March 21, 2023

Crop Insurance Schemes- Features, benefits and coverages

Farming contributes around 18% to the GDP, which makes it the most important and vulnerable sector of the economy. Crop insurance is essential as it provides insurance coverage against their harvest. Loss of crops due to damages is inevitable, to mitigate the ill effects of this loss, the government introduced the crop insurance scheme, which covers the losses borne by the farmer.

Risks include extreme weather, natural disasters, or revenue loss due to price fluctuations in the market. Let us understand a bit more about the crop insurance scheme in this article

Crop Insurance Schemes in India

Although there are many crop insurance schemes, the most popular ones include the following:-

1. Pradhan Mantri Fasal Bima Yojana (PMFBY)

2. Weather-Based Crop Insurance Scheme (WBCIS)

3. Pilot Unified Package insurance scheme (UPIS)

4. Coconut Palm Insurance Scheme (CPIS)

Features of Crop Insurance Scheme

1. It is a farmer’s choice whether they want to subscribe to these schemes. However, to avail of a crop loan, it is mandatory to subscribe to a crop insurance scheme

2. The farmers who subscribe to these schemes should pay a maximum premium of 2% of the sum assured for Kharif crops, 1.5% for Rabi crops, and 5% for annual commercial/horticultural crops.

3. The difference between a farmer’s actual premium and the payable insurance rate will be shared equally by the State and Centre.

4. The assessment for crop losses because of non-preventable natural risks will be done on the area approach.

5. There are three levels of indemnity, i.e., 70%, 80%, and 90%, for all crops corresponding to the crop risk.

6. Crop Cutting Experiments (CCE) will be undertaken per crop or unit area on a sliding scale as provided under the respective scheme.

7. The State Government decides and notifies the crop-wise insured sum.

8. The State Government changes the insured sum from the first year/season to the subsequent year/season according to the changes in the Minimum Support Prices (MSP), Scale of Finance, or Farm-gate price available for the notified crops.

9. The claim amount will be electronically credited to the farmers’ insured bank accounts.

Benefits of crop insurance scheme

Some of the important benefits of crop insurance scheme include the following:-

1. Crop production value increases as the insurance provide financial support in event of crop failure

2. It encourages farmers to adopt higher technology or progressive farming practices in agriculture.

3. It helps farmers maintain the flow of agricultural credit.

4. It streamlines the loss assessment process and helps to build an accurate statistical base for crop production.

5. There is a tax exemption on the premium payable by a farmer against the purchase of the crop insurance policy.

6. The farmers can get a crop loan at low-interest rates when they avail of a crop insurance scheme.

7. The country’s economy will strengthen since farmers can repay their loans with reimbursement received under the crop insurance policy.

Eligibility for Coverage under Crop Insurance Schemes

All farmers are eligible to take the crop insurance schemes in India, including sharecroppers and tenant farmers. However, they need to grow the notified crops in the notified area provided under the schemes.

Risks Covered Under Crop Insurance Schemes

The following risks are covered under crop insurance schemes:-

1.Basic risks

It covers yield losses to the standing crop due to non-preventable risks like disease attacks, dry spells, landslides, drought, storms, inundation, floods, cyclones, hailstorms, and natural fire due to lightning.

2. Prevented planting risk/sowing/germination

It provides cover against any problem in sowing or planting because of adverse seasonal conditions or deficit rainfall.

3. Mid-season adversity

It provides relief to farmers against losses occurring due to adverse seasonal conditions where the expected yield during the season is below 50% of the normal yield.

4. Post-harvest losses

It covers losses for up to a maximum of two weeks from harvesting.

5. Localized calamities

It covers losses against localized calamities and risks like landslides and hail storms affecting isolated farms in the notified areas.


1.What is Crop Insurance?

Crop insurance is a means of protecting the agriculturist against financial losses due to uncertainties that may arise from crop failures/losses arising from named or all unforeseen perils beyond their control.

2. What is Weather based Crop Insurance?

Weather Based Crop Insurance aims to mitigate the hardship of the insured farmers against the likelihood of financial loss on account of anticipated crop loss resulting from the incidence of adverse conditions of weather parameters like rainfall, temperature, frost, humidity, etc.

3.How much Coverage of Crops?

1) Food crops (Cereals, Millets, and Pulses), 2) Oilseeds, 3) Annual Commercial / Annual Horticultural crops


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