{"id":104611,"date":"2026-05-22T17:47:28","date_gmt":"2026-05-22T12:17:28","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=104611"},"modified":"2026-05-22T17:47:28","modified_gmt":"2026-05-22T12:17:28","slug":"crop-insurance-in-india","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/crop-insurance-in-india\/","title":{"rendered":"Crop Insurance in India, Schemes, Benefits, Challenges &#038; Reforms"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Crop Insurance in India is a system designed to protect farmers from financial losses caused by unexpected events such as natural disasters, pests, or crop failure. It helps provide financial support to farmers when their crops are damaged, reducing risk and uncertainty in agriculture. By offering a safety net, crop insurance plays an important role in stabilizing farmers\u2019 income and encouraging them to continue farming despite challenges.<\/span><\/p>\n<h2><b>Crop Insurance in India Objectives<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Provide financial protection:<\/b><span style=\"font-weight: 400;\"> Crop insurance helps farmers <\/span><b>recover losses<\/b><span style=\"font-weight: 400;\"> when crops are damaged due to <\/span><b>natural calamities<\/b><span style=\"font-weight: 400;\"> like droughts, floods, unseasonal rains, pests, or diseases. It <\/span><b>acts as a safety cushion<\/b><span style=\"font-weight: 400;\"> during difficult times.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Stabilize farmers\u2019 income: <\/b><span style=\"font-weight: 400;\">It ensures that <\/span><b>farmers continue to earn a basic income<\/b><span style=\"font-weight: 400;\"> even after crop failure, reducing the chances of falling into debt or being forced to sell produce at very low prices.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Encourage modern farming:<\/b><span style=\"font-weight: 400;\"> By reducing risk, it <\/span><b>gives farmers the confidence to use better seeds, fertilizers, and new technologies, <\/b><span style=\"font-weight: 400;\">which can improve productivity and overall farm output.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Support easy access to credit:<\/b><span style=\"font-weight: 400;\"> Crop insurance makes <\/span><b>farmers more reliable in the eyes of banks and financial institutions,<\/b><span style=\"font-weight: 400;\"> helping them get loans more easily and ensuring a steady flow of credit in agriculture.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Promote crop diversification:<\/b><span style=\"font-weight: 400;\"> It encourages <\/span><b>farmers to grow a variety of crops<\/b><span style=\"font-weight: 400;\"> instead of depending on a single crop, making agriculture more resilient and reducing overall risk.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Reduce rural distress:<\/b><span style=\"font-weight: 400;\"> By offering financial security, <\/span><b>crop insurance helps lower stress among farmers<\/b><span style=\"font-weight: 400;\"> and supports their overall well-being.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Strengthen the agricultural sector: <\/b><span style=\"font-weight: 400;\">Overall, it <\/span><b>contributes to the stability, growth, and competitiveness of agriculture<\/b><span style=\"font-weight: 400;\"> by reducing uncertainties and improving confidence among farmers.<\/span><\/li>\n<\/ul>\n<h2><b>Crop Insurance in India Current State<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">India has <\/span><b>four major crop insurance schemes,<\/b><span style=\"font-weight: 400;\"> with <\/span><b>PMFBY<\/b><span style=\"font-weight: 400;\"> being the most prominent and one of the largest crop insurance programmes globally. Other schemes include <\/span><b>RWBCIS, UPIS (Pilot Unified Package Insurance Scheme), and CPIS (Coconut Palm Insurance Scheme).<\/b><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">There has been a significant increase in <\/span><b>farmer enrolment, with participation rising by about 27% from 2022-23.<\/b><span style=\"font-weight: 400;\"> A large number of farmers, including non-loanee farmers, are now covered.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>From 2016-17 to 2023-24, around 41% of enrolled farmers<\/b><span style=\"font-weight: 400;\"> (56.80 crore applications) received claims\/compensation, showing the growing role of these schemes in supporting farmers.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Despite this growth, the <\/span><b>overall penetration of crop insurance remains low, <\/b><span style=\"font-weight: 400;\">meaning many farmers are still not covered under schemes like <\/span><b>PMFBY and RWBCIS.<\/b><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Crop insurance penetration is only about <\/span><b>0.62% of GDP, <\/b><span style=\"font-weight: 400;\">which is quite low compared to its importance in an agriculture-based economy.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The<\/span><b> insurance density is also low,<\/b><span style=\"font-weight: 400;\"> with an average of about <\/span><b>\u20b92,148 per farmer,<\/b><span style=\"font-weight: 400;\"> indicating limited coverage and spending on insurance.<\/span><\/li>\n<\/ul>\n<h2><b>Major Crop Insurance in India<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Key Features of Major Crop Insurance in India are discussed below in details:<\/span><\/p>\n<h3><b>Pradhan Mantri Fasal Bima Yojana (PMFBY)<\/b><\/h3>\n<ul>\n<li><b>About the Scheme<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">Farming is risky because crops can be damaged by <\/span><b>droughts, floods, pests, or storms.<\/b><\/li>\n<li><a href=\"https:\/\/vajiramandravi.com\/current-affairs\/pmfby\/\" target=\"_blank\"><b>Pradhan Mantri Fasal Bima Yojana<\/b><\/a><b> was launched in 2016<\/b><span style=\"font-weight: 400;\"> to protect farmers from such losses and give them financial support.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">It provides <\/span><b>affordable crop insurance<\/b><span style=\"font-weight: 400;\"> and acts like a safety net during difficult times.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The scheme covers the <\/span><b>entire crop cycle &#8211; from sowing to post-harvest losses.<\/b><\/li>\n<li><span style=\"font-weight: 400;\">It follows a fair system of <\/span><b>\u201cOne Nation, One Crop, One Premium\u201d <\/b><span style=\"font-weight: 400;\">to keep premiums uniform.<\/span><\/li>\n<\/ul>\n<\/li>\n<li><b>Key Achievements<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">Around <\/span><b>78.41 crore farmer<\/b><span style=\"font-weight: 400;\"> applications have been insured since 2016.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">About <\/span><b>\u20b91.83 lakh crore<\/b><span style=\"font-weight: 400;\"> has been paid as claims to farmers.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Farmer enrollment increased from <\/span><b>3.17 crore (2022-23) to 4.19 crore (2024-25).<\/b><\/li>\n<li><span style=\"font-weight: 400;\">Participation of <\/span><b>non-loanee farmers has increased <\/b><span style=\"font-weight: 400;\">significantly over time.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">It has become the <\/span><b>largest crop insurance scheme in the world<\/b><span style=\"font-weight: 400;\"> in terms of farmer coverage. Its Main Benefits are:<\/span><\/li>\n<\/ul>\n<\/li>\n<li><b>Affordable premium:<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">Farmers pay only <\/span><b>2% for <\/b><a href=\"https:\/\/vajiramandravi.com\/upsc-exam\/kharif-and-rabi-crops\/\" target=\"_blank\"><b>Kharif crops<\/b><\/a><b>, 1.5% for Rabi crops, and 5% for commercial\/horticultural crops.<\/b><\/li>\n<li><span style=\"font-weight: 400;\">The remaining premium is <\/span><b>shared by the Central and State Governments <\/b><span style=\"font-weight: 400;\">(generally <\/span><b>50:50, and 90:10 for some states<\/b><span style=\"font-weight: 400;\">).<\/span><\/li>\n<\/ul>\n<\/li>\n<li><b>Comprehensive coverage: <\/b><span style=\"font-weight: 400;\">Includes natural disasters, pests, diseases, and post-harvest losses.<\/span><\/li>\n<li><b>Timely compensation:<\/b><span style=\"font-weight: 400;\"> Claims are processed quickly to prevent farmers from falling into debt.<\/span><\/li>\n<li><b>Technology use:<\/b><span style=\"font-weight: 400;\"> Satellite images, <\/span><strong><a href=\"https:\/\/vajiramandravi.com\/upsc-exam\/drones-technology-drones-and-uavs\/\" target=\"_blank\">drones<\/a><\/strong><span style=\"font-weight: 400;\">, and mobile apps ensure accurate loss assessment.<\/span><\/li>\n<li><b>Eligibility<\/b>\n<ul>\n<li><b>Loanee farmers:<\/b><span style=\"font-weight: 400;\"> Farmers who take crop loans for seasonal agriculture are required to enroll, and premiums are deducted from their loans.<\/span><\/li>\n<li><b>Non-loanee farmers:<\/b><span style=\"font-weight: 400;\"> Farmers without loans can voluntarily join the scheme.<\/span><\/li>\n<\/ul>\n<\/li>\n<li><b>Risks Covered<\/b>\n<ul>\n<li><b>Standing crop losses:<\/b><span style=\"font-weight: 400;\"> Due to <\/span><strong><a href=\"https:\/\/vajiramandravi.com\/current-affairs\/drought\/\" target=\"_blank\">drought<\/a><\/strong><span style=\"font-weight: 400;\">, <\/span><strong><a href=\"https:\/\/vajiramandravi.com\/upsc-exam\/floods\/\" target=\"_blank\">floods<\/a><\/strong><span style=\"font-weight: 400;\">, storms, pests, diseases, etc.<\/span><\/li>\n<li><b>Prevented sowing:<\/b><span style=\"font-weight: 400;\"> Farmers get compensation if they cannot sow crops due to bad weather.<\/span><\/li>\n<li><b>Post-harvest losses:<\/b><span style=\"font-weight: 400;\"> Damage after harvesting (within a limited period) is covered.<\/span><\/li>\n<li><b>Localized calamities:<\/b><span style=\"font-weight: 400;\"> Risks like hailstorms, landslides, and flooding in specific areas.<\/span><\/li>\n<\/ul>\n<\/li>\n<li><b>Steps Taken to Improve the Scheme<\/b>\n<ul>\n<li><b>National Crop Insurance Portal (NCIP):<\/b><span style=\"font-weight: 400;\"> For online enrolment, monitoring, and direct transfer of claims.<\/span><\/li>\n<li><b>Digital claim system:<\/b><span style=\"font-weight: 400;\"> Faster settlement with penalties in case of delays.<\/span><\/li>\n<li><b>Separate funding mechanism:<\/b><span style=\"font-weight: 400;\"> Ensures timely release of the central share of claims.<\/span><\/li>\n<li><b>Better technology use:<\/b><span style=\"font-weight: 400;\"> Apps for crop data collection and linking land records.<\/span><\/li>\n<li><b>Awareness drives: <\/b><span style=\"font-weight: 400;\">Campaigns like Fasal Bima Saptah and village-level training programs.<\/span><\/li>\n<li><b>Helpline support (KRPH):<\/b><span style=\"font-weight: 400;\"> Farmers can register and track complaints easily.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3><b>Unified Package Insurance Scheme (UPIS)<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Launched as a <\/span><b>pilot scheme in 45 districts<\/b><span style=\"font-weight: 400;\"> to provide comprehensive risk coverage to farmers.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Aims to <\/span><b>cover crops, life, assets, and family safety under a single insurance package.<\/b><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Crop insurance (PMFBY\/RWBCIS)<\/b><span style=\"font-weight: 400;\"> is<\/span><b> mandatory for all enrolled farmers.<\/b><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Farmers must <\/span><b>select at least two additional covers<\/b><span style=\"font-weight: 400;\"> from other insurance components.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Includes<\/span><b> 7 sections: <\/b><span style=\"font-weight: 400;\">crop insurance, life insurance (<\/span><strong><a href=\"https:\/\/vajiramandravi.com\/current-affairs\/pradhan-mantri-jeevan-jyoti-bima-yojana-pmjjby\/\" target=\"_blank\">PMJJBY<\/a><\/strong><span style=\"font-weight: 400;\">), accident insurance (<\/span><strong><a href=\"https:\/\/vajiramandravi.com\/current-affairs\/pradhan-mantri-suraksha-bima-yojana\/\" target=\"_blank\">PMSBY<\/a><\/strong><span style=\"font-weight: 400;\">), student safety, household, agricultural implements (pump sets), and tractor insurance.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Integrates <\/span><b>government flagship schemes like PMJJBY and PMSBY along with asset insurance.<\/b><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Provides a <\/span><b>single application form and single-window system for easy access.<\/b><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Implemented <\/span><b>mainly through banks and financial institutions,<\/b><span style=\"font-weight: 400;\"> simplifying the process.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Reduces the <\/span><b>need to manage multiple separate insurance policies.<\/b><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Crop insurance claims are handled separately,<\/b><span style=\"font-weight: 400;\"> while other claims are processed individually based on reports.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Designed to offer holistic financial protection and reduce overall risk for farmers.<\/span><\/li>\n<\/ul>\n<h3><b>Coconut Palm Insurance Scheme (CPIS)<\/b><\/h3>\n<ul>\n<li><b>Need of the Scheme:<\/b>\n<ul>\n<li><strong><a href=\"https:\/\/vajiramandravi.com\/current-affairs\/coconut\/\" target=\"_blank\">Coconut<\/a><\/strong><span style=\"font-weight: 400;\"> is a<\/span><b> long-term crop,<\/b><span style=\"font-weight: 400;\"> but it is still affected by <\/span><a href=\"https:\/\/vajiramandravi.com\/current-affairs\/climate-change\/\" target=\"_blank\"><span style=\"font-weight: 400;\"><strong>climate changes<\/strong><\/span><\/a><span style=\"font-weight: 400;\">, natural disasters, pests, and diseases.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Coconut palms have a <\/span><b>periodic pattern of yield, similar to seasonal crops.<\/b><\/li>\n<li><span style=\"font-weight: 400;\">Most coconut farming depends on <\/span><b>rain-fed conditions, making it vulnerable to both natural and biological stresses.<\/b><\/li>\n<li><span style=\"font-weight: 400;\">Due to these reasons, a <\/span><b>separate insurance scheme is provided for coconut growers.<\/b><\/li>\n<li><b>Insurance companies:<\/b><span style=\"font-weight: 400;\"> Insurance companies under this scheme are authorized by the Government of India (DAC).<\/span><\/li>\n<\/ul>\n<\/li>\n<li><b>Scheme operation and eligibility:<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">The scheme is <\/span><b>implemented only in states and Union Territories where coconut is cultivated.<\/b><\/li>\n<li><span style=\"font-weight: 400;\">Farmers, planters, or growers must have at<\/span><b> least 5 healthy, nut-bearing coconut palms in a continuous area to be eligible.<\/b><\/li>\n<li><span style=\"font-weight: 400;\">The scheme aims to insure <\/span><b>all healthy and productive coconut palms.<\/b><\/li>\n<\/ul>\n<\/li>\n<li><b>Coverage of palms:<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">Covers all varieties of coconut palms &#8211; <\/span><b>Tall, Dwarf, and Hybrid.<\/b><\/li>\n<li><span style=\"font-weight: 400;\">Applicable whether palms are grown as single crop, intercrop, on bunds, farms, or homesteads.<\/span><\/li>\n<\/ul>\n<\/li>\n<li><b>Risks covered:<\/b>\n<ul>\n<li><b>Natural events<\/b><span style=\"font-weight: 400;\"> like storm, <\/span><strong><a href=\"https:\/\/vajiramandravi.com\/current-affairs\/cyclones\/\" target=\"_blank\">cyclone<\/a><\/strong><span style=\"font-weight: 400;\">, hailstorm, heavy rains, floods, and inundation<\/span><\/li>\n<li><b>Pests and diseases<\/b><span style=\"font-weight: 400;\"> causing serious and irreversible damage<\/span><\/li>\n<li><b>Fire<\/b><span style=\"font-weight: 400;\"> (including forest\/bush fire), lightning<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Earthquake, landslide, tsunami<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Severe drought leading to total loss<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Covers situations where the palm dies or becomes unproductive<\/span><\/li>\n<\/ul>\n<\/li>\n<li><b>Premium and subsidy:<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">50% of the premium is paid by the <\/span><strong><a href=\"https:\/\/vajiramandravi.com\/current-affairs\/coconut-development-board\/\" target=\"_blank\">Coconut Development Board<\/a><\/strong><span style=\"font-weight: 400;\"> (CDB)<\/span><\/li>\n<li><span style=\"font-weight: 400;\">25% is paid by the State Government<\/span><\/li>\n<li><span style=\"font-weight: 400;\">25% is paid by the farmer<\/span><\/li>\n<\/ul>\n<\/li>\n<li><b>Other features:<\/b><span style=\"font-weight: 400;\"> Insurance is taken on a yearly basis, but farmers can also opt for up to 3 years with some discount.<\/span><\/li>\n<\/ul>\n<h3><b>Restructured Weather Based Crop Insurance Scheme (RWBCIS)<\/b><\/h3>\n<ul>\n<li><b>About the Scheme:<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">RWBCIS is a Government of India initiative that protects <\/span><b>farmers from financial losses caused by adverse weather conditions<\/b><span style=\"font-weight: 400;\"> such as erratic rainfall, extreme temperatures, wind, and humidity.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">It uses<\/span><b> weather parameters as a proxy <\/b><span style=\"font-weight: 400;\">instead of actual crop yield to assess losses and provide compensation.<\/span><\/li>\n<\/ul>\n<\/li>\n<li><b>Core Mechanism:<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">Claims are not based on manual crop cutting.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Compensation is automatically triggered when weather data from local stations deviates from pre-set thresholds.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Payouts are calculated based on the extent of deviation (weather triggers).<\/span><\/li>\n<\/ul>\n<\/li>\n<li><b>Objective of the Scheme:<\/b>\n<ul>\n<li><b>To reduce the hardship of farmers<\/b><span style=\"font-weight: 400;\"> caused by adverse weather conditions like rainfall, temperature, wind, and humidity.<\/span><\/li>\n<li><b>To protect farmers from financial losses<\/b><span style=\"font-weight: 400;\"> due to expected crop damage resulting from such weather changes.<\/span><\/li>\n<\/ul>\n<\/li>\n<li><b>Coverage of Crops:<\/b><span style=\"font-weight: 400;\">Food crops (cereals, millets, pulses), Oilseeds, Commercial and horticultural crops<\/span><\/li>\n<li><b>Weather Risks Covered:<\/b>\n<ul>\n<li><a href=\"https:\/\/vajiramandravi.com\/current-affairs\/precipitation\/\" target=\"_blank\"><b>Rainfall<\/b><\/a><b>:<\/b><span style=\"font-weight: 400;\"> deficit, excess, unseasonal rainfall, dry spells, rainy days<\/span><\/li>\n<li><a href=\"https:\/\/vajiramandravi.com\/current-affairs\/distribution-of-temperature\/\" target=\"_blank\"><b>Temperature<\/b><\/a><b>: <\/b><span style=\"font-weight: 400;\">high (heat) and low temperature<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Relative humidity<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Wind speed<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Combination of these factors<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Add-on risks: hailstorm and cloudburst (covered as additional options)<\/span><\/li>\n<\/ul>\n<\/li>\n<li><b>Premium and Support:<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">Farmers pay a very low, subsidized premium.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The remaining premium cost is shared by the Central and State Governments.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2><b>Crop Insurance in India Concerns and Challenges<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>High costs &amp; coordination issues: <\/b><span style=\"font-weight: 400;\">Crop insurance involves high transaction costs, especially for small farmers. There is also poor coordination between insurance companies, banks, and government agencies, which affects smooth implementation.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Delays in claim settlement:<\/b><span style=\"font-weight: 400;\"> Farmers often face long delays in receiving compensation due to slow verification processes, paperwork, and delayed premium payments by states. <\/span><b>Example of poor compensation:<\/b><span style=\"font-weight: 400;\"> In one case (2025, Maharashtra), a farmer who lost his entire crop received only \u20b92.30 as compensation, showing serious flaws in damage assessment systems.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Unequal coverage of farmers:<\/b><span style=\"font-weight: 400;\"> Schemes like PMFBY are more focused on loanee farmers (over 50%), while RWBCIS mainly benefits better-off male farmers. This creates uneven access, leaving many small and marginal farmers out.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Low awareness and participation:<\/b><span style=\"font-weight: 400;\"> Many farmers, especially in remote areas, lack proper awareness about scheme benefits, rules, and claim processes. Paying premiums during the sowing season also creates financial pressure.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Use of imperfect technology:<\/b><span style=\"font-weight: 400;\"> Insurance companies rely on satellite data and area-based models instead of individual farm assessment. This can lead to incorrect estimation of losses, as seen in cases where farmers receive very low compensation despite heavy damage.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Information gap (principal-agent problem):<\/b><span style=\"font-weight: 400;\"> There is asymmetric information, where farmers report losses but insurers verify them. This mismatch creates trust issues and errors in compensation.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Adverse selection problem:<\/b><span style=\"font-weight: 400;\"> Since enrolment became voluntary, mostly high-risk farmers (flood\/drought-prone areas) opt for insurance. This increases the risk burden and cost of the scheme.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Financial stress on the system:<\/b><span style=\"font-weight: 400;\"> Farmers pay low premiums (2% for Kharif, 1.5% for Rabi), while governments cover the rest. This leads to a high subsidy burden of \u20b925,000-30,000 crore (2022-24).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Imbalance between premium and claims: <\/b><span style=\"font-weight: 400;\">Between 2016-2023, insurers collected about \u20b91.97 lakh crore in premiums but paid \u20b91.40 lakh crore as claims, raising concerns about fairness and pricing.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Loss-making insurance business:<\/b><span style=\"font-weight: 400;\"> Insurance companies often pay more than they earn (\u20b9128 paid for every \u20b9100 earned), making the system financially strained.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>State government issues:<\/b><span style=\"font-weight: 400;\"> Some states delay or fail to pay their share of subsidies, causing reduced coverage or withdrawal of insurers. States like Bihar, Jharkhand, and West Bengal have opted out due to high costs.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Impact of loan waivers: <\/b><span style=\"font-weight: 400;\">Farm loan waivers reduce farmers\u2019 interest in insurance, as they may depend on waivers instead of buying insurance.<\/span><\/li>\n<\/ul>\n<h2><b>Reforms and Measures to Strengthen Crop Insurance in India<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Better design and separate management:<\/b><span style=\"font-weight: 400;\"> A one-size-fits-all approach does not work for crop insurance. Since PMFBY (yield-based) and RWBCIS (weather-based) are different in nature, they should be managed separately with specialised insurers. Also, having different premium rates (APR) for different schemes can help attract more farmers, especially those who are currently uninsured.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Stronger risk-sharing and reinsurance system:<\/b><span style=\"font-weight: 400;\"> The agri-reinsurance market needs to be expanded to handle risks better, especially for high-value crops. New approaches like alternative risk-sharing models or cap-and-cup methods can help reduce the financial burden on the government while keeping the system sustainable.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Flexible and localized approach:<\/b><span style=\"font-weight: 400;\"> States and farmers should be given more freedom to choose insurance products based on their local risks (like drought, flood, or hailstorm). This will make crop insurance more relevant and effective instead of using the same model everywhere.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Improved distribution and access:<\/b><span style=\"font-weight: 400;\"> A strong distribution network is needed to reach more farmers. Channels like mobile networks, banking correspondents, FPOs, and CSCs can be used for premium collection and claim settlement, helping to increase insurance coverage.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Use of technology for better assessment:<\/b><span style=\"font-weight: 400;\"> Modern tools like satellite imagery, drones, and weather data systems (like <\/span><strong><a href=\"https:\/\/vajiramandravi.com\/current-affairs\/winds-upsc\/\" target=\"_blank\">WINDS<\/a><\/strong><span style=\"font-weight: 400;\">) should replace slow manual methods like CCEs. Systems like YES-TECH can improve yield estimation, making claim settlement faster, more accurate, and transparent.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Timely payouts and accountability: <\/b><span style=\"font-weight: 400;\">Digital systems like the DigiClaim module can ensure direct and quick transfer of claims to farmers\u2019 accounts. At the same time, strict penalties (like 12% for delays) and escrow accounts for states can reduce delays and improve accountability.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Wider inclusion of farmers:<\/b><span style=\"font-weight: 400;\"> Crop insurance should cover tenant farmers, sharecroppers, and small\/marginal farmers, not just loanee farmers. Expanding coverage will make the system more inclusive and fair.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Awareness and farmer education:<\/b><span style=\"font-weight: 400;\"> Programs like Fasal Bima Pathshalas, Meri Policy Mere Haath, and Fasal Bima Saptah should be strengthened to improve farmer awareness. This helps farmers understand how to enroll, pay premiums, and claim benefits properly.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Overall focus:<\/b><span style=\"font-weight: 400;\"> By improving technology use, transparency, flexibility, and inclusion, Crop Insurance in India can become more trustworthy, efficient, and beneficial for farmers while also reducing financial pressure on the government.<\/span><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Crop Insurance in India protects farmers from crop losses caused by disasters, pests and climate risks through PMFBY, RWBCIS and support schemes now.<\/p>\n","protected":false},"author":29,"featured_media":104595,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[786],"tags":[7672,5104,5105],"class_list":{"0":"post-104611","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-general-studies","8":"tag-crop-insurance-in-india","9":"tag-economy","10":"tag-economy-notes","11":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/104611","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/29"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=104611"}],"version-history":[{"count":4,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/104611\/revisions"}],"predecessor-version":[{"id":104618,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/104611\/revisions\/104618"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/104595"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=104611"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=104611"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=104611"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}