Published on: March 17, 2022




Maharashtra has decided to withdraw from the Pradhan Mantri Fasal Bhima Yojana (PMFBY) if changes to it are not carried out


  • Introduced in the 2016-17 kharif season
  • Central-state scheme
  • Aims to cushion farmers against crop loss
  • Central and state governments pay more than 95 per cent of the premium amount while the farmer bears 1.5-5 per cent of the premium
  • Extensive usage of technology is used to settle the claims of farmers within a stipulated time period
  • Farmers are required to fill loss reports online which are validated by insurance companies before the compensation amount is paid directly in their accounts.
  • Prior to 2020, the scheme was mandatory for farmers who availed institutional finance, but that was changed and made voluntary for all farmers.


  • It is said that the scheme helps insurance companies more than the farmers. Farm leaders claim insurance companies have made windfall gains at the behest of the public exchequer and farmers.
  • Delayed payouts and denial of claims are other common complaints against insurance companies.
  • Companies point out the nature of the insurance allows for payment only when there is a loss. Also, over the last few years, they have said their payouts have been more than the premium collected, making the scheme non-viable for them.
  • The insurance companies were also blamed for not conducting enough crop cutting experiments (CCE), which measure the total loss experienced by the farmers.

Which states have withdrawn from the scheme, and why?

  • Gujarat, Bihar, West Bengal, Andhra Pradesh, Telangana and Jharkhand have opted out of the scheme.
  • The Lok Sabha’s Standing Committee on Agriculture had noted in its report of August 2021 that these states decided to opt out because of low claim ratio and financial constraints.

What changes has the Maharashtra government proposed?

  • One of the major changes is a share in premium collected from insurance companies during a non-payout or normal year
  • Called the Beed model, after the district where it was first experimented during kharif 2020, under this model, insurance companies provide cover to an extent of 110 per cent of the premium collected
  • In case the compensation amount exceeds this, the state government will bridge the amount. In case the compensation amount is less than the premium collected, the company will refund 80 per cent of the funds to the state government and keep 20 per cent for its administrative expenses.