PMFBY Extended to 2025-26 and the DAP Special Package: Cabinet Decisions Explained

Decision 1: Crop Insurance Continued

• PMFBY and RWBCIS continue for 2025-26; the outlay for the five years 2021-22 to 2025-26 is Rs 69,515.71 crore.
• A Fund for Innovation and Technology (FIAT) of Rs 824.77 crore funds technology in the scheme: YES-TECH (remote-sensing-based yield estimation with at least 30% technology weight) and WINDS (block-level automatic weather stations and panchayat-level rain gauges, started in July 2023).
• North-Eastern states get the Centre’s premium share at 90:10 and the flexibility to keep unspent funds for the region.

PMFBY in Brief

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• Launched in 2016 by the Ministry of Agriculture and Farmers Welfare, replacing NAIS and MNAIS; farmers pay a maximum premium of 2% (Kharif), 1.5% (Rabi) and 5% (commercial and horticultural crops), with the balance shared by the Centre and the state.
• Covers prevented sowing, standing-crop losses, post-harvest losses and localised calamities on an area approach; voluntary for all farmers since Kharif 2020.

RWBCIS in Brief

• Insures against deviations in weather – rainfall, temperature, humidity, wind – measured at automatic weather stations; payouts follow pre-fixed weather triggers rather than measured yield.
• Covers food crops, oilseeds, horticultural and cash crops; the state chooses the crops and districts; premium subsidy is shared by the Centre and the state as in PMFBY.

Decision 2: The DAP Special Package

• DAP (di-ammonium phosphate, 18-46-0) is India’s second most used fertilizer after urea and is largely imported as finished DAP or as phosphoric acid and rock phosphate.
• Fertilizer prices for phosphatic and potassic fertilizers are decontrolled under the Nutrient Based Subsidy (NBS) regime (since April 2010), so when international prices rise the government adds a special package to keep the retail price steady.
• The Cabinet approved a one-time special package of Rs 3,850 crore (about Rs 3,500 per tonne) from 1 January 2025 until further orders, on top of the NBS subsidy, so that the retail price stays at Rs 1,350 per 50 kg bag.
• The package protects farmers from the spike in global DAP prices caused by supply disruptions and the Red Sea shipping crisis, and supports the Rabi sowing season.

Why These Decisions Matter

• Crop insurance and affordable fertilizer are the two biggest risk-and-cost cushions for small farmers; both decisions came just before the Rabi season’s peak.
• For the exchequer, fertilizer subsidy is one of the largest items after food subsidy; the DAP package shows how the NBS system is supplemented when prices spike.

FAQs

Why does India need a special package for DAP?

Because DAP prices are decontrolled and import-driven; when world prices rise above what the NBS subsidy covers, companies would have to raise retail prices, so the Centre adds a temporary package.

Is the DAP subsidy paid to farmers?

No. It is paid to fertilizer companies against sales recorded on the point-of-sale machines, so that the farmer buys at the fixed retail price.

Which exams ask these facts?

NABARD Grade A (ARD and ESI), RBI Grade B (economic and social issues) and SSC/banking general awareness sections regularly ask the outlay, the extension year and the DAP price.