What is Agriculture Insurance Crop Insurance (PMFBY) in India?
Pradhan Mantri Fasal Bima Yojana (PMFBY) is a government-backed crop insurance scheme launched in India in 2016. It aims to provide financial support to farmers in case of crop failure due to natural calamities, pests, or diseases. The scheme covers all food and oilseed crops and commercial/horticultural crops for which past yield data is available.
Key Features:
- Covers yield losses due to drought, flood, hailstorm, landslide, pests, diseases, and other natural calamities.
- Provides timely compensation to farmers to ensure stability and encourage farmers to adopt modern technology.
- Premium rates are capped to keep it affordable.
- Insurance companies are selected through a bidding process by the government.
Benefits of Agriculture Insurance Crop Insurance (PMFBY)
| Benefit | Explanation |
|---|---|
| Risk mitigation | Protects farmers from crop loss due to natural disasters or pests. |
| Financial stability | Provides compensation, ensuring income stability for farmers. |
| Encourages modern farming | Reduces risk, encouraging farmers to invest in better inputs. |
| Affordable premiums | Subsidized premiums make insurance accessible. |
| Promotes credit flow | Helps farmers secure loans as banks see less risk. |
| Wide coverage | Covers all food, oilseed, and commercial crops. |
| Timely claim settlement | Focus on prompt compensation to farmers. |
Risks/Challenges of Agriculture Insurance Crop Insurance (PMFBY)
| Risk/Challenge | Explanation |
|---|---|
| Delayed claim settlement | Sometimes delays in processing claims due to paperwork or assessment issues. |
| Limited awareness | Many farmers lack full understanding of scheme benefits and enrollment procedures. |
| Moral hazard | Farmers may neglect proper crop care expecting insurance payouts. |
| Basis risk | Compensation may not fully cover losses due to inaccurate area yield data or weather indices. |
| Fraud and data manipulation | Risk of false claims or misreporting crop loss. |
| Coverage gaps | Not all crops or farmers may be covered equally. |
Top 10 Agriculture Crop Insurance Plans in India (Under or similar to PMFBY)
Note: PMFBY is the flagship government scheme and widely adopted. Other plans come from private insurers or older schemes. Below is a comparative overview of PMFBY and similar crop insurance plans available in India:
| Plan Name | Provider | Key Features | Pros | Cons |
|---|---|---|---|---|
| PMFBY (Pradhan Mantri Fasal Bima Yojana) | Government + empanelled insurers | Covers all major crops, capped premiums, wide coverage | Affordable premiums, govt. subsidy, wide coverage | Delays in claim settlement, basis risk |
| Rashtriya Fasal Bima Yojana (RFBY) | Government | Earlier govt. scheme replaced by PMFBY | Simple structure | Less comprehensive than PMFBY |
| Weather-Based Crop Insurance Scheme (WBCIS) | Government + Insurers | Payout based on weather parameters | Faster claims, less dependency on yield data | May not reflect actual losses accurately |
| Haryana Crop Insurance Scheme | State Govt. | State-specific tailored benefits | Local customization | Limited to Haryana farmers |
| Andhra Pradesh Crop Insurance Scheme | State Govt. | State-specific benefits and subsidies | Better local awareness | Limited to Andhra Pradesh |
| Private Crop Insurance (ICICI Lombard, Bajaj Allianz, etc.) | Private Insurers | Customized plans, quick claims | Flexible, tech-driven claims | Higher premiums, less govt. subsidy |
| National Agriculture Insurance Scheme (NAIS) | Government | Predecessor to PMFBY | Wide coverage | Higher premiums, delayed payments |
| Weather Index Insurance by Private Insurers | Private Insurers | Weather-based payout | Fast claims, automated | Weather data may miss actual losses |
| Multi-Peril Crop Insurance (MPCI) | Private Insurers | Covers multiple risks, traditional insurance | Covers many perils | Expensive premiums, complex assessment |
| Crop Insurance for Horticultural Crops | Private + Government | Focused on horticulture | Specialized coverage | Less coverage for food grains |
Comparison Table: Top Crop Insurance Plans in India
| Plan Name | Coverage | Premium Cost | Claim Settlement Time | Subsidy Availability | Suitability | Pros | Cons |
|---|---|---|---|---|---|---|---|
| PMFBY | Food, oilseed, commercial crops | Low (2%-5%) | Moderate (few weeks) | Yes (govt. subsidy) | Small & marginal farmers | Affordable, wide coverage, govt. support | Delay in claims, basis risk |
| RFBY | Food crops | Moderate | Slow | Yes | General farming | Simple scheme | Replaced by PMFBY, limited benefits |
| WBCIS | Weather-based index | Low | Fast | Yes | Areas with reliable weather data | Quick payouts | Weather data may not reflect real losses |
| State-specific schemes | Crop-specific, regional | Varies | Varies | Yes | Local farmers | Customized for local needs | Limited to specific states |
| Private Insurers (ICICI, Bajaj) | All major crops | Higher | Fast | Limited | Commercial farmers | Flexible plans, faster claims | Costly, limited subsidy |
| NAIS | All crops | Moderate | Slow | Yes | Broad farming | Wide crop coverage | Less affordable, replaced by PMFBY |
| Multi-Peril Crop Insurance | Multiple risks | High | Moderate | Limited | Large farmers | Comprehensive risk cover | Expensive, complex claims process |
FAQs for Agriculture Insurance Crop Insurance (PMFBY in India)
- Who is eligible for PMFBY?
All farmers growing notified crops are eligible, including tenant farmers and sharecroppers. - What crops are covered?
Food crops (cereals, millets, pulses), oilseeds, and commercial/horticultural crops. - How to apply for PMFBY?
Farmers can apply through their bank, insurance companies, or local government offices during the enrollment period. - What is the premium rate?
2% for Kharif crops, 1.5% for Rabi crops, and 5% for commercial crops, with the government subsidizing the rest. - What risks does PMFBY cover?
Natural calamities such as drought, floods, hailstorms, pests, and diseases. - How are claims calculated?
Based on actual yield losses compared to normal yield or through area-based yield assessments. - How long does claim settlement take?
Typically within a few weeks, though delays may occur due to assessment or documentation. - Can tenant farmers avail PMFBY?
Yes, with proper proof of cultivation rights. - Is there any provision for re-insurance?
Yes, insurers may transfer risk to re-insurers. - Can PMFBY be combined with crop loans?
Yes, insurance is linked to crop loans, making credit access easier for farmers.