Crop Insurance & Farm Risk

Most farmers do not insure their crops

In NSO's 2019 survey, 8.3 per cent of paddy-growing agricultural households insured their crop in July–December 2018 and 13.9 per cent in January–June 2019; 6.8 per cent insured wheat. Among paddy growers who did not insure (July–December 2018), the most common reason — 44.2 per cent — was not being aware of crop insurance. Under PMFBY, the Ministry of Agriculture reported coverage of about 30 per cent of gross cropped area in implementing states since 2016-17, and farmer applications reached an all-time high in 2023-24. Applications are not farmers, and the household survey has not been repeated, so current uptake among farmers is not established. Evidence confidence: High for 2018-19.

1 sub-problem

Six states have left the national crop insurance scheme at some point

PMFBY is voluntary for states. The Ministry of Agriculture told the Lok Sabha in March 2023 that Bihar, Telangana, Andhra Pradesh, Jharkhand, West Bengal and Gujarat had opted out after implementing it for some seasons, citing their perception of risk and financial constraints; Andhra Pradesh rejoined from Kharif 2022 and Punjab had announced it would join. Current participation is not established here. Evidence confidence: High as of March 2023.

Crop insurance claims are delayed by late state subsidy payments and yield disputes

The Ministry of Agriculture has told Parliament that claims were delayed by late transmission of yield data, late release of states' share of premium subsidy, yield disputes between insurers and states, missing bank details, errors on the National Crop Insurance Portal and delayed remittance of farmers' premium (March 2023); and by late state subsidy, incorrect or delayed proposals from banks and yield-data discrepancies (February 2026). Remedies include a 12 per cent penalty on insurers for delayed claims, delinking the central subsidy share, and mandatory state escrow accounts for premium from Kharif 2025. The amount of claims pending is not established here. Evidence confidence: High for causes; low for current scale.

Crop losses to wild animals are not counted nationally and were outside crop insurance

In December 2024 the Ministry of Environment told the Lok Sabha that details of crop losses caused by wild animals are not collated in the Ministry, human-wildlife conflict being primarily a state responsibility. Because such losses were treated as preventable, PMFBY did not cover them; in February 2026 the Ministry of Agriculture said states had been allowed to notify wild-animal damage as an add-on cover at their own cost, and that a committee had recommended procedures for covering it as a localised risk. Evidence confidence: High that the losses are uncounted; their scale is unknown.