🌾 PMFBY
Comprehensive crop insurance scheme providing financial protection to farmers against crop failure due to natural calamities.
Overview
The Pradhan Mantri Fasal Bima Yojana (PMFBY) is a comprehensive crop insurance scheme designed to support the agricultural sector. Its primary objective is to provide financial support to farmers suffering from crop loss or damage arising out of unforeseen events, thereby stabilizing their income and encouraging them to adopt innovative agricultural practices.
Launch Details
The scheme was launched on 13th January 2016. It was introduced to replace the earlier schemes, namely the National Agricultural Insurance Scheme (NAIS) and the Modified NAIS, aiming to fix their shortcomings and offer a more farmer-friendly insurance product.
Premium Rates (Farmer's Share)
One of the key features of PMFBY is the minimal premium burden on farmers, with the government bearing the bulk of the cost.
| Category of Crops | Premium Rate (Farmer's Share) |
|---|---|
| Kharif Crops | 2% of Sum Insured or Actuarial rate (whichever is lower) |
| Rabi Crops | 1.5% of Sum Insured or Actuarial rate (whichever is lower) |
| Commercial / Horticulture | 5% of Sum Insured or Actuarial rate (whichever is lower) |
Premium Subsidy: The balance premium (Actuarial rate minus Farmer's share) is shared by the Centre and State Governments. The sharing pattern is 50:50 for most states and 90:10 for North Eastern and Himalayan States.
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Overview
The Pradhan Mantri Fasal Bima Yojana (PMFBY) is a comprehensive crop insurance scheme designed to support the agricultural sector. Its primary objective is to provide financial support to farmers suffering from crop loss or damage arising out of unforeseen events, thereby stabilizing their income and encouraging them to adopt innovative agricultural practices.
Launch Details
The scheme was launched on 13th January 2016. It was introduced to replace the earlier schemes, namely the National Agricultural Insurance Scheme (NAIS) and the Modified NAIS, aiming to fix their shortcomings and offer a more farmer-friendly insurance product.
Premium Rates (Farmer's Share)
One of the key features of PMFBY is the minimal premium burden on farmers, with the government bearing the bulk of the cost.
| Category of Crops | Premium Rate (Farmer's Share) |
|---|---|
| Kharif Crops | 2% of Sum Insured or Actuarial rate (whichever is lower) |
| Rabi Crops | 1.5% of Sum Insured or Actuarial rate (whichever is lower) |
| Commercial / Horticulture | 5% of Sum Insured or Actuarial rate (whichever is lower) |
Premium Subsidy: The balance premium (Actuarial rate minus Farmer's share) is shared by the Centre and State Governments. The sharing pattern is 50:50 for most states and 90:10 for North Eastern and Himalayan States.
Sum Insured Calculation
The Sum Insured represents the maximum amount payable in case of a total loss. It is calculated utilizing the Scale of Finance.
Sum Insured = Scale of Finance (SoF) × Area under Cultivation
The Scale of Finance (SoF) is defined as the finance required for raising a crop per unit area (usually per hectare) and is notified by the State Level Technical Committee (SLTC).
Risks Covered & Exclusions
The scheme covers losses from the pre-sowing to the post-harvest stage.
| Risk Stage | Details of Coverage |
|---|---|
| Prevented Sowing/Planting | If the majority of the insured area is prevented from sowing/planting due to deficit rainfall or adverse seasonal conditions, farmers are eligible for indemnity claims up to 25% of the Sum Insured. |
| Standing Crop Loss | Covers yield losses due to non-preventable risks such as drought, dry spells, flood, inundation, pests and diseases, landslides, natural fire and lightning, storm, hailstorm, and cyclone. |
| Post-Harvest Losses | Coverage is available for up to 14 days after harvesting for crops kept in "cut and spread" condition to dry, specifically against specific perils like cyclone, cyclonic rains, and unseasonal rains. |
| Localized Calamities | Loss/damage resulting from hailstorm, landslide, inundation, cloud burst, and natural fire affecting isolated farms is covered on an individual farm basis. |
| Add-on Coverage | Losses due to attack by wild animals can be covered as an add-on at the discretion of the state government. |
Exclusions: The scheme does not cover losses arising from war, nuclear risks, malicious damage, and other preventable risks.
Claim (Indemnity) Calculation
Claims are calculated based on the shortfall in yield compared to the historical average.
Claim =
Understanding Key Terms
-
Threshold Yield: This is the benchmark yield level for a crop in a specific area. It is basically the Guaranteed Yield.
- Calculation: Based on the Moving Average Yield of the best 5 out of the past 7 years.
- Formula: Threshold Yield = Average Yield × Indemnity Level.
-
Indemnity Level: This represents the percentage of the yield that is guaranteed/protected. It varies based on the risk profile of the crop/area:
| Risk Category | Indemnity Level |
|---|---|
| High Risk | 70% of Average Yield |
| Medium Risk | 80% of Average Yield |
| Low Risk | 90% of Average Yield |
Concept Example
To make this clear, let's look at a practical calculation:
Scenario:
- Crop: Wheat (Rabi)
- Sum Insured: ₹50,000 per hectare
- Average Yield (Best 5 of past 7 years): 40 quintals/ha
- Risk Category: Medium Risk (80% Indemnity)
- Actual Yield (Current Year): 20 quintals/ha (due to calamity)
Step 1: Calculate Threshold Yield
- Threshold Yield = Average Yield × Indemnity Level
- Threshold Yield = 40 quintals/ha × 80% = 32 quintals/ha
Step 2: Calculate Shortfall
- Shortfall = Threshold Yield - Actual Yield
- Shortfall = 32 quintals/ha - 20 quintals/ha = 12 quintals/ha
Step 3: Calculate Claim
- Claim = (Shortfall / Threshold Yield) × Sum Insured
- Claim = (12 quintals/ha / 32 quintals/ha) × ₹50,000
- Claim = 0.375 × ₹50,000 = ₹18,750 per hectare
Intimation Timeline for Claims
Timely reporting of losses is crucial for claim settlement, especially for localized risks.
| Event Type | Intimation Deadline |
|---|---|
| Localized Calamities | Farmer must intimate within 72 hours of occurrence. |
| Post-Harvest Loss | Farmer must intimate within 72 hours of occurrence. |
| Prevented Sowing | Intimation required, usually invoked for a wider area. |
| Widespread Calamities | Based on Crop Cutting Experiments (CCEs) data; individual intimation not required. |
Crop Seasons and Duration
Understanding crop seasons is essential as premium rates vary by season.
Types of Crops
| Season | Sowing Time | Examples |
|---|---|---|
| Kharif | June - July (Monsoon) | Rice, Maize, Jute, Groundnut, Cotton |
| Rabi | Oct - Dec (Winter) | Wheat, Mustard, Barley, Peas, Gram |
| Zaid (Summer) | March - June | Watermelon, Cucumber, Fodder crops |
Crop Cycles
| Cycle Type | Duration | Examples |
|---|---|---|
| Uni-Cycle | 1 year or more | Sugarcane (12-18 months), Cotton (approx 6-8 months) |
| Bi-Cycle | 2 crops per year | Rice-Wheat rotation, Rice-Maize |
| Tri-Cycle | 3 crops per year | Rice-Wheat-Moong |
| Perennial | Multi-year lifespan | Tea, Coffee, Rubber, Coconut, Banana |
Revolutions in Agriculture
These revolutions mark significant productivity leaps in specific agricultural sectors.
| Revolution | Related Sector |
|---|---|
| Green Revolution | Food grains (Introduction of High Yield Variety seeds, mainly Wheat & Rice) |
| White Revolution | Milk / Dairy (Operation Flood) |
| Blue Revolution | Fish / Aquaculture |
| Yellow Revolution | Oilseeds (Mustard, Sunflower) |
| Golden Revolution | Horticulture (Fruits, Honey) |
| Silver Revolution | Eggs / Poultry |
| Pink Revolution | Onion / Meat / Prawns |
| Red Revolution | Meat / Tomato |
| Grey Revolution | Fertilizers |
| Brown Revolution | Leather / Cocoa |
| Black Revolution | Petroleum / Crude Oil |
| Round Revolution | Potato |
Strengthening Measures
Since its inception, PMFBY has undergone revisions to become more efficient:
- Voluntary Enrollment: Enrollment is now voluntary for all farmers (including loanee farmers) since 2020.
- Technology Integration: Use of Smartphones, Remote Sensing, Drones, and GPS technology for accurate yield estimation and faster claim settlement.
- Doorstep Distribution: Distribution of policies to farmers at their doorstep (Meri Policy Mere Haath).
Summary Cheat Sheet
| Parameter | Details |
|---|---|
| Full Name | Pradhan Mantri Fasal Bima Yojana |
| Launch Date | 13th January 2016 |
| Predecessors | NAIS and MNAIS |
| Enrollment | Voluntary (since 2020) |
| Premium (Kharif) | 2% of Sum Insured |
| Premium (Rabi) | 1.5% of Sum Insured |
| Premium (Commercial) | 5% of Sum Insured |
| Subsidy Sharing | 50:50 (Centre:State); 90:10 (NE/Himalayan) |
| Sum Insured | SoF x Area (SoF set by SLTC) |
| Prevented Sowing | Up to 25% of Sum Insured |
| Post-Harvest Coverage | 14 days after harvest |
| Claim Intimation | Within 72 hours (local/post-harvest) |
| Claim Formula | (Threshold - Actual) / Threshold x SI |
| Threshold Yield | Best 5 of past 7 years x Indemnity Level |
| Indemnity (High Risk) | 70% of Average Yield |
| Indemnity (Medium Risk) | 80% of Average Yield |
| Indemnity (Low Risk) | 90% of Average Yield |
| Technology | Drones, GPS, Remote Sensing, Smartphones |
| Doorstep Initiative | Meri Policy Mere Haath |
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