by the Centre and states. Farmers would also get full financial security. There would be no capping on the premium rates and no reduction in the sum. 

The Indian agricultural sector is dependent on vagaries of weather – particularly rain-fed areas which constitute more than 60% of the total sown areas. Large-scale damage to crops for various reasons including weather is very common and the farming communities, whose sole livelihood depends on crops, bear the brunt of this. Due to the high element of risk involved in farming because of unfavorable weather, it becomes all the more important to protect the farmers from the losses that can occur due to large-scale destruction of crops.  


Crop insurance is purchased by agricultural producers, including farmers and others to protect themselves against either the loss of their crops due to natural disasters, such as hail, drought, and floods, or the loss of revenue due to declines in the prices of agricultural commodities. 

Agencies involved in the crop insurance are: 

  • National Agricultural Insurance Scheme (NAIS).

  • Modified National Agricultural Insurance Scheme (MNAIS).

  • Weather Based Crop Insurance Scheme (WBCIS).

  • Coconut Palm Insurance Scheme (CPIS). First scheme is being run only by the Agricultural Insurance

  • Corporation and is most widespread throughout the country (nearly 450 districts). 

Objective of PMFBY

  • To provide insurance coverage and financial support to the farmers in the event of failure of any of the notified crop as a result of natural calamities, pests & diseases. 

  • To stabilize the income of farmers to ensure their continuance in farming.

  • To encourage farmers to adopt innovative and modern agricultural practices.

  • To ensure the flow of credit to the agriculture sector.  

Implementing Agency (IA): 

The Scheme shall be implemented through a multi-agency framework by selected insurance companies under the overall guidance & control of the Department of Agriculture, Cooperation & Farmers Welfare (DAC&FW), Ministry of Agriculture & Farmers Welfare (MoA&FW), Government of India (GOI) and the concerned State in coordination with various other agencies; viz Financial Institutions like Commercial Banks, Co-operative Banks, Regional Rural Banks and their regulatory bodies, Government Departments viz. Agriculture, Co-operation, Horticulture, Statistics, Revenue, Information/Science & Technology, Panchayati Raj etc.  

DAC&FW has designated/ impaneled Agriculture Insurance Company of India(AIC) and some private insurance companies presently to participate in the Government sponsored agriculture /crop insurance schemes based on their financial strength, infrastructure, manpower and expertise etc. The impanelled private insurance companies at present are: 

  • ICICI-Lombard General Insurance Company Ltd. 

  • HDFC-ERGO General Insurance Company Ltd.  

  • IFFCO-Tokio General Insurance Company Ltd. 

  • Cholamandalam MS General Insurance 2 Company Ltd. 

  • Bajaj Allianz General Insurance Company Ltd.  

  • Reliance General Insurance Company Ltd.  

  • Future Generali India Insurance Company Ltd.  

  • Tata-AIG General Insurance Company Ltd.  

  • SBI General Insurance Company Ltd. 

  • Universal Sompo General Insurance Company Ltd.  

The selection of insurance company from amongst the insurance companies to act as IA shall be done by the concerned State Government for implementation of the scheme in their State. Such selection of IA shall be done from amongst the designated / empanelled companies which shall be initially pre-qualified , strictly on the basis of, experience, existence of infrastructure in the area and quality of services like coverage of farmers & area, pay-outs in terms of quantum & timely settlement thereof, willingness to do publicity & awareness campaigns etc. The final selection of IA from amongst the pre-qualified insurance companies shall be done based on the lowest weighted premium quoted by a pre-qualified company for all notified crops within the cluster of districts. 

Premium rates:  

The Actuarial Premium Rate (APR) would be charged under PMFBY by IA. DAC&FW/States will monitor the premium rates considering the basis of Loss Cost (LC) i.e. Claims as % of Sum Insured (SI) observed in case of the notified crop(s) in notified unit area of insurance (whatsoever may be the level of unit area) during the preceding 10 similar crop seasons (Kharif / Rabi) and loading for the expenses towards management including capital cost and insurer’s margin and taking into account non-parametric risks and reduction in insurance unit size etc. The rate of Insurance Charges payable by the farmer will be as per the following table: S.No Season Crops Maximum Insurance charges payable by farmer (% of Sum Insured) 1 Kharif Food & Oilseeds crops (all cereals, millets, & oilseeds, pulses) 2.0% of SI or Actuarial rate, whichever is less 2 Rabi Food & Oilseeds crops (all cereals, millets, & oilseeds, pulses) 1.5% of SI or Actuarial rate, whichever is less 3 Kharif & Rabi Annual Commercial / Annual Horticultural crops 5% of SI or Actuarial rate, whichever is less.  

Risk will be shared by IA and the Government as follows: The liability of the Insurance companies in case of catastrophic losses computed at the National level for an agricultural crop season, shall be up to 350% of total premium collected (farmer share plus Govt. subsidy) or 35% of total Sum Insured (SI), of all the Insurance Companies combined, whichever is higher. The losses at the National level in a crop season beyond this ceiling shall be met by equal contribution (i.e. on 50:50 basis) from the Central Government and the concerned State Governments. 12. ESTIMATION OF CROP YIELD: The State/UT Govt. will plan and conduct the requisite number of Crop Cutting Experiments (CCEs) for all notified crops in the notified insurance units in order to assess the crop yield. The State / UT Govt. will maintain single series of Crop Cutting Experiments (CCEs) and resultant Yield estimates, both for Crop Production estimates and Crop Insurance. Crop Cutting Experiments (CCE) shall be undertaken per unit area /per crop, on a sliding scale, as indicated below: Sl. No. INSURANCE UNIT Minimum no. of CCEs required to be done 1. District 24 2. Taluka / Tehsil / Block 16 3. Mandal/Hobli/ Phirka / Revenue 10 Circle 4. Village / GramPanchayat/Patwar- 4 for major crops, 8 for other crops Mandal/Patwari-Halka  

Use of Mobile Phone Technology to improve Yield-data Quality & Timeliness:

It has been felt that the process of CCEs currently being conducted for estimating yield is lacking in reliability and speed which affects the claims settlement. There is a need to have good quality, timely and reliable yield-data. For addressing this problem, video/image capture of crop growth at various stages and transmission thereof with CCE data on a real-time basis utilizing mobile communication technology with GPS time stamping, can improve data quality, / timeliness and support timely claim processing and payments. States and insurance companies shall utilize this technology for the purpose. The cost of using technology etc. for conduct of CCEs etc will be shared between Central Government and State/U.T. Governments on 50:50 basis, wherever necessary, subject to a cap on total funds to be made available by Central Government for this purpose based on approximate cost of procuring handheld devices/Smartphones and other related costs. 

Indemnity level (il) and threshold yield (ty) : 

  • Three levels of Indemnity, viz., 70%, 80% and 90% corresponding to crop Risk in the areas shall be available for all crops. 

  • The Threshold Yield for a crop in an Insurance Unit shall be based on impaneledaverage yield of last seven years excluding two years of declared calamity if any, multiplied by the level of indemnity of the area.  

Decline in number of beneficiaries under PMFBY:  

Under the Pradhan Mantri Fasal Bima Yojana (PMFBY), which is an actuarial/bidded premium based scheme, over and above farmers premium, subsidy is provided both by Central and State Government on 50: 50 basis.  Funds allocated by Central Government under PMFBY since its inception are given below:- 


Funds Allocated (In Rs. crore)* 







  * Includes allocation of funds for meeting the committed liabilities of the Government under erstwhile schemes. 

Here is the state-wise detail of farmer applicants covered during 2016-17 and 2017-18 are given in Annexure. 

There is decline in coverage of farmer applicants in 2017-18 from 2016-17.  This is mainly due to factors like the announcement of Debt Waiver Scheme in Maharashtra and Uttar Pradesh, farmer’s perception of mitigated risk in 2017-18, which was a good monsoon year, deduplication due to Aadhaar being made mandatory for coverage etc..   

The scheme is optional for States.  Notwithstanding that Government has been urging the States to bring more areas and crops under the scheme so that maximum farmers may be covered under the scheme.  Besides that Government seeks active involvement of all stakeholders especially States and implementing insurance companies for conduct of publicity campaign/awareness programmes including organization of camps in the rural areas to build farmer awareness about crop insurance schemes.  Other measures include release of advertisements on regular basis in leading National/local News Papers, telecast through audio-visual media, distribution of pamphlets in local languages, participation in agriculture fairs / mela / goshti, dissemination of SMS through Kisan Portal/National Crop Insurance Portal and conduct of workshops/ trainings of officials of State Governments and financial institutions and farmers    Moreover, insurance companies have been asked to utilize 0.5% of gross premium collected by them for publicity and awareness generation.  For non-loanee farmers since crop insurance is optional, the Common Service Centers (CSCs) and online enrolment have been activated to provide services besides traditional modes like banks and insurance intermediaries.  






Coverage of Farmers Applicants during 2016-17 and 2017-18 

Sl. No. 


Farmers Applicants  covered 

(in numbers) 



A & N Islands 



Andhra Pradesh 





















Himachal Pradesh 




Jammu & Kashmir 
















Madhya Pradesh 






















Not Available 










Tamil Nadu 












Uttar Pradesh 








West Bengal 




Grand Total 








 (This Information was given by the Minister of State for Ministry of Agriculture & Farmers Welfare, Shri Parshottam Rupala) 

 Two years after the launch of the PMFBY, majority of farmers are still not aware of the scheme. “In our crop insurance, more than 90 per cent are loanee farmers. There was a study which said 70 per cent of the farmers are not aware of the scheme itself. Even if a farmer is aware of the crop insurance he doesn’t know how much premium he will have to pay, when the claim will come, how much I’m insured and whether it’s coming from the loan account, he’s not aware of. So the trust deficit is there,” said an official of SBI General Insurance. 

January 31, 2019 has been fixed as the deadline for settlement of claims from Kharif in 2017, said the official who was participating in a seminar on ‘Sustainable agriculture insurance’ organised by GIC Re. Insurers have already settled Rs 11,000 crore out of Rs 16,000 crore. Out of the pending Rs 5000 crore, insurers are expected to give Rs 3,500 crore to the farmers as part of settlement soon. The loss ratio in the scheme was 75 per cent in the 2016-17 and 90 per cent in the last fiscal. However, as much as Rs 1500 crore of claims are stuck as states like Bihar and Telangana have not paid their share of premiums. 

“We have made it clear that no insurer can quote below a certain rate. Sharing of data is also very essential so as to make the scheme more effective one,” he said. In 2016-17, the Budget allocation was Rs 9,000 crore, but Rs 12,000 crore was spent under the scheme. In the fiscal 2017-18, the Budget allocation was Rs 13,000 crore, but Rs 15,000 crore was spent on the PMFBY. 

“Pricing for the risks is of utmost concern for us. We emphasise on actuarial pricing based on actual data,” said Alice Vaidyan, CMD, GIC Re. “Low awareness continues to be the area of concern.” The growth in India’s crop insurance market premium has been phenomenal — from Rs 4,200 crore in 2015-16 it reached Rs 22,180 crore in 2016-17. In 2017-18, it grossed a premium of Rs 24,352 crore and for 2018-19, projected premium under crop insurance Rs 27,000 crore, GIC Re has said. The government has indicated that despite fall in farmers’ enrolment under the scheme in 2017-18, it would expand the coverage to 50 percent. In 2016-17, coverage was at 30 percent. 

Public sector GIC Re is leading 15 of 18 treaties in the domestic crop insurance market and writing premium of around Rs 12,000 crore in 2017-18 with a market share of 52 percent. The state owned reinsurer expects 10 percent growth in crop insurance business in 2018-19. The farmers’ share of premium under PMFBY will be based on one season, one rate. They have to pay only 1.5 percent of premium for Rabi crop, and 2 percent for Kharif crop. The remaining premium will be paid as subsidy by the centre and states together. If the claims are less, it will turn out to be a bonanza for insurers. 

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