What Happened
- India is now recognized as the most technologically ambitious agricultural insurance market globally, anchored by the Pradhan Mantri Fasal Bima Yojana (PMFBY) — the world's largest crop insurance ecosystem by farmer count.
- Since PMFBY's launch in 2016, over 78 crore farmer applications have been insured and Rs 1.72 lakh crore in claims have been disbursed to 19.61 crore farmers.
- In 2024-25, a record 4.19 crore farmers were enrolled — the highest participation since the scheme's inception.
- Technology integration — including satellite imagery, AI-driven underwriting, drone-based crop assessment, and parametric (weather-index) insurance — is dramatically improving claim accuracy and settlement speed.
- Madhya Pradesh has become India's first state to adopt 100% technology-based yield assessments under PMFBY, eliminating traditional manual crop-cutting experiments.
Static Topic Bridges
Pradhan Mantri Fasal Bima Yojana (PMFBY)
PMFBY, launched in February 2016, replaced three earlier schemes — the Modified National Agricultural Insurance Scheme (MNAIS), Weather-based Crop Insurance Scheme, and the National Agricultural Insurance Scheme (NAIS) — to provide a single, simplified crop insurance framework. The scheme provides coverage for the entire cropping cycle from pre-sowing to post-harvest, including midseason adversities.
- Farmer premium is capped at 2% for Kharif crops, 1.5% for Rabi food and oilseed crops, and 5% for commercial/horticultural crops
- The difference between actual actuarial premium and farmer's share is subsidised by the Centre and State governments on a 50:50 basis (90:10 in Northeast states)
- Coverage includes prevented sowing (up to 25% of sum insured), midseason adversity, post-harvest losses, and localized calamities (hailstorm, landslide, inundation)
- Individual farm-level assessment is provided for localized calamities
- Farmer enrollment was made voluntary for loanee farmers from Kharif 2020
Connection to this news: The record 4.19 crore enrollment in 2024-25 and Rs 1.72 lakh crore in cumulative claims disbursement demonstrates that PMFBY has matured into a functioning safety net, and its technology integration is now what distinguishes India's approach globally.
Technology in Agriculture — Precision Farming and Remote Sensing
Precision agriculture uses GPS, GIS, remote sensing, IoT sensors, drones, and AI to optimize farm inputs and monitor crop health at granular levels. In the insurance context, these technologies replace the traditional crop-cutting experiment (CCE) method — where government officials physically inspect sample plots — which was slow, prone to manipulation, and covered limited area.
- Satellite imagery and remote sensing enable automated crop-loss assessment across large areas without physical inspection
- AI-driven underwriting uses historical yield data, soil health information, weather analytics, and crop intelligence for customized risk pricing
- Drone mapping provides geo-tagged field data for rapid and accurate damage assessment
- Digital platforms enable farmer self-enrollment, real-time policy tracking, and direct benefit transfers to bank accounts
- 80% of PMFBY claims are now targeted for settlement within 30 days using technology-driven processes
Connection to this news: The shift from manual CCEs to satellite-and-AI-based yield estimation — pioneered at scale by Madhya Pradesh — represents a structural transformation in how India manages agricultural risk, making crop insurance both faster and more credible.
Parametric (Weather-Index) Insurance
Parametric insurance triggers automatic payouts based on pre-defined weather parameters (rainfall, temperature, wind speed) rather than actual assessed crop losses. This model eliminates the need for post-disaster field inspections, drastically reducing claim settlement times and moral hazard. It is particularly valuable for drought-prone and flood-prone regions where traditional indemnity-based assessment is impractical.
- Payouts are triggered automatically when rainfall or temperature crosses pre-set thresholds at reference weather stations
- No loss adjuster visits or damage documentation required from farmers
- Basis risk — the gap between index readings and actual farm-level losses — remains the key challenge
- India is expanding parametric products to cover more crop types and risk categories beyond rainfall deficit
- International models (e.g., Africa Risk Capacity, Caribbean Catastrophe Risk Insurance) inform India's approach
Connection to this news: The expansion of parametric insurance products within India's crop insurance ecosystem directly addresses the speed-of-settlement challenge that has historically undermined farmer trust in insurance schemes.
Key Facts & Data
- PMFBY coverage since 2016: 78 crore farmer applications insured
- Total claims disbursed: Rs 1.72 lakh crore to 19.61 crore farmers
- 2024-25 enrollment: 4.19 crore farmers (highest ever)
- Farmer premium cap: 2% (Kharif), 1.5% (Rabi), 5% (commercial/horticultural)
- Centre-State subsidy sharing: 50:50 (90:10 in Northeast)
- Coverage growth: from 371 lakh applications (2014-15) to 1,510 lakh (2024-25)
- Target: 50% of gross cropped area to be covered in coming years
- Madhya Pradesh: first state with 100% technology-based yield assessment under PMFBY
- Claims settlement target: 80% within 30 days using technology