Pradhan Mantri Fasal Bima Yojana (PMFBY): A Critical Analysis for UPSC
Published on: 29 July 2025 | Category: Government Schemes & Policies | Tags: GS Paper 2, Agriculture, Government Interventions
Introduction
The Pradhan Mantri Fasal Bima Yojana (PMFBY), launched in 2016, is a flagship crop insurance scheme under the Ministry of Agriculture & Farmers Welfare. It aims to provide a safety net to farmers against crop failure arising from natural calamities, pests, and diseases. Given the volatility of Indian agriculture, the scheme is considered essential for ensuring financial stability among farmers.
Why in News?
Recent reports highlight a major concern — states have defaulted on paying nearly ₹6,450 crore in claim settlements since FY2020, affecting the timely disbursement of insurance to farmers. Despite this, the scheme has witnessed expansion in coverage and tech integration.
Objectives of PMFBY
- To provide financial support to farmers in the event of crop loss.
- To stabilize the income of agricultural households.
- To encourage the adoption of modern agricultural practices.
- To ensure credit flow in the agriculture sector.
Key Features of PMFBY
- Low Premium: Farmers pay 2% for Kharif, 1.5% for Rabi, and 5% for commercial/horticultural crops.
- Shared Subsidy: Remaining premium is borne equally by Centre and State (90:10 in North-Eastern states).
- Technology Integration: Use of satellites, drones, and mobile apps for assessment of crop damage.
- Post-Harvest Coverage: Covers losses due to cyclones, unseasonal rains, and localized disasters.
- Return on Investment: For every ₹100 premium paid, farmers have received approximately ₹500 in claims.
Performance Highlights
- Since inception, more than ₹1.78 lakh crore disbursed as claims.
- Over 4.19 crore farmers enrolled in 2024-25.
- Campaigns like Meri Policy Mere Haath and Fasal Bima Pathshala have increased awareness.
Challenges in Implementation
- State Defaults: Major states like Rajasthan, Andhra Pradesh, and Madhya Pradesh have delayed payments.
- Delayed Claims: Compensation is often delayed, defeating the purpose of immediate financial aid.
- Underrepresentation: Low coverage among tenant (6.5%) and marginal (17.6%) farmers.
- Private Sector Exit: Payment delays and high risks discourage insurance companies from participation.
- Manual Assessments: Traditional methods of crop damage estimation are time-consuming and inaccurate.
Recent Reforms and Innovations
- National Crop Insurance Portal (NCIP): Unified digital platform for enrolment, tracking, and claim disbursal.
- Digiclaim Module: Enables direct claim transfer through PFMS integration.
- 12% Penalty on Delay: Effective from Kharif 2024 for insurers delaying compensation.
- YES-TECH: Yield Estimation System based on satellite imagery. Mandatory for paddy, wheat, and soybean.
- WINDS: Strengthens weather data collection at the village level for better yield prediction.
- Escrow-Based Advance Premium: Ensures timely deposit of state premiums from Kharif 2025–26.
- Proportional Claim Disbursal: Farmers receive Centre’s claim share even if states default.
Impact on Farmers
The PMFBY has played a pivotal role in reducing distress among farmers after crop loss. While timely compensation remains a bottleneck, reforms have enhanced transparency and accountability. The average return of ₹500 on every ₹100 premium makes it a valuable risk mitigation tool.
UPSC Mains Angle
Mains Question: “Pradhan Mantri Fasal Bima Yojana has improved financial resilience among vulnerable farmers. Discuss.”
Suggested Answer Strategy:
- Start with the vulnerability of Indian agriculture.
- Explain PMFBY's role in addressing these vulnerabilities.
- Highlight success metrics and tech integration.
- Discuss implementation challenges and recent reforms.
- Conclude with suggestions to improve coverage and efficiency.
UPSC Prelims PYQ (2016)
Q: With reference to ‘Pradhan Mantri Fasal Bima Yojana’, consider the following statements:
- Farmers will have to pay a uniform premium of two percent for any crop they cultivate in any season.
- This scheme covers post-harvest losses arising out of cyclones and unseasonal rains.
Answer: (b) 2 only
Conclusion
The PMFBY represents a landmark policy to safeguard India’s agrarian economy. Although plagued by certain bottlenecks, ongoing digital and administrative reforms signal a commitment to improving its efficacy. For UPSC aspirants, this scheme offers insights into governance, technology in agriculture, and centre-state fiscal coordination.
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