Insurance Coverage under the PMFBY Scheme

Under this scheme, the insurance cover is limited to specific crops and agricultural risks related to the crop yield. The list of notified crops includes food crops (i.e., cereals, millets, and pulses), oilseeds, annual commercial crops, and annual horticultural crops.

It also covers all stages of the crop production cycle. The inclusions and exclusions of insurance cover provided are as follows:

• Initial Stage – Risk of sowing, planting and germination failure
  Wherein, the insured area is prevented from successful sowing, planting, or germination due to low rainfall or adverse weather conditions
• Growth Stage – Risk of standing crop failure
  In this scenario, planted crops are damaged due to non-preventable risks. Insurance cover is provided to cover yield losses against drought, dry spells, floods, inundation, pest infestations, crop diseases, landslides, natural fires, lightning, hailstorms, and cyclones.
• Harvest Stage – Risk of post-harvest losses
  This is applicable to only those crops that are required to be dried in cut-and-spread or small bundles after harvesting. Insurance coverage is provided up to a maximum period of two weeks from harvesting these crops and extended for losses due to hailstorms, cyclones, cyclonic rains and unseasonal rains.
• Protection against calamities – Loss or damage to notified insured crops due to identified localised risks of hailstorms, landslides, cloud bursts and natural fires is provided.
• Exclusions – Loss or damage to notified insured crops due to war, nuclear risks, malicious damage and other preventable risks is excluded from the scope of coverage.

The insurance claim size is based on the proportion of shortfall from the threshold yield multiplied by the sum insured. The sum insured is calculated over the scale of finance provided to farmers and the threshold crop yield is calculated based on seven-year data and indemnity levels.

Premiums under the PMFBY Scheme

To avail insurance benefits under this scheme, farmers are required to pay a nominal share of actuarial premiums—Kharif crops (2%), Rabi crops (1.5%), Commercial crops (5%) and Horticultural crops (5%). However, 95-98.5% actuarial premium is fulfilled by the state and central governments and shared on a 1:1 ratio. For example, if a farmer has a sum of Rs. 35,000 (US$ 477) and one hectare of land insured, the actuarial premium charged by insurance companies is Rs. 4,000 (US$ 54.5). In this scenario, if the farmer grows Kharif crops on the insured land, then he is required to only pay 2% of the actuarial premium, i.e., Rs. 800 (US$ 10.9), while the remaining amount of Rs. 1,600 (US$ 21.8) each will be paid by state and central governments.

Beneficiaries of the PMFBY Scheme

According to the government, under this scheme, all farmers (including sharecroppers and tenant farmers) growing notified crops in the notified areas are eligible for coverage, if they have insurable interest for the insured crops.

The eligible farmers can be broadly classified into two categories:

When the scheme was launched in 2016, a total of 55.94 crore farmers were insured, wherein 75% farmers received mandatory coverage as per the SAO loan allocations and 25% farmers voluntarily opted for insurance.

The table provides details of the number of farmers enrolled for insurance, the total crop sown area covered under insurance and the number of farmers who benefitted from the insurance programme.

* Information is based on declarations received from implementing insurance companies pending verification by the Department of Agriculture, Cooperation and Farmers’ Welfare, government of India with state governments.

Over the past 8 years, the Pradhan Mantri Fasal Bima Yojana (PMFBY) has enrolled 56.80 crore farmer applications, with over 23.22 crore farmers receiving claims. During the time frame, farmers have paid nearly Rs. 31,139 crore (US$ 3.75 billion) as their share of premiums, against which claims totalling over Rs. 1,55,977 crore (US$ 18.77 billion) have been paid out to them.

In the Rabi 2022-23 and Kharif 2022-23 seasons, there has been a significant rise in applications from women farmers, with a 36% and 48% increase, respectively, compared to previous seasons. Specifically, Loanee women farmer applications surged by 65% in both the Kharif and Rabi seasons of 2022-23. Meanwhile, non-Loanee farmer applications saw a 19% increase during the Kharif 2022 season, with similar growth observed in the Rabi 2022 season. 

Insurance Companies participating in the PMFBY Scheme