Centre to brief MPs on crop insurance scheme

UPSC Study Note — Prelims + Mains | GS-II & GS-III

1. At a Glance

• Pradhan Mantri Fasal Bima Yojana (PMFBY) is India's flagship crop insurance scheme launched in 2016, providing affordable insurance to farmers against crop losses from natural calamities, pests, and diseases. [1]
• A UPSC aspirant must know PMFBY for GS-III (agriculture, government schemes) and GS-II (welfare schemes, government interventions for vulnerable groups).
• On 18 March 2026, Lok Sabha Speaker Om Birla directed the government to brief MPs in small groups on PMFBY's provisions, highlighting persistent awareness gaps even at the legislative level. [5]
• The scheme is among the world's largest crop insurance programmes by area and premium, making it significant for comparative public policy questions. [1]

2. Why in the News

• 18 March 2026: During Question Hour in the Lok Sabha, Speaker Om Birla asked the government to form small MP groups to brief them on PMFBY's functioning and provisions. [5]
• Agriculture Minister Shivraj Singh Chouhan was responding to supplementary questions on the scheme when the Speaker intervened and proposed the briefing initiative; the Minister agreed to comply. [5]
• January 2025: The Union Cabinet approved continuation of PMFBY and the Restructured Weather Based Crop Insurance Scheme (RWBCIS) up to 2025-26 with a total outlay of ₹69,515.71 crore. [2]
• Kharif 2025: New compliance requirements — mandatory ESCROW accounts for States — came into force, making PMFBY operationally relevant in current legislative discourse. [2]

3. Background & Evolution

4. Core Static Facts

Identity

• Full Name: Pradhan Mantri Fasal Bima Yojana (PMFBY)
• Launch Date: Kharif season 2016
• Type: Central Sector Scheme (100% Central funding for premium subsidy, shared with States — see below) [1]
• Implementing Ministry: Ministry of Agriculture & Farmers' Welfare (MoAFW) [1]
• Nodal Agency: Agriculture Insurance Company of India (AIC) and empanelled private insurers [1]
• Portal: National Crop Insurance Portal (NCIP) — digitises farmer-insurer-bank interaction [1]

Premium Structure [1]

Coverage Scope [1]

• Pre-sowing to post-harvest losses
• Natural calamities: drought, flood, hailstorm, cyclone, inundation, landslide, earthquake
• Pests & diseases
• Post-harvest losses (up to 14 days for specified perils)
• Prevented sowing / planting risk

Participation [1]

• Compulsory: Loanee farmers availing Kisan Credit Card (KCC) / crop loans for notified crops in notified areas
• Voluntary: Non-loanee and tenant farmers

Scale (cumulative since 2016 to 2024-25) [4]

• Total farmer applications insured: 78.407 crore
• Farmers who received claims: 22.667 crore
• Total claims paid: ₹1.83 lakh crore
• Coverage of farmer applications: grew from 371 lakh (2014-15) to 1,510 lakh (2024-25)
• Non-loanee farmer applications: grew from 20 lakh (2014-15) to 522 lakh (2024-25)

Financial Outlay [2]

• Cabinet-approved budget for continuation (up to 2025-26): ₹69,515.71 crore

Technology Tools [1]

• YES-TECH: Yield Estimation System based on remote sensing
• CROPIC: Collection of Real-time Photos and Observations of Crops (geotagged photos)
• Drones & Smartphones: Rapid crop loss assessment
• NCIP: National Crop Insurance Portal

5. Multi-Dimensional Analysis

Economic

• PMFBY stabilises farm income by providing risk transfer against catastrophic losses, reducing distress-driven borrowing and farm suicides. [1]
• With ₹1.83 lakh crore in claims paid to 22.67 crore farmer-applications, the scheme injects significant counter-cyclical fiscal stimulus into rural economies post-disaster. [4]
• The ₹69,515.71 crore approved outlay (through 2025-26) represents a substantial fiscal commitment; premium subsidy burden shared between Centre and State creates co-operative fiscal federalism in agriculture. [2]
• Rising non-loanee participation (from 20 lakh to 522 lakh) signals improving financial inclusion among subsistence and marginal farmers. [4]

Social

• By capping farmer premiums at 1.5–5%, PMFBY targets small and marginal farmers who cannot afford commercial insurance, enhancing equity. [1]
• Voluntary participation since 2020 empowers tenant and sharecropper farmers — groups historically excluded from formal credit and insurance. [1]
• Persistent awareness gaps — evident from the Speaker's directive to brief even MPs — indicate the need for stronger last-mile communication. [5]

Environmental / Climate

• The scheme explicitly covers climate-linked perils (drought, flood, cyclone, unseasonal rainfall), making it a climate adaptation tool for the agriculture sector. [1]
• Technology integration (remote sensing, drones) for yield estimation reduces the need for physical crop-cutting experiments, lowering assessment lag during climate emergencies. [1]

Legal / Constitutional

• PMFBY is a Central Sector Scheme (CSS), not a Centrally Sponsored Scheme — Centre bears full administrative cost; premium cost is shared. [1]
• Agriculture is a State Subject (Entry 14, List II, Seventh Schedule) — State governments must notify crops, areas, and insurers, creating a Centre-State partnership that can cause delays when States exit or delay premium payments. [3]
• Kharif 2025 ESCROW mandate addresses State-level premium non-payment default risk through a legal/financial safeguard. [2]

Ethical / Governance

• The 12% penalty on delayed claims (from Kharif 2024) is a significant accountability measure against insurer moral hazard. [2]
• The ESCROW account requirement ensures States cannot use premium funds for other purposes — addressing fiduciary governance concerns. [2]
• Speaker Om Birla's direction for MP briefings highlights a governance gap: legislators themselves lack scheme literacy, undermining effective parliamentary oversight. [5]

Administrative

• Key challenge: States opting out — Telangana, Andhra Pradesh, Bihar, West Bengal, Jharkhand, and Gujarat had exited at various points, fragmenting nationwide coverage. [3]
• Cluster-based tendering of districts to insurance companies can create regional monopolies; farmer grievance redressal through NCIP remains inconsistent. [1]
• Transition from Crop Cutting Experiments (CCEs) to YES-TECH is incomplete — some States still rely on manual CCEs, delaying yield data and claim settlement. [1]

6. Recent Developments (Last 12–18 Months)

• January 2025: Union Cabinet approves continuation of PMFBY + RWBCIS up to 2025-26 with total budget of ₹69,515.71 crore. [2]
• Kharif 2024: 12% automatic penalty on insurers for delayed claim payments — systemic accountability reform. [2]
• Kharif 2025: Mandatory ESCROW accounts for States to deposit premium share in advance — addresses State-level default risk. [2]
• 2025 (9th year milestone): Total claims paid cross ₹1.83 lakh crore across 78.407 crore farmer applications since scheme inception. [4]
• 18 March 2026: Lok Sabha Speaker Om Birla directs the government to brief MPs in small groups on PMFBY, during Question Hour; Agriculture Minister Shivraj Singh Chouhan agrees. [5]

7. Prelims Hooks

1. PMFBY was launched in Kharif season 2016, replacing the National Agricultural Insurance Scheme (NAIS) and Modified NAIS (MNAIS). [1]
2. Maximum farmer premium under PMFBY for Kharif food crops is 2%; for Rabi food crops is 1.5%; for commercial/horticultural crops is 5%. [1]
3. PMFBY is a Central Sector Scheme — not a Centrally Sponsored Scheme — implemented by the Ministry of Agriculture & Farmers' Welfare. [1]
4. The scheme is compulsory for loanee farmers (KCC holders) for notified crops, and voluntary for non-loanee farmers. [1]
5. YES-TECH (Yield Estimation System based on Technology) uses remote sensing for yield estimation under PMFBY. [1]
6. CROPIC is the tool under PMFBY that uses geotagged photographs to verify crop damage. [1]
7. The National Crop Insurance Portal (NCIP) digitises the farmer-insurer-bank interface under PMFBY. [1]
8. Total claims paid under PMFBY since inception (as of 2024-25): ₹1.83 lakh crore to 22.667 crore farmer applications. [4]
9. Cabinet-approved outlay for PMFBY + RWBCIS (up to 2025-26): ₹69,515.71 crore. [2]
10. From Kharif 2024, a 12% penalty is automatically applied to insurers for delayed claim settlements. [2]
11. From Kharif 2025, States must maintain a mandatory ESCROW account for advance premium deposits. [2]
12. Non-loanee farmer applications increased from 20 lakh (2014-15) to 522 lakh (2024-25) under PMFBY. [4]
13. On 18 March 2026, Lok Sabha Speaker Om Birla directed the government to brief MPs on PMFBY during Question Hour. [5]
14. The Restructured Weather Based Crop Insurance Scheme (RWBCIS) runs parallel to PMFBY and was jointly extended in January 2025. [2]
15. PMFBY covers losses from pre-sowing to post-harvest stage, including prevented sowing risk and localised calamities like hailstorm and landslide. [1]

8. Mains Relevance

GS Paper Mapping

Plausible Mains Question Stems

1. "Pradhan Mantri Fasal Bima Yojana has emerged as one of the world's largest crop insurance programmes, yet significant challenges in implementation persist. Critically examine." (GS-III, 15 marks)
2. "The recent mandate of ESCROW accounts for State governments and the 12% penalty for delayed claims signal a shift in PMFBY's governance architecture. Analyse the implications for Centre-State cooperation in agricultural risk management." (GS-III, 10 marks)
3. "Despite its scale, awareness of PMFBY remains inadequate even among elected representatives. What does this reveal about the gaps in India's welfare scheme delivery ecosystem?" (GS-II, 10 marks)

9. Related Topics to Study Next

1. Kisan Credit Card (KCC) Scheme — PMFBY is compulsory for KCC holders; understanding KCC clarifies loanee farmer enrollment mechanics.
2. Minimum Support Price (MSP) & Procurement Policy — Both are income-stabilisation tools for farmers; UPSC often links them in a single question.
3. PM-KISAN (PM Kisan Samman Nidhi) — Another flagship direct-benefit scheme for farmers; frequently compared with PMFBY in policy analysis.
4. Agricultural Credit & NABARD — NABARD channels credit to agriculture; crop insurance rides on the same credit ecosystem.
5. Restructured Weather Based Crop Insurance Scheme (RWBCIS) — Runs in parallel with PMFBY, uses weather indices instead of yield; extended jointly in 2025.
6. Climate Change & Indian Agriculture — PMFBY is a climate adaptation tool; relevant for Environment + Agriculture crossover questions.
7. Cooperative Federalism in Agriculture — States opting out of PMFBY is a classic case study for Centre-State friction on concurrent/state subjects.
8. Digital Agriculture Mission — YES-TECH, CROPIC, and drone-based assessment fit within India's broader Digital Agriculture stack.

10. Common Errors / Trap Areas

1. CSS vs. Central Sector Scheme: PMFBY is a Central Sector Scheme, not a Centrally Sponsored Scheme. In CSS, States share implementation cost; in Central Sector, Centre funds everything except the premium subsidy split. Do not confuse.
2. Premium % confusion: The 2% cap applies only to Kharif food/oilseed crops. Rabi is 1.5% and commercial/horticultural is 5%. Aspirants often mis-apply the 2% figure universally.
3. Voluntary vs. Compulsory: Many aspirants believe PMFBY is entirely voluntary. It is compulsory for loanee farmers (KCC/crop loan holders) for notified crops in notified areas; voluntary only for non-loanee farmers.
4. PMFBY ≠ WBCIS/RWBCIS: PMFBY covers yield-based losses (assessed via crop cutting experiments / YES-TECH). The Restructured WBCIS covers losses based on weather indices (temperature, rainfall, humidity) — a fundamentally different trigger mechanism. These two are often confused.
5. Year of launch: PMFBY was launched in 2016 (Kharif season), not 2014 or 2015. The predecessor schemes (NAIS, MNAIS) existed before that. Do not conflate.