While the country has had crop insurance since 1972, crop insurance has been beset by problems like high premium, delay in conducting crop-cutting experiments and delay in settling claims. The penetration of agricultural insurance was low and stagnant in terms of area insured and farmers covered. The high premium rates, of 8-10% under Modified National Agriculture Insurance Scheme and Weather-based Crop Insurance Scheme, had left a vast majority of farmers without any significant insurance coverage. To fix these issues, the government launched the Pradhan Mantri Fasal Bima Yojana (PMFBY) from Kharif 2016. The scheme provides farmers the maximum financial protection against non-preventable natural risks. In 2016-17, around 5.72 crore farmers were covered under the scheme as compared with 4.75 crore in 2015-16. The sum insured grew 74%, to Rs 2 lakh crore, and the premium paid grew 298%, to Rs 21,882 crore. The new insurance scheme removed capping of premium rates, which led to higher sums insured and fixing of premium rates at 2% in the Kharif season and 1.5% in Rabi season and thus helped farmers.
The scheme has faced several challenges during its first year of implementation, like extension of cut-off dates for registration and delay in submission of yield data. A report by Icrier recommends use of technology and JAM to link land records of farmers with Aadhaar and bank accounts for assessment and faster settlement of claims.