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. The PMFBY will replace the existing two
schemes National Agricultural Insurance Scheme as well as the Modified NAIS.
1. To provide insurance coverage and financial support to the farmers in the event of
failure of any of the notified crop as a result of natural calamities, pests & diseases.
2. To stabilise the income of farmers to ensure their continuance in farming.
3. To encourage farmers to adopt innovative and modern agricultural practices.
4. To ensure flow of credit to the agriculture sector.
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
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. 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.
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
PMFBY is a replacement scheme of NAIS / MNAIS, there will be exemption from
Service Tax liability of all the services involved in the implementation of the scheme.
It is estimated that the new scheme will ensure about 75-80 per cent of subsidy for
the farmers in insurance premium.
Plot No. 334,Visalakshinagar, Visakhapatnam - 530043. Andhra Pradesh, India.