Crop insurance
Crop insurance — Pradhan Mantri Fasal Bima Yojana (PMFBY) · Restructured Weather-Based Crop Insurance · subscription mechanics
12 min read · Updated 2026-05-25
What is Pradhan Mantri Fasal Bima Yojana?
Pradhan Mantri Fasal Bima Yojana is India's flagship crop insurance scheme, launched on 13 January 2016, which compensates yield loss when a notified village's actual yield falls below a threshold set from the best five of the last seven years. Farmers pay 2 percent of the sum insured for kharif food crops, 1.5 percent for rabi and 5 percent for commercial crops; governments pay the rest.
The story
It is 8 February 2024. The Beed district collector in Marathwada signs off a damage report: 44% of kharif soybean has failed because of a 23-day dry spell in August 2023. Within 60 days, 3.2 lakh PMFBY enrolled farmers receive Rs.412 crore in payouts — the largest single-district disbursement since the scheme launched in 2016. Hundreds of kilometres away, a Punjab paddy farmer who once enrolled in PMFBY has quietly opted out: in 2020, the Punjab government withdrew from the scheme along with Bihar, West Bengal, and Andhra — citing premium subsidy costs and dissatisfaction with insurer payouts.
The contradiction defines crop insurance in India. PMFBY has covered 5.5 crore farmer-applications annually (2022-24 average) at a gross premium of ~Rs.31,000 crore, with claim payouts of ~Rs.1.65 lakh crore between 2016 and 2024. Yet the scheme remains controversial — premium-collection mismatches, delayed CCEs (Crop-Cutting Experiments), private insurer disputes, and the opt-in voluntary turn after 2020 have all bruised its image.
For UPSC, PMFBY is the single most-asked agriculture insurance topic. It bundles risk pooling, federal cost-sharing, technology (satellite + drone yield estimation), and the political economy of farmer welfare.
Why this matters for UPSC
GS-III tests crop insurance under "agricultural distress, MSP, subsidies, insurance" — Prelims has asked PMFBY specifics in 2018 and 2020, and Mains has set 15-mark essays in 2018 ("examine the effectiveness of PMFBY") and 2022 (revamped scheme). The scheme also pairs with disaster-relief and climate-finance questions in interview.