The Pradhan Mantri Fasal Bima Yojana (PMFBY) is a crop insurance scheme launched by the Government of India on February 18, 2016, administered by the Ministry of Agriculture and Farmers Welfare. It was formulated to replace the earlier National Agricultural Insurance Scheme (NAIS) and the Modified National Agricultural Insurance Scheme (MNAIS) with the goal of providing a comprehensive risk cover and stabilizing farmers' incomes.
The scheme provides financial support to farmers against crop loss or damage arising from non-preventable natural risks like drought, floods, hailstorms, and pests, covering the crop cycle from pre-sowing to post-harvest. A key mechanism is the highly subsidized premium structure: farmers pay a maximum of 2% of the sum insured for all Kharif crops, 1.5% for all Rabi crops, and 5% for annual commercial and horticultural crops. The difference between the actuarial premium and the farmer's share is paid as a subsidy, shared equally by the Central and State Governments, though the ratio is 90:10 for North Eastern States from Kharif 2020. Claims are generally settled on an 'Area Approach basis' for widespread damage, with the unit of insurance reduced to the Village/Village Panchayat level for major crops. However, losses due to localized calamities like hailstorm, landslide, and inundation are assessed on an individual farm basis.
PMFBY is closely connected to the Restructured Weather-Based Crop Insurance Scheme (RWBCIS), which focuses on weather-related triggers, and both are implemented by empanelled general insurance companies. A significant recent change occurred in 2020, when the scheme was made voluntary for all farmers, including those who had taken crop loans (loanee farmers), whereas it was previously compulsory for them. Furthermore, the scheme has increasingly integrated technology like remote sensing, drones, and the YES-TECH (Yield Estimation System using Technology) initiative for more accurate and timely loss assessment.