The Union Cabinet
chaired by the Prime Minister Shri Narendra Modi on January 13, 2016
approved a New Crop Insurance Scheme aimed at providing maximum
insurance for farmers at minimum premium.
The new scheme Pradhan Mantri Fasal Bima Yojana will be rolled out from
the kharif season in June this year. It will replace the existing two
schemes National Agriculture Insurance Scheme as well as modified
National Agriculture Insurance Scheme.
Under the new Crop Insurance Scheme the farmers premium would be 2% for
kharif foodgrains and oilseeds crops and 1.5% for rabi foodgrains and
oilseeds crops. For horticulture and cotton crops the premium has been
fixed at upto 5% for both khairf and rabi seasons.
There is no upper limit on Government subsidy. Even if balance premium
is 90%, it will be borne by the Government. Earlier, there was a
provision of capping the premium rate which resulted in low claims being
paid to farmers.
The New Scheme aims to enhance insurance coverage of crops up to 50% of
the total crop areas from the existing level of about 23% over the next
2-3 years. It also provides for change in criteria to determine crop
losses by providing local level assessment for calamities like hailstorm
Under the new scheme simple technology through phone and remote censors
would be used for quick estimation and early settlement of claims. Crop
Insurance portal will be used extensively to ensure better coordination
The Government's liability on premium subsidy will be shared by the
Central and State Governments on 50-50 basis.
The Government will substantially increase budget for crop insurance
from Rs. 2883 crores in 2015-16 to Rs. 7750 crore in 2018-19.
The New Crop Insurance Scheme will be implemented by private insurance
companies along with the Agricultural Insurance Companies of India Ltd..