Cabinet approves New Crop Insurance Scheme-Pradhan Mantri Fasal Bima Yojana- A boost to the farming sector

13 January, 2016

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi today has approved the ‘Pradhan Mantri Fasal Bima Yojana’ – a path breaking scheme for farmers’ welfare.

The highlights of this scheme are as under:-

(i). There will be a uniform premium of only 2% to be paid by farmers for all Kharif crops and 1.5% for all Rabi crops. In case of annual commercial and horticultural crops, the premium to be paid by farmers will be only 5%. The premium rates to be paid by farmers are very low and balance premium will be paid by the Government to provide full insured amount to the farmers against crop loss on account of natural calamities.

(ii). There is no upper limit on Government subsidy. Even if balance premium is 90%, it will be borne by the Government.

(iii). Earlier, there was a provision of capping the premium rate which resulted in low claims being paid to farmers. This capping was done to limit Government outgo on the premium subsidy. This capping has now been removed and farmers will get claim against full sum insured without any reduction.

(iv). The use of technology will be encouraged to a great extent. Smart phones will be used to capture and upload data of crop cutting to reduce the delays in claim payment to farmers. Remote sensing will be used to reduce the number of crop cutting experiments.

The new Crop Insurance Scheme is in line with One Nation – One Scheme theme. It incorporates the best features of all previous schemes and at the same time, all previous shortcomings/weaknesses have been removed.

Sr. No Feature NAIS
Crop Insurance Scheme
1. Premium rate Low High Lower than
even NAIS
(Govt to
contribute 5 times that of farmer)
2. One Season – One Premium Yes No Yes
3. Insurance Amount cover Full Capped Full
4. On Account Payment No Yes Yes
5. Localised Risk coverage No Hail storm
Land slide
Hail storm
Land slide
6. Post Harvest Losses coverage No Coastal areas
– for cyclonic rain
All India –
for cyclonic + unseasonal rain
7. Prevented Sowing coverage No Yes Yes
8. Use of Technology

(for quicker settlement of claims)
No Intended Mandatory
9. Awareness No No Yes (target to
double coverage to 50%)

One Nation – One Scheme: best features of all previous schemes incorporated + all previous shortcomings / weaknesses removed

Pradhan Mantri Fasal Bima Yojana