With referene to ‘Pradhan Mantri Fasal Bima Yojana’, consider the following statements: 1. Under this scheme, farmers will have to pay a uniform premium of two percent for any crop they cultivate in any reason of the year. 2. This scheme covers post-harvest losses arising out of cyclones and unseasonal rains. Which of the statements given above is/are correct?
Contents15
- A1 only
- B2 only
- CBoth 1 and 2
- DNeither 1 nor 2
Show answer
Answer: (B) 2 only
Answer: (b) 2 only
Statement 1 (✗ WRONG):
Premium is NOT uniform 2% for all crops.
Rates vary:
- Kharif crops = 2%
- Rabi crops = 1.5%
- Annual commercial/horticultural crops = 5%.
Statement 2 (✓ CORRECT):
PMFBY covers post-harvest losses from cyclones and unseasonal rains for up to 14 days after harvesting, for crops kept in 'cut and spread' condition.
Key PMFBY features (launched January 2016):
- Replaced NAIS and Modified NAIS
- No cap on premium subsidy
- Covers prevented sowing, mid-season adversity, post-harvest losses, localized calamities
- Uses drones, satellites for crop loss assessment.
Remember the premium rates:
- Kharif = 2%
- Rabi = 1.5%
- Commercial/Horticultural = 5%.
These are often tested.
PMFBY was launched in January 2016, replacing the earlier National Agricultural Insurance Scheme, making it highly relevant for the 2016 exam.
The scheme introduced different premium rates for different crop seasons (Kharif 2%, Rabi 1.5%, Commercial 5%) rather than a uniform rate, which is the key trap in statement 1.
UPSC is testing whether students know the specific premium structure and the post-harvest coverage feature that distinguishes PMFBY from earlier insurance schemes.
Pradhan Mantri Fasal Bima Yojana (PMFBY)
Indian Economy Pradhan Mantri Fasal Bima Yojana uniform premium two percent
Pradhan Mantri Fasal Bima Yojana: Coverage, Premium Rates & UPSC Facts
PMFBY launched January 2016 to replace NAIS and Modified NAIS with better coverage
Premium rates: Kharif 2%, Rabi 1.5%, Commercial/Horticultural 5% (NOT uniform 2%)
Covers post-harvest losses from cyclones/rains for 14 days after harvesting
Uses satellites and drones for crop loss assessment, no cap on premium subsidy
What is PMFBY
PMFBY is India's flagship crop insurance scheme launched in January 2016. It replaced the earlier NAIS (National Agricultural Insurance Scheme) and Modified NAIS to provide comprehensive risk cover for farmers at affordable premium rates.
Premium Rate Structure
Crop Season | Premium Rate | Examples | Coverage Period |
|---|---|---|---|
Kharif | 2% | Rice, Cotton, Sugarcane | Sowing to harvest |
Rabi | 1.5% | Wheat, Gram, Mustard | Sowing to harvest |
Commercial/Horticultural | 5% | Fruits, Vegetables, Spices | Annual crops |
Coverage Types
Prevented Sowing: When farmers cannot sow due to adverse weather
Mid-season Adversity: Drought, flood, pest attacks during crop growth
Post-harvest Losses: Cyclones and unseasonal rains for 14 days after harvest (crops in 'cut and spread' condition)
Localized Calamities: Hailstorm, landslide, inundation affecting isolated farms
Add-on Coverage: Wild animal attacks, fire risks (optional)
Question Analysis
This question tests the premium rate structure (Statement 1 trap: uniform 2% vs actual rates) and post-harvest coverage (Statement 2 correct: covers cyclone/rain losses for 14 days). The trap exploits confusion between Kharif rate (2%) and thinking it applies uniformly.
Trap: Premium is uniform 2% for all crops — Wrong! Rates vary: Kharif 2%, Rabi 1.5%, Commercial 5%
Trap: PMFBY only covers standing crops — Wrong! It covers post-harvest losses for 14 days
Trap: Confusing PMFBY with NAIS/Modified NAIS — PMFBY replaced them in 2016
Trap: Premium subsidy has a cap — Wrong! PMFBY has no cap on government premium subsidy
Evolution of Crop Insurance in India
Indian Economy
Evolution of Crop Insurance Schemes: NAIS to PMFBY
NAIS (1999) was India's first major crop insurance scheme with area-based assessment
PMFBY (2016) uses technology, removes subsidy caps, covers more risks
Modified NAIS (2010) improved coverage but had premium subsidy caps
Scheme Comparison
Scheme | Launch Year | Key Features | Major Limitations |
|---|---|---|---|
NAIS | 1999 | Area-based assessment, government subsidy | High premium, limited coverage, delayed claims |
Modified NAIS | 2010 | Reduced premium, private company participation | Subsidy caps, weather risks not covered |
PMFBY | 2016 | Technology use, no subsidy cap, comprehensive coverage | Implementation challenges in some states |
PMFBY Improvements
Technology Integration: Uses satellites, drones, smartphones for faster crop loss assessment
No Premium Cap: Government bears unlimited subsidy burden beyond farmer's share
Weather Insurance: Covers weather-based risks through Weather Based Crop Insurance Scheme integration
Faster Settlement: Technology enables quicker claim processing compared to manual assessment in NAIS
Trap: NAIS is still operational — Wrong! Replaced by PMFBY in 2016
Trap: All three schemes run parallel — Wrong! PMFBY replaced both NAIS and Modified NAIS
Trap: Technology use started with NAIS — Wrong! PMFBY introduced satellite/drone assessment
Post-Harvest Loss Coverage in Agriculture
Indian Economy post-harvest losses cyclones unseasonal rains
Post-Harvest Loss Coverage: Weather Risks After Harvesting
Post-harvest losses occur when harvested crops are damaged by weather events before storage
Coverage applies for 14 days after harvesting for crops in 'cut and spread' condition
Only cyclones and unseasonal rains are covered, not all weather events
What Are Post-Harvest Losses
Post-harvest losses occur when harvested crops waiting to be collected or dried are damaged by adverse weather. This is different from standing crop losses that happen before harvesting.
Coverage Conditions
Time Limit: Coverage extends for 14 days maximum after harvesting
Crop Condition: Applies only to crops in 'cut and spread' condition in the field
Covered Events: Cyclones and unseasonal rains only
Assessment: Losses must be objectively measurable and weather-event specific
Post-Harvest Coverage Process
%%{init: {"flowchart": {"wrappingWidth": 460}}}%%
flowchart TD
s1["`**Crop Harvesting**
Farmer harvests crop, keeps in 'cut and spread' condition`"]
s2["`**Weather Event**
Cyclone or unseasonal rain damages harvested crop`"]
s3["`**Damage Assessment**
Within 14 days of harvest, technology-based loss assessment`"]
s4["`**Claim Settlement**
Compensation based on extent of post-harvest damage`"]
s1 --> s2
s2 --> s3
s3 --> s4Trap: All weather events covered post-harvest — Wrong! Only cyclones and unseasonal rains
Trap: Coverage continues indefinitely — Wrong! Limited to 14 days after harvesting
Trap: Applies to stored crops in warehouses — Wrong! Only 'cut and spread' crops in fields
Agricultural Risk Management in India
Indian Economy
Agricultural Risk Management: Insurance & Mitigation Strategies
Agricultural risks include weather, pest, market, and technology risks affecting farm income
Weather-Based Crop Insurance Scheme (WBCIS) complements area-based insurance like PMFBY
Pradhan Mantri Krishi Sinchayee Yojana addresses irrigation risks through water management
Types of Agricultural Risks
# Agricultural Risks
## Weather Risks
- Drought
- Floods
- Hailstorm
- Cyclones
- Unseasonal Rains
## Biological Risks
- Pest Attacks
- Disease Outbreaks
- Wild Animal Damage
## Market Risks
- Price Volatility
- Demand Fluctuation
- Storage Losses
## Technology Risks
- Input Quality
- Equipment Failure
- Knowledge GapsRisk Management Schemes
Scheme | Risk Type Addressed | Mechanism | Key Feature |
|---|---|---|---|
PMFBY | Weather + Biological | Area-based insurance | Technology assessment |
WBCIS | Weather only | Weather parameter-based | Automatic payouts |
PM-KISAN | Income support | Direct cash transfer | ₹6,000 per year |
PMKSY | Water/drought risk | Irrigation infrastructure | Per drop more crop |
Trap: PMFBY covers market price risks — Wrong! Only covers production losses, not price volatility
Trap: WBCIS and PMFBY are same — Wrong! WBCIS is weather-parameter based, PMFBY is area-based