Pradhan Mantri Fasal Bima Yojana (PMFBY)

Pradhan Mantri Fasal Bima Yojana (PMFBY) - Background Context

Parliament’s committee recommends the in its report the re-formulation and revises the Pradhan Mantri Fasal Bima Yojana (PMFBY). It demands more openness and transparency in its operations and needs more financial grant or funds allocation to welcome positive engagement from farmers. The committee, after its observation of PMFBY concluded and put forward the deficiency and imperfection in the initial design of the PMFBY scheme, these identified flaws makes it less effective and fruitful in its core objectives.

Pradhan Mantri Fasal Bima Yojana (PMFBY)


The ambitious Pradhan Mantri Fasal Bima Yojana (PMFBY) launched in the year 2016 with great enthusiasm and motivation to replace the earlier insurance schemes NAIS and MNAIS, has to face the music of less engagement and enrollment of farmers into the ambitious PMFBY scheme, and is tentatively deflected from its core objectives. Perhaps or certainly PMFBY needs rejuvenation and refurbishment from the Union Government to lure farmers for their enrollment into this ambitious project.

Current Challenges of PMFBY

  1. A. Inadequate Reach and the Issue of penetration
    1. Data Constraints: Mere 45% of the claims made by the farmer for the last three crop season, and no data availability of the insurance paid by the insurance companies for the rabi season.
    2. Low Payout of Insurance Claims: The potential reason for this situation is no synchronization or coordination between payment of premium by the state and central government. Moreover, the insurance companies lack any authority to intervene in this process and thus simply has to wait and sit on claims.
    3. Gaps in the Estimation of Crop Loss: Use of modern Technology in the estimation and evaluation of crop damage. There are no well equipped, trained organizations or agencies (maybe, organization/agencies are least interested due to lack of framework from the government), favourable conditions and wide scope for corruption, lacking or no-utilization of smartphone and computing technologies to map affected area or regions.
    4. Less Number or No Notified Crops: Less registration of crops taken in the respective season than insurance claimed, delayed into payment for the claims made.
    5. High Premium Rates by Actuary: Insurance companies/agencies charge high actuarial premium rates to avail the PMFBY scheme by Union Government.
    6. Delay in Payment of Premium or Harvest Data: Delay in payment of insurance premium or no communication/reason for the delay in payment of premium by the government and delay in submission of harvest season resulted into no compensation to farmers by the insurance companies.
    7. Poor Capacity to Deliver PMFBY: No proactive efforts by the State Government or associated Insurance companies to create awareness on PMFBY. No infrastructure groundwork or platform for proper deployment of PMFBY.
    8. PMBY non-Accessible to Farmers in Vulnerable Regions: The entities such as lower protection or lower surety/safeguard (called as indemnity in insurance language), low crop yields or low sum insured and most importantly defaulter on banks list due to inability to pay back loans. Collectively all these reasons make PMFBY scheme failure to protect against bad weather conditions and their extreme weather events.

Highlights of the PMFBY

  • Scheme Name: Pradhan Mantri Fasal Bima Yojana.
  • Launch Year: 2016
  • Insurance Premiums Payable by Farmer: 2% for Krap Crop, 1.5% for Rabi Crop and 5% for the commercial and Horticulture crop.
  • Delivery of Scheme: Mandatory for the farmer taking loan or credits from banks and optional for farmers not taking loans or credits from banks.

Primary Objective of PMFBY

  • To provide rescue funds and financial relief to farmers taking
  • Providing financial support to farmers in distress due to crop loss/damage arising out of unforeseen events or extreme weather conditions.
  • Assistance in stabilizing the farmers' livelihood for the continuation of farming as an occupation.
  • The motivation for farmers to embrace innovative and technological farming practices.
  • Monetary provision and Flow of funds/credits to the agricultural sector which has a direct and indirect contribution to India’s food security, crop diversification and alongside protection to farmers from production risk.

Important Links (External)

  1. Pradhan Mantri Fasal Bima Yojana (PMFBY) - Official website.
  2. Performance Evaluation of Pradhan Mantri Fasal Bima Yojana - CMA IIM (Ahmedabad).

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