Crop Insurance Schemes in India – Farmers work tirelessly to grow the food we eat, but bad weather, pests, or low crop prices can make farming risky. Crop insurance schemes in India are like a safety net, helping farmers recover money if their crops fail. These schemes, supported by the government’s fiscal policy, work alongside programs like PM KISAN Yojana, which gives farmers cash to buy seeds or tools.
In 2025, crop insurance and PM KISAN Yojana are helping millions of farmers stay strong, boosting India’s economy by about 6.7% next year. Let’s explore what crop insurance schemes are, how they work with PM KISAN Yojana, and why they matter to you in simple language.
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What Are Crop Insurance Schemes?
Crop insurance schemes protect farmers from losing money if their crops are damaged by things like floods, droughts, pests, or falling market prices. The government pays most of the insurance cost, so farmers only pay a small fee, like 2% for Kharif crops or 1.5% for Rabi crops. These schemes are part of fiscal policy in India, managed by the Ministry of Finance, which uses spending to support farmers. In 2025, the government has extended major schemes like Pradhan Mantri Fasal Bima Yojana (PMFBY) and Restructured Weather Based Crop Insurance Scheme (RWBCIS) until 2025-26, with a budget of ₹69,515.71 crore to cover farmers across India.
Main Crop Insurance Schemes in India (2025)
Here are the key crop insurance schemes available in 2025, designed to help farmers alongside programs like PM-KISAN:
- Pradhan Mantri Fasal Bima Yojana (PMFBY): Launched in 2016, PMFBY is India’s biggest crop insurance scheme, covering losses from natural disasters (like floods or droughts), pests, or post-harvest damage. Farmers pay 2% for Kharif, 1.5% for Rabi, or 5% for commercial crops, with the government covering the rest. In 2025, PMFBY covers 23 states and has insured 63.19 crore farmers since 2016, paying ₹1,75,276 crore in claims.
- Restructured Weather Based Crop Insurance Scheme (RWBCIS): This scheme pays farmers if bad weather, like too much or too little rain, hurts crops. It uses weather data to settle claims quickly. In 2025, RWBCIS is extended with PMFBY, supported by a ₹824.77 crore tech fund for tools like drones and satellites.
- Unified Package Insurance Scheme (UPIS): UPIS combines crop insurance with coverage for things like farm equipment or personal accidents, giving farmers extra protection. It’s voluntary for all farmers.
- Coconut Palm Insurance Scheme (CPIS): This helps coconut farmers recover losses from damaged trees due to storms or diseases, supporting farmers in coastal areas.
- State-Specific Schemes: Some states, like Gujarat’s Mukhyamantri Kisan Sahay Yojana or Andhra Pradesh’s YSR Free Crop Insurance Scheme, offer local insurance plans to cover more farmers.
How Crop Insurance Works with PM-KISAN
PM KISAN Yojana gives small farmers ₹6,000 per year (₹2,000 every four months) to buy seeds, fertilizers, or other needs.
Crop insurance schemes complement this by protecting farmers if those crops fail. For example, a farmer using PM KISAN money to plant rice can use PMFBY to get money back if a flood destroys the crop.
Both are part of expansionary fiscal policy, where the government spends to help farmers and rural areas. In 2025, PM KISAN supports over 9 crore farmers with ₹60,000 crore, while crop insurance schemes like PMFBY ensure they don’t lose everything if disaster strikes. Here’s a quick look:
| Program | Details (April 2025) | How It Helps Farmers |
|---|---|---|
| PM-KISAN | ₹6,000/year to 9 crore farmers | Pays for seeds, tools, or family needs. |
| PMFBY | ₹69,515.71 crore for 2021–26 | Covers crop losses from floods, pests. |
| RWBCIS | Weather-based claims, tech fund | Pays for losses due to bad weather. |
| Economic Impact | 6.7% GDP growth, 4.2% prices | More crops, stable food prices. |
Note: Data from Union Budget 2025–26, PM-KISAN portal, and government announcements.
How Farmers Use Crop Insurance
Farmers can join crop insurance schemes to protect their crops. Here’s how it works:
- Who Can Join: All farmers, including sharecroppers and tenants, growing notified crops (like rice, wheat, or pulses) in covered areas. It’s mandatory for farmers with crop loans but voluntary for others.
- How to Apply: Register through banks, Common Service Centres (CSCs), or online portals like pmfby.gov.in. Farmers pay a small premium (e.g., 2% for Kharif), and the government subsidizes the rest.
- What’s Covered: Losses from natural disasters (floods, droughts, cyclones), pests, diseases, prevented sowing, or post-harvest damage. Some schemes, like RWBCIS, cover weather issues like low rainfall.
- Claims Process: Report losses within 48 hours to the local agriculture office or insurer. Officials and insurance companies assess damage, often using tech like drones. Claims are paid directly to bank accounts, usually within 30–45 days.
In 2025, the government is using a ₹824.77 crore tech fund to make claims faster with tools like YES-TECH (remote sensing for yield estimates) and WINDS (weather data systems), covering states like Andhra Pradesh and Madhya Pradesh.
Why Crop Insurance and PM-KISAN Matter
Together, crop insurance and PM-KISAN help farmers and the whole country. Here are five simple reasons why they’re important:
- Protect Farmers’ Money: PM-KISAN gives ₹6,000 yearly for farming needs, while PMFBY pays if crops fail, like ₹49,000 to a farmer for flood-damaged rice.
- Keep Food Prices Stable: More crops from insured farmers mean grocery prices stay low (around 4.2% in 2025).
- Create Rural Jobs: Farmers spend PM-KISAN and insurance money at local shops, boosting village economies.
- Support Fiscal Policy Goals: Both programs are tools of fiscal policy, helping the objectives of fiscal policy like 6.7% economic growth and rural support, as set by the Ministry of Finance.
- Work with Monetary Policy: PM-KISAN and crop insurance (fiscal policy) team up with the RBI’s 6% interest rate (monetary policy) to make loans cheaper, helping farmers grow more.
Fiscal Policy vs. Monetary Policy
PM-KISAN and crop insurance are part of monetary and fiscal policy teamwork. Here’s the difference between monetary policy and fiscal policy:
- Fiscal policy: Managed by the Ministry of Finance, it’s about spending and taxes. PM-KISAN (₹60,000 crore) and PMFBY (₹69,515.71 crore) are fiscal policy because the government spends to help farmers.
- Monetary policy: Run by the RBI, it’s about loans and money flow. In 2025, the RBI’s 6% rate makes borrowing easier for farmers.
Fiscal policy vs. monetary policy: PM-KISAN and crop insurance give farmers cash and protection (fiscal policy), while the RBI’s low rates help them borrow (monetary policy), boosting farming and the economy.
Challenges and What’s Next
Crop insurance schemes face issues like slow claim payments, paperwork errors, or excluding tenant farmers. PM KISAN Yojana also struggles with reaching all farmers due to Aadhaar issues. In 2025, the government is fixing these by using tech (like drones for PMFBY claims) and simplifying PM KISAN registration.
The Union Budget keeps both programs strong, with ₹60,000 crore for PM KISAN and ₹69,515.71 crore for crop insurance, as part of expansionary fiscal policy. Fiscal policy in India is formulated by the Ministry of Finance, which aims to support farmers and keep food prices stable.
Why This Matters to You
Crop insurance schemes and PM-KISAN help farmers grow the food you eat without fear of losing everything. When farmers are secure, they produce more, keeping your groceries affordable (prices at 4.2%).
Their spending creates jobs in villages, helping the economy grow by 6.7% next year. As part of fiscal policy in India, these programs show how the government supports farmers and all of us.
Next time you buy vegetables or see a busy market, know that crop insurance and PM KISAN Yojana are making it possible!
Sources: Union Budget 2025–26, PM-KISAN Portal, PMFBY Portal, The Hindu (Jan 1, 2025), ClearIAS (Jan 4, 2025), Protect Our Livelihood (Apr 3, 2025).
URLs: PM-KISAN Portal, PMFBY Portal
Categories: Fiscal Policy, Agriculture, Economic Growth.
