Crop Insurance Schemes in India: PMFBY and RWBCIS Explained with Exam Facts

Context

• On 1 January 2025 the Cabinet approved the continuation of PMFBY and RWBCIS for 2025-26, taking the outlay for 2021-22 to 2025-26 to Rs 69,515.71 crore.
• A Fund for Innovation and Technology (FIAT) of Rs 824.77 crore was created to finance YES-TECH, WINDS and research.
• The same meeting extended the one-time special package on DAP so that farmers keep getting the fertilizer at Rs 1,350 per 50 kg bag.

Pradhan Mantri Fasal Bima Yojana (PMFBY)

• Launched: 13 January 2016; in force from the Kharif 2016 season, replacing NAIS and MNAIS; ministry – Agriculture and Farmers Welfare.
• Farmer’s premium: a maximum of 2% for Kharif food and oilseed crops, 1.5% for Rabi crops and 5% for annual commercial and horticultural crops; the rest of the actuarial premium is shared equally by the Centre and the state (90:10 for North-Eastern states).
• Risks covered: prevented sowing, standing-crop losses from non-preventable risks (drought, flood, pests and diseases), post-harvest losses for up to 14 days for crops left to dry in the field, and localised calamities such as hailstorm, landslide and inundation, with mid-season adversity payouts.
• Area approach: yield is measured through crop-cutting experiments at the insurance unit (village or panchayat for major crops); the payout is the shortfall from the threshold yield.
• Voluntary since Kharif 2020 for loanee farmers as well; states choose insurers through bidding, and the Centre’s premium subsidy is capped at 30% for unirrigated and 25% for irrigated areas.
• Delivery through the National Crop Insurance Portal, DigiClaim for direct payment, the Kisan Rakshak helpline (14447) and campaigns such as Meri Policy Mere Haath.

Restructured Weather Based Crop Insurance Scheme (RWBCIS)

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• Also launched in 2016 alongside PMFBY, replacing the earlier WBCIS.
• Uses weather parameters as proxies for yield: rainfall, temperature, humidity, wind speed and similar indices recorded at reference weather stations.
• Payouts are automatic when a trigger is crossed, so there are no crop-cutting experiments; it suits horticulture and crops where yield data are weak.
• Premium rates for farmers are the same as PMFBY; the state decides which scheme applies to which crop and district.

Technology: YES-TECH, WINDS and CROPIC

• YES-TECH (Yield Estimation System based on Technology) uses remote sensing and modelling so that at least 30% of the weight in yield estimates comes from technology, reducing disputes over crop-cutting experiments.
• WINDS (Weather Information and Network Data System), launched in July 2023, sets up automatic weather stations at block level and rain gauges at panchayat level, raising weather-data density about fivefold.
• CROPIC collects geo-tagged crop photographs for loss verification.

Performance

• Farmers have paid roughly Rs 32,000 crore of premium since 2016 against claims of more than Rs 1.7 lakh crore, a payout of about five times the farmers’ share.
• Around 4 crore farmer applications are insured every year; the Agriculture Insurance Company of India and about 20 empanelled insurers implement the scheme.
• Some states have opted out at times and run their own schemes, such as the Bihar Rajya Fasal Sahayata Yojana and West Bengal’s Bangla Shasya Bima.

FAQs

Is PMFBY compulsory for farmers with crop loans?

Not since Kharif 2020; loanee farmers may opt out by informing the bank before the enrolment deadline.

Who pays the premium beyond the farmer’s share?

The Centre and the state share the balance equally (90:10 for North-Eastern states), with the Centre’s share capped when actuarial premiums are very high.

Why is crop insurance a NABARD Grade A favourite?

Agricultural risk management is central to the ARD syllabus; the premium rates, the risks covered, the 2020 changes and the 2025 extension figures are asked almost every year.