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Current Affairs

Pradhan Mantri Fasal Bima Yojana (PMFBY)

Date: 19 March 2022 Tags: Agriculture


Maharashtra government has threatened to withdraw from PMFBY scheme if its suggestions are not adopted.



Many states such as Gujarat have already withdrawn from Prime Minister’s crop insurance scheme. 



  • The PMFBY is a centrally sponsored scheme that aims to cushion farmers against crop loss due to adverse climatic conditions.

  • The state and central governments together cover 95 per cent of the premium amount while the farmer bears 1.5-5 per cent of the premium. 

  • Farmers will have to fill loss reports online which are validated by insurance companies before the compensation. Technology will be used for calculating the amount.

  • Earlier, the scheme was mandatory for farmers availing institutional finance but was made voluntary post 2020.


Criticism of the scheme

  • It is alleged that the scheme benefits insurance companies more than the farmers.  These companies have made profits at cost of public exchequer.

  • Other issues include delay in giving payments and denial of claims of farmers experiencing losses.

  • Famers have blamed insurance companies for not conducting enough crop cutting experiments (CCE), to measure the total loss experienced by the farmers.



Insurance companies have said that they have paid farmers amount which is more than the premium collected, making it less profitable for them.


States withdrawing

Many states have withdrawn from scheme due to low claim ratio and financial constrains. They have modified the scheme from their own resources without central contribution.


Maharashtra’s proposed changes

  • Maharashtra wants to implement the scheme through the Beed model. In this method, insurance companies provide cover to an extent of 110 per cent of the premium collected.

  • If compensation exceeds this, the state government will bridge the amount. In case the compensation amount is less than the premium, the company will refund 80 per cent of the funds to the state government and keep 20 per cent.