The Indian government has extended two key crop insurance programs – Pradhan Mantri Fasal Bima Yojana (PMFBY) and Restructured Weather Based Crop Insurance Scheme (RWBCIS) – through the 2025-26 fiscal year.
This extension aligns the schemes with the 15th Finance Commission period. Additionally, the cabinet has approved the creation of a ₹824.77 crore fund to support the integration of advanced technologies into these programs.
India extends crop insurance schemes
The decision, announced on Jan. 1, followed a meeting of the Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi.
According to a report by The Hindu, the government aims to improve the efficiency and reach of these insurance schemes, which are designed to mitigate financial risks faced by farmers due to crop losses.
Increased budget for insurance schemes
The total allocation for PMFBY and RWBCIS has been raised to ₹69,515.71 crore for the 2021-22 to 2025-26 period, an increase from the previous allocation of ₹66,550 crore for 2020-21 to 2024-25.
These schemes provide insurance coverage for farmers against crop damage caused by yield risks and weather-related issues.
Technology-driven improvements
A dedicated Fund for Innovation and Technology (FIAT) will be used to implement digital tools like the Yield Estimation System using Technology (YES-TECH) and Weather Information and Network Data Systems (WINDS). These tools aim to enhance accuracy in yield assessments, expedite claims processing, and reduce disputes.
YES-TECH employs satellite and remote sensing data to calculate crop yields, while WINDS plans to establish automated weather stations and rain gauges at localised levels. This network is expected to significantly improve the collection of hyper-local weather data.
The government has earmarked 2024-25 as the start date for WINDS implementation, allowing states more time to prepare.
Regional focus and challenges
The northeastern states remain a priority, with the central government subsidising 90% of premiums. However, participation has been limited due to low enrolment rates and a smaller gross cropped area.
To address this, the government has introduced flexibility in fund allocation, allowing unutilised funds to be redirected to other agricultural development projects.
Declining insurer participation
Despite the government’s push to expand crop insurance coverage, some insurers have reduced their involvement. Gross premiums underwritten for PMFBY fell by 4.17% in FY24, reaching ₹30,677 crore compared to ₹32,011 crore in the previous year.
State-run Agriculture Insurance Company (AIC) experienced a 32% drop in premium income, from ₹14,619 crore in FY23 to ₹9,890 crore in FY24. Other public sector insurers, including Oriental Insurance and New India Assurance, also reported reductions in their crop insurance portfolios.
Expanding access for non-loanee farmers
To address coverage gaps, the Ministry of Agriculture introduced the App for Intermediary Enrolment (AIDE) in 2023. This platform enables insurance brokers and intermediaries to enrol non-loanee farmers. By FY24, the initiative facilitated the enrolment of over 6.88 lakh farmers, covering 4.15 lakh hectares across multiple states.
The AIDE platform leverages a network of 12 lakh point-of-sale personnel to expand access to crop insurance products. The government aims to further increase participation among non-loanee farmers while encouraging the adoption of innovative agricultural practices.
PMFBY remains one of India’s largest crop insurance programs, covering millions of farmers and a wide variety of crops. Its future success will depend on how effectively the government integrates technology, addresses regional disparities, and encourages greater insurer participation.
Source - https://www.insurancebusinessmag.com
