PMFBY Scale Makes Claim Quality the Next Test of Farm ResilienceEconomy & Energy

GS Paper 3 · 30 August 2026

PMFBY Scale Makes Claim Quality the Next Test of Farm Resilience

A new PMFBY backgrounder reports that since Kharif 2016 through Rabi 2025-26, more than 92.46 crore farmer applications were insured and over 26.33 crore applications received claims exceeding ₹2.06 lakh crore. The Union Budget allocated ₹12,200 crore for 2026-27. Farmers pay maximum premiums of 2% for Kharif foodgrain and oilseed crops, 1.5% for Rabi foodgrain and oilseed crops, and 5% for commercial and horticultural crops, with governments subsidising the balance. As of 27 August 2026, Kharif coverage reached 241.38 lakh farmers and 278.12 lakh hectares. The scheme covers specified risks across prevented sowing, standing crops, localised calamities and limited post-harvest periods. Technology systems such as YES-TECH and WINDS aim to improve yield and weather evidence. Scale, however, does not settle performance. Farmers need clear notification, accurate enrolment, credible loss assessment, timely claims, accessible grievance handling and transparent state-level data. Insurance should stabilise shocks without replacing investment in irrigation, extension and climate-resilient farming.

Why UPSC cares

For GS Paper 3, connect crop insurance with agricultural risk, climate adaptation, fiscal federalism, technology-based yield estimation and farmer income stability. Evaluate settlement quality alongside enrolment scale.

How to study this story

Crop insurance converts a low-frequency but severe farm shock into a shared financial risk. Its value depends less on the number of applications than on whether the insured farmer understands coverage and receives a fair claim in time for the next season. Area-based yield insurance can reduce verification cost, but it creates basis risk when an individual farm suffers while the wider unit does not cross the threshold. Localised-loss provisions, remote sensing, weather stations and digital crop surveys can improve evidence, yet technology must be auditable and open to correction. States influence crop notification, subsidy payment and implementation, so delayed public contributions can undermine settlement even when farmer premiums were paid. Clear cut-off dates, land and tenancy records, multilingual notices and assisted enrolment are essential for sharecroppers and non-loanee farmers. Grievance systems should disclose status, reasons and appeal timelines rather than send farmers among banks, insurers and departments. Public dashboards need district-level settlement time and rejection reasons, not just cumulative totals. Insurance complements, but cannot replace, irrigation, diversified crops, extension and disaster preparedness. The best evaluation measures financial recovery, trust and continued cultivation after loss, while controlling fraud and keeping premiums fiscally sustainable.

The larger paper context

For GS Paper 3, trace how incentives change behaviour. Energy price support, research funding and crop insurance should distribute risk fairly, correct a clear market failure and remain auditable through quality, adoption and settlement outcomes.

Probable question

Large crop-insurance enrolment is meaningful only when claims are accurate, timely and accessible. Evaluate PMFBY as an instrument of climate-risk governance.

Quick practice check

  1. Q1

    What is basis risk in an area-based crop-insurance design?

    1. Every farmer receives the same premium refund
    2. An individual loss may not trigger payment if the wider insured unit stays above the threshold
    3. Weather data are never used
    4. Only post-harvest losses are insured
    Show answer

    Correct answer: An individual loss may not trigger payment if the wider insured unit stays above the threshold

    Area-based assessment may diverge from an individual farm's experience, leaving a real loss outside the trigger.

  2. Q2

    Which indicator best complements PMFBY enrolment totals?

    1. Number of publicity posters
    2. Length of scheme guidelines
    3. Total district names
    4. Claim-settlement time and transparent rejection reasons
    Show answer

    Correct answer: Claim-settlement time and transparent rejection reasons

    Timeliness and reasoned decisions reveal whether insurance provides usable recovery rather than only nominal coverage.

Related previous-year questions

  • UPSC GS-3: Issues related to direct and indirect farm subsidies and minimum support prices; e-technology in aid of farmers
Read the primary source ↗