PMFBY, launched in 2016, represents India's most comprehensive crop insurance framework, aiming to stabilise farm incomes against weather shocks while balancing fiscal responsibility across multiple stakeholders.
PMFBY is implemented through empanelled general insurance companies — both public and private — selected by state governments through a bidding process. The premium burden is shared among the farmer, the state government, and the central government, with the residual actuarial premium funded jointly by both governments, making it a cooperative federal scheme.
Farmers pay a capped premium: 2% of sum insured for Kharif crops, 1.5% for Rabi crops, and 5% for annual commercial and horticultural crops. The actual actuarial premium — often significantly higher — is absorbed by the government, insulating farmers from full market-rate exposure.
Delayed claims settlement, inadequate use of remote-sensing technology for crop-cutting experiments, and low awareness among marginal farmers have constrained outcomes. Several states have periodically exited the scheme citing high premium liabilities, weakening its universal coverage objective.
Enrolment was made voluntary for all farmers from 2020 onward, replacing mandatory coverage for loanee farmers. Technology integration through satellite imagery and smartphone-based yield estimation is being scaled to reduce settlement delays and improve transparency.
PMFBY's architecture is sound, but its effectiveness hinges on timely claim disbursement, sustained state participation, and robust data infrastructure. Strengthening these operational dimensions is essential to convert insurance coverage into genuine income security.
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