• The Union Cabinet, chaired by the Prime Minister Narendra Modi, approved continuation of the Pradhan Mantri Fasal Bima Yojana (PMFBY) and Restructured Weather Based Crop Insurance Scheme (RWBCIS) till 2025-26 with an overall outlay of Rs 69,515.71 crore from 2021-22 to 2025-26. 

• The decision will help in risk coverage of crops from non-preventable natural calamities for farmers across the country till 2025-26. 

• The Cabinet approved setting up of Fund for Innovation and Technology (FIAT), with an allocation of Rs 824.77 crore for technology improvements in insurance schemes.

• PMFBY and RWBCIS offer financial assistance to farmers suffering from crop loss or damage caused by various unforeseen events. 

• PMFBY covers crop losses based on yield risk, while RWBCIS focuses on weather-related risks.

Crop insurance schemes

• Crop insurance aims to protect the farmer against financial losses due to uncertainties that may arise from crop failures/losses arising from named or all unforeseen perils beyond their control.

• Keeping in view the risks involved in agriculture and to insure the farming community against various risks, the Ministry of Agriculture & Farmers’ Welfare introduced a crop insurance scheme in 1985 — Comprehensive Crop Insurance Scheme (CCIS). 

• Thereafter, the government brought improvements in the erstwhile schemes from time to time based on the experience gained and views of the stakeholders, states, farming community, etc. 

• The insurance schemes currently under implementation are the Pradhan Mantri Fasal Bima Yojana (PMFBY) and the Restructured Weather Based Crop Insurance Scheme (RWBCIS).

Pradhan Mantri Fasal Bima Yojana (PMFBY)

• Pradhan Mantri Fasal Bima Yojana (PMFBY), launched on January 13, 2016, aims to provide a comprehensive risk solution to farmers at the lowest uniform premium across the country. 

• It was launched to support production in agriculture by providing an affordable crop insurance product to ensure comprehensive risk cover for crops of farmers against all non-preventable natural risks from pre-sowing to post-harvest stage. 

• The scheme also aims to cover the risk of crop yield losses of insured farmers against all non-preventable natural risks from pre-sowing to post-harvest and to provide adequate claim amount and timely settlement of claims. 

• Under PMFBY, a uniform maximum premium of only 2 per cent of the sum insured is paid by farmers for all Kharif crops and 1.5 per cent for all Rabi crops. In case of annual commercial and horticultural crops, the maximum premium to be paid by farmers is up to 5 per cent. 

• The premium rates to be paid by farmers are very low and the balance of actuarial premium is being borne by the government, to be shared equally by the state & central government  to provide full insured amount to the farmers against crop loss on account of natural calamities. In Northeast states, the subsidy sharing pattern between central and state government is 90:10.

• Earlier, there was a provision of capping the premium rate which resulted in low claims being paid to farmers. This capping in earlier schemes has now been removed.

• In PMFBY farmers will get a claim against full sum insured without any reduction.

• The crop insurance scheme has been able to provide financial assistance to the most vulnerable farmers as around 85 per cent of the farmers enrolled with the scheme are small and marginal farmers.

• PMFBY was revamped in February 2020 with new features, such as voluntary enrolment for all farmers, wider use of technology in yield estimation, risk coverage to choose for payment of sum insured to states as per the option and prevailing risk profile.

• It has also been made convenient for the farmer to report crop loss within 72 hours of the occurrence of any event through Crop Insurance App, CSC Centre or the nearest agriculture officer, with claim benefit transferred electronically into the bank accounts of the eligible farmer.

• Integration of land records with the PMFBY’s National Crop Insurance Portal (NCIP), Crop Insurance mobile app for easy enrolment of farmers, remittance of farmer premium through NCIP, a subsidy release module and a claim release module through NCIP are some of the key features of the scheme.

• Since implementation of PMFBY in 2016, around 38 crore farmer applicants have been enrolled and over 12.37 crore (provisional) have received claims.

Objectives of the scheme:

i) Providing financial support to farmers suffering crop loss/damage arising out of unforeseen events.

ii) Stabilising the income of farmers to ensure their continuance in farming.

iii) Encouraging farmers to adopt innovative and modern agricultural practices.

iv) Ensuring credit worthiness of the farmers, crop diversification and enhancing growth and competitiveness of the agriculture sector.

Restructured Weather Based Crop Insurance Scheme (RWBCIS)

• With the objective to provide coverage for those crops for which there is no standard/approved methodology for assessment of yield and to overcome the shortcoming under erstwhile National Agriculture Insurance Scheme (NAIS)/, a pilot Weather Based Crop Insurance Scheme (WBCIS) was launched in 20 states (as announced in the Union Budget 2007-08). 

• However, WBCIS was implemented as a full-fledged component scheme of the National Crop Insurance Programme (NCIP) from Rabi 2013-14 season to Rabi 2015-16. 

• WBCIS was to provide insurance protection to the farmers against adverse weather incidence, such as deficit and excess rainfall, high or low temperature, humidity, etc which are deemed to impact crop production adversely. 

• The scheme was restructured on the basis of premium and administrative structure on the lines of PMFBY and is available in the country from Kharif 2016 as Restructured WBCIS.

• Restructured Weather Based Crop Insurance Scheme (RWBCIS) aims to mitigate the hardship of the insured farmers against the likelihood of financial loss on account of anticipated crop loss resulting from adverse weather conditions relating to rainfall, temperature, wind, humidity etc. 

• RWBCIS uses weather parameters as “proxy‟ for crop yields in compensating the cultivators for deemed crop losses.

• Under RWBCIS, admissible claims are being calculated based on deviation from the prescribed/defined weather parameters. As per provisions of the RWBCIS, if the observed trigger value falls below or above the notified trigger value, then claims per unit are calculated depending upon index definition given in the term sheet.

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