Pradhan Mantri Fasal Bima Yojana (PMFBY)

profile picture BookMyCrop Jul 28, 2021

The new Crop Insurance Scheme adheres to the principle of the One Nation – One Scheme. It integrates the greatest elements of all prior schemes while also eliminating all previous shortcomings/weaknesses. The PMFBY has replaced two of the existing programs, Modified NAIS & the National Agricultural Insurance Scheme.


  1. To offer farmers insurance coverage and financial assistance in the event that any of the notified crops fail due to natural disasters, pests, or illnesses.

  2. Farmers' income must be stabilised in order for them to continue farming.

  3. In order to encourage farmers to use novel and advanced agricultural practices.

  4. To maintain the flow of finance to the agricultural industry.

Highlights of the scheme:

  • Farmers will pay a consistent premium of only 2 per cent for all Kharif crops and 1.5 per cent for all Rabi crops. Farmers will only be required to pay a 5% premium on yearly commercial and horticultural crops. Farmers will pay very low premium rates, and the government will pay the balance premium in order to offer the full insured amount to farmers in the event of crop loss due to natural calamity.

  • Government subsidies have no upper limit. Even if the balance premium is 90%, the government will bear it.

  • Previously, there existed a clause that limited the premium rate, resulting in minimal claims payments to farmers. This cap was put in place to minimise the government's outlay on the premium subsidies. This capping has now been lifted, and farmers will be able to make a claim against the full sum insured with no reduction.

  • To a large extent, the use of technology will be promoted. Smartphones will be used to capture and upload crop cutting data in order to shorten claim payment delays for farmers. To reduce the number of crop cutting tests, remote sensing will be used.

  • Because PMFBY is a successor scheme for NAIS / MNAIS, all services engaged in the program's implementation will be free from Service Tax responsibility. It is projected that the new program will provide farmers with a 75-80% rebate on insurance premiums.

Who can be covered?

All those farmers who are sanctioned with Seasonal Agricultural Operations (SAO) loans by Financial Institutions, i.e. loanee farmers, would be covered mandatorily for the notified crop’s season.

Non-loanee farmers are not required to participate in the Scheme.

  • The insurance coverage must be exactly the same as the sum insured/hectare as defined in the government notification or/and on the National Crop Insurance Portal multiplied by the sown area for the notified crop.

How to enrol in the Scheme?

  • Loanee and non-loanee farmers are to be enrolled in the Ministry of Agriculture & Farmers Welfare's National Crop Insurance Portal (NCIP) in New Delhi. Banks that make Seasonal Crop Loans to farmers are responsible for uploading data to the NCIP.

  • Intermediaries, Non-loanee farmers, farmers on their own, Common Service Centers (CSCs), and other Agencies are required to upload the data in the NCIP, along with their essential documents.

  • The premium can only be paid via NEFT; DDs and checks are not accepted. Similarly, offline enrollment applications are not accepted, as all applications must be completed online.

Risks covered under the PMFBY:

  • Losses in Yield (standing crops, on a notified area basis). Comprehensive risk insurance is offered to cover yield losses caused by non-preventable hazards such as natural fire and lightning, storms, hailstorms, cyclones, floods, inundations, and landslide risks, as well as drought, dry spells, and pests/diseases will be addressed.

  • In circumstances where the majority of insured farmers in a notified region intend to sow/plant and have spent expenses for the purpose, but are prevented from sowing/planting the insured crop due to bad weather conditions, compensation claims of up to 25% of the sum insured may be filed.

  • Coverage for post-harvest losses will be given for a maximum of 14 days after harvesting for crops that are kept in a “cut & spread” state to dry on the field.

  • Loss/damage resulting from the occurrence of certain localised hazards such as hailstorms, landslides, and inundation affecting isolated farms in the notified region would also be covered for certain limited concerns.


The aforementioned data is only for informational purposes fetched from credible sources.

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