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Pradhan Mantri Fasal Bima Yojana

This topic provides information about Pradhan Mantri Fasal Bima Yojana.

The new Crop Insurance Scheme is in line with One Nation – One Scheme theme.  It incorporates the best features of all previous schemes and at the same time, all previous shortcomings / weaknesses have been removed. The PMFBY will replace the existing two schemes National Agricultural Insurance Scheme as well as the Modified NAIS.


  1. 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.
  2. To stabilise the income of farmers to ensure their continuance in farming.
  3. To encourage farmers to adopt innovative and modern agricultural practices.
  4. To ensure flow of credit to the agriculture sector.

Highlights of the scheme

  • There will be a uniform premium of only 2% to be paid by farmers for all Kharif crops and 1.5% for all Rabi crops. In case of annual commercial and horticultural crops, the premium to be paid by farmers will be only 5%. The premium rates to be paid by farmers are very low and balance premium will be paid by the Government to provide full insured amount to the farmers against crop loss on account of natural calamities.
  • There is no upper limit on Government subsidy. Even if balance premium is 90%, it will be borne by the Government.
  • Earlier, there was a provision of capping the premium rate which resulted in low claims being paid to farmers. This capping was done to limit Government outgo on the premium subsidy. This capping has now been removed and farmers will get claim against full sum insured without any reduction.
  • The use of technology will be encouraged to a great extent. Smart phones will be used to capture and upload data of crop cutting to reduce the delays in claim payment to farmers. Remote sensing will be used to reduce the number of crop cutting experiments.
  • PMFBY is a replacement scheme of  NAIS / MNAIS, there will be exemption from Service Tax liability of all the services involved in the implementation of the scheme. It is estimated that the new scheme will ensure about 75-80 per cent of subsidy for the farmers in insurance premium.

Farmers to be covered

All farmers growing notified crops in a notified area during the season who have insurable interest in the crop are eligible.

Compulsory coverage : The enrolment under the scheme, subject to possession of insurable interest on the cultivation of the notified crop in the notified area, shall be compulsory for following categories of farmers:

  • Farmers in the notified area who possess a Crop Loan account/KCC account (called as Loanee Farmers) to whom credit limit is sanctioned/renewed for the notified crop during the crop season. and
  • Such other farmers whom the Government may decide to include from time to time.
Voluntary coverage : Voluntary coverage may be obtained by all farmers not covered above, including Crop KCC/Crop Loan Account holders whose credit limit is not renewed.

Risks covered under the scheme

  • Yield Losses (standing crops, on notified area basis). Comprehensive risk insurance is provided to cover yield losses due to non-preventable risks, such as Natural Fire and Lightning, Storm, Hailstorm, Cyclone, Typhoon, Tempest, Hurricane, Tornado. Risks due to Flood, Inundation and Landslide, Drought, Dry spells, Pests/ Diseases also will be covered.
  • In cases where majority of the insured farmers of a notified area, having intent to sow/plant and incurred expenditure for the purpose, are prevented from sowing/planting the insured crop due to adverse weather conditions, shall be eligible for indemnity claims upto a maximum of 25 per cent of the sum-insured.
  • In post-harvest losses, coverage will be available up to a maximum period of 14 days from harvesting for those crops which are kept in “cut & spread” condition to dry in the field.
  • For certain localized problems, Loss / damage resulting from occurrence of identified localized risks like hailstorm, landslide, and Inundation affecting isolated farms in the notified area would also be covered.

Unit of Insurance

The Scheme shall be implemented on an ‘Area Approach basis’ i.e., Defined Areas for each notified crop for widespread calamities with the assumption that all the insured farmers, in a Unit of Insurance, to be defined as "Notified Area‟ for a crop, face similar risk exposures, incur to a large extent, identical cost of production per hectare, earn comparable farm income per hectare, and experience similar extent of crop loss due to the operation of an insured peril, in the notified area.

Defined Area (i.e., unit area of insurance) is Village/Village Panchayat level by whatsoever name these areas may be called for major crops and for other crops it may be a unit of size above the level of Village/Village Panchayat. In due course of time, the Unit of Insurance can be a Geo-Fenced/Geo-mapped region having homogenous Risk Profile for the notified crop.

For Risks of Localised calamities and Post-Harvest losses on account of defined peril, the Unit of Insurance for loss assessment shall be the affected insured field of the individual farmer.

Calendar of activity

Loaning period (loan sanctioned) for Loanee farmers covered on Compulsory basis. April to July October to December
Cut-off date for receipt of Proposals of farmers (loanee & non-loanee). 31 July 31st December
Cut-off date for receipt of yield data Within a month from final harvest Within a month from final harvest

How to apply

Farmers can apply online for Crop Insurance at the link https://pmfby.gov.in/

To calculate the insurance premium payable, click here

Revised operational guidelines for Pradhan Mantri Fasal Bima Yojna (PMFBY)

Government has modified operational guidelines for Pradhan Mantri Fasal Bima Yojna (PMFBY) which is being implemented from 1st of October, 2018.

New provisions in the operational guidelines of PMFBY

  • Provision of Penalties/ Incentives for States, Insurance Companies (ICs) and Banks i.e. 12% interest rate to be paid by the Insurance Company to farmers for delay in settlement claims beyond two months of prescribed cut off date. Similarly, State Govt. have to pay 12% interest rate for delay in release of State share of Subsidy beyond three months of prescribed cut off date/submission of requisition by Insurance Companies.
  • Detailed SOP for Performance evaluation of ICs and their de-empanelment
  • Inclusion of Perennial horticultural crops (on pilot basis) under the ambit of PMFBY. (OGs of PMFBY envisages coverage of food and Oilseed crops and Annul Commercial & Horticultural crops)
  • Inclusion of hailstorms in post harvest losses, besides unseasonal and cyclonic rainfalls
  • Inclusion of cloud burst and natural fire in localized calamities in addition to hailstorm, landslide, and inundation.
  • Add on coverage for crop loss due to attack of wild animals on pilot basis with the additional financial liabilities of this provision to be borne by concerned state Govt.
  • Mandatory capturing of Adhaar number – This would help in de-duplication
  • Target for Coverage to ICs especially of Non loanee farmers (10% incremental).
  • Definition of Major Crops, Unseasonal rainfall and Inundation incorporated for clarity and proper coverage
  • Rationalization of premium release process: Release of Upfront premium subsidy based on 50% of 80% of total share of subsidy of corresponding season of previous year as GOI/State subsidy at the beginning of the season- Companies need not provide any projections for the advance subsidy. Second Installment – balance premium based on approved business statistics on Portal for settlement of claims and final installment after reconciliation of entire coverage data on portal based on final business statistics on portal.
  • States allowed to take decision for inclusion of crops having high premium for calculation of L1 calculation and for notification.
  • Rationalization of methodology for calculation of TY
  • Moving average of best 5 out of 7 years for calculation of claim amount.
  • Settlement of claims (Prevented sowing/ on account for Mid season adversity / Localized Claims) without waiting for Second installment of final subsidy.
  • Yield based claims to be settled on the basis of subsidy provided on provisional business data.
  • Separate Budget Allocation for Administrative expenses (atleast 2% of budget of scheme).
  • Broad Activity wise seasonality discipline containing defined timelines for all major activities to streamlines the process of coverage, submission of yield data and early settlement of claims.
  • District wise crop wise crop calendar (for major crops) to decide cutoff date for enrolment.
  • Increased time for change of crop name for insurance - upto 2 days prior to cutoff date for enrolment instead of earlier provision of 1 month before cutoff date.
  • More time to insured farmer to intimate individual claims – 72 hours (instead of 48 hours) through any stakeholders and directly on portal.
  • Timeline for declaration of prevented sowing •
  • Detailed SOP for dispute redressal regarding yield data/crop loss.
  • Detailed SOP for claims estimation w.r.t. Add on products i.e. Mid season adversity, prevented/failed sowing, post harvest loss and localized claims
  • Detailed SOP for Area Correction factor
  • Detailed SOP for Multi picking crops.
  • Detailed plan for publicity and awareness- earmarked expenditure-0.5% of Gross premium per company per season
  • Use of RST in clustering/Risk classification.
  • Penalties/ Incentives for States, ICs and Banks • Performance evaluation of ICs and their de-empanelment.

Revamping of PMFBY and RWBCIS

The Union Cabinet, in February 2020, has approved revamping of "Pradhan Mantri Fasal Bima Yojana (PMFBY)" and "Restructured Weather Based Crop Insurance Scheme (RWBCIS)" to address the existing challenges in implementation of Crop Insurance Schemes.

It is proposed to modify certain parameters/provisions of ongoing schemes of PMFBY and RWBCIS as under:

  • Allocation of business to Insurance Companies to be done for three years (Both PMFBY/RWBCIS).
  • Option shall be given to States/UTs to choose Scale of Finance or district level Value of Notional Average Yield (NAY) i.e. NAY* Minimum Support Price (MSP) as Sum Insured for any district crop combination (Both PMFBY/RWBCIS). Farm gate price will be considered for the other crops for which MSP is not declared.
  • Central Subsidy under PMFBY/RWBCIS to be limited for premium rates upto 30% for unirrigated areas/crops and 25% for irrigated areas/crops. Districts having 50% or more irrigated area will be considered as irrigated area/district (Both PMFBY/RWBCIS).
  • Flexibility to States/UTs to implement the Scheme with option to select any or many of additional risk covers/features like prevented sowing, localised calamity, mid-season adversity, and post-harvest losses. Further, States/UT can offer specific single peril risk/insurance covers, like hailstorm etc, under PMFBY even with or without opting for base cover (Both PMFBY/RWBCIS).
  • States not to be allowed to implement the Scheme in subsequent Seasons in case of considerable delay by States in release of requisite Premium Subsidy to concerned Insurance Companies beyond a prescribed time limit. Cut-off dates for invoking this provision for Kharif and Rabi seasons will be 31st March and 30th September of successive years respectively (Both PMFBY/RWBCIS).
  • For estimation of crop losses/admissible claims, two-Step Process to be adopted based on defined Deviation matrix" using specific triggers like weather indicators, satellite indicators, etc. for each area along with normal ranges and deviation ranges. Only areas with deviations will be subject to Crop Cutting Experiments (CCEs) for assessment of yield loss (PMFBY).
  • Technology solutions like Smart Sampling Technique (SST) and optimization of number of CCEs to be adopted in conducting CCEs (PMFBY).
  • In case of non-provision of yield data beyond cut-off date by the States to implementing Insurance Companies, claims to be settled based on yield arrived through use of Technology solution (PMFBY alone).
  • Enrolment under the Scheme to be made voluntary for all farmers (Both PMFBY/RWBCIS).
  • Central Share in Premium Subsidy to be increased to 90% for North Eastern States from the existing sharing pattern of 50:50 (Both PMFBY/RWBCIS).
  • Provisioning of at least 3% of the total allocation for the Scheme to be made by Government of India and Implementing State Governments for administrative expenses. This shall be subject to an upper cap fixed by DAC&FW for each State (Both PMFBY/RWBCIS).
  • Besides above, Department of Agriculture, Cooperation and Farmers Welfare in consultation with other stakeholders/agencies will prepare/develop State specific, alternative risk mitigation programme for crops/areas having high rate of premium. Further, as the scheme is being made voluntary for all farmers, therefore, to provide financial support and effective risk mitigation tools through crop insurance especially to 151 districts which are highly water stressed including 29 which are doubly stressed because of low income of farmers and drought, a separate, scheme in this regard would also be prepared.
  • The concerned provisions/parameters of scheme and operational guidelines of the PMFBY and RWBCIS shall be modified to incorporate the above said modifications and shall be made operational from Kharif 2020 season.


With these changes it is expected that farmers would be able to manage risk in agriculture production in a better way and will succeed in Stabilizing the farm income. Further, it will increase coverage in north eastern region enabling farmers of NER to manage their agricultural risk in a better way. These changes will also enable quick and accurate yield estimation leading to faster claims settlement. These changes are proposed to be implemented from Kharif’ 2020 Season throughout the Country.

Comparison with previous schemes







PM Crop Insurance Scheme


Premium rate



Lower than even NAIS (Govt to contribute 5 times that of farmer)


One Season – One Premium





Insurance Amount cover





On Account Payment





Localised Risk coverage


Hail storm, Land slide Hail storm, Land slide, Inundation


Post Harvest Losses coverage


Coastal areas - for cyclonic rain

All India – for cyclonic + unseasonal rain


Prevented Sowing coverage





Use of Technology (for quicker settlement of claims)








Yes (target to double coverage to 50%)

For complete information about the scheme, click here.

Source : PMFBY portal

Related resources

  1. Directory of Insurance Companies
  2. Directory of Banks
Arvind Feb 06, 2020 08:03 PM

How will I be able to know if the fiscal and financial targets of this scheme is met.

Bikash Sharma Dec 16, 2019 12:12 PM

Thanks for given details information about PMFBY steps by steps. It is quite helpful for me to while going to the field...

Ashvin vekariya Dec 01, 2019 01:37 PM

How many percent pay government to insurance companies?
Kharif pak primium

Rathinakumar Sep 25, 2019 08:07 AM

Where from shall i ger our area paddy yeild report for the past 7 years, is it passible to download fron net. Kindly guide

Manohar Magennavar Sep 18, 2019 02:22 PM

Whether all the Districts are covered in the Karnataka state under Fasal Bima Yojana

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