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] | Crop Type | Max Farmer Premium | |-----------|-------------------| | Kharif food & oilseed crops | 2% of sum insured | | Rabi food & oilseed crops | 1.5% of sum insured | | Annual commercial/horticultural crops | 5% of sum insured | | Remaining premium | Shared equally between Centre & States |

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 | GS Paper | Syllabus Heading | |----------|-----------------| | GS-III | Government Budgeting; Agriculture; Food Security; Government Schemes | | GS-II | Government Policies & Interventions for Development in Various Sectors; Welfare Schemes for Vulnerable Sections |

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.