Modi Government Unveils Pioneering Crop Insurance Scheme For Farmers

The Narendra Modi-led NDA government has cleared a new crop insurance scheme under which the premium to be paid by the farmers has been kept at a very low rate.


The new scheme – called Pradhan Mantri Fasal Bima Yojana (PM Crop Insurance Scheme) – will bring down the premium paid by farmers at a maximum of 2 per cent for foodgrains and oilseeds, and a maximum of 5 per cent for horticulture and annual commercial crops. The rest will be paid by the state and the central government, equally.



The current premium rates stand at 4 to 15 per cent to insure crops.

The scheme, called by PM Modi as his government’s Lohri, Pongal, Bihu gift to farmers, will eventually replace the existing farm insurances which have not even covered one-fourth of the crop area.



The new scheme will cover yield loss of standing crops, prevented sowing/planting risk, post harvest losses and localised risks, including hailstorms, unseasonal rains, landslides and inundation – addressing a long-standing demand of farmers.

To settle claims, it will use smartphones, remote-sensing data and even drones to assess the crop damage, as against the old method of relying on yield data, which is often delayed.

Under this scheme, in case of crop loss, a farmer will get an immediate payment of 25 per cent of the due compensation, and the money will go directly to his bank account.



Home Minister Rajnath Singh said the new scheme will come into effect from the Kharif crop cycle, beginning June.

The new scheme is seen as PM Modi’s major move to woo rural voters ahead of key elections.

The move also come in the backdrop of drubbings the BJP faced in rural pockets of Bihar and elsewhere. This could also be because of the disconnect with the agricultural community in the rural hinterland.




The Prime Minister Office tweeted:


According to the prime minister, the new scheme includes successful aspects of the existing schemes and “effectively addresses” whatever was lacking in those schemes.

For crop insurance there are two schemes in the market – National Agricultural Insurance Schemes (NAIS) and Modified NAIS, having high variability in premium rates. Here is a comparison between all of them:


Unlike the existing schemes where an entire village or a group of villages is taken as unit to arrive at damage and compensation, the new scheme will treat individual farmer as unit of insurance.

“Farmers didn’t accept the earlier scheme because of deficiencies. The government has now removed those,” agriculture Minister Radhamohan Singh said.

“So far, a government will only provide relief, but now the scheme will compensate for the losses,” he added.

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