Crop insurance is growing, but also needs to become more inclusive

Crop insurance needs to become more inclusive

Pradhan Mantri Fasal Bima Yojana’s extension is undoubtedly expected to bring relief to the farming community, given rising coverage, but it also needs a pivot to become more inclusive.

In one of its first decisions of the year, the Cabinet, on January 1, announced an extension of the scheme to FY26 with an overall outlay of Rs 69,515.7 crore from 2021-22 to 2025-26.

However, a Moneycontrol analysis shows that the scheme may be moving away from marginal farmers.

While applications under the scheme have increased at a compounded annual growth rate of over 20 percent for the Kharif season, administrative data shows that the share of marginal farmers enrolled under the programme has declined.

Marginal farmers, or those with holdings of less than 1 hectares or 2.5 acres, had a 15.3 percent share of applications under the schemes during the 2024 Kharif season, compared with 18.1 percent in 2018.

Rabi season displays a similar trend, with the share of marginal farmers declining under the crop insurance schemes post Covid, despite falling premiums from the government.

While marginal farmers had an 18.3 percent share in crop insurance schemes pre-Covid, this declined to 16.4 percent during the Rabi season post Covid.

In the case of the Rabi season, the decline in the share of marginal farmers was accompanied by a rise in the enrollment share of other farmers.

Small farmers who own or cultivate between 1 and 2 hectares of agricultural land still have the highest share, over 65 percent.

Over half of marginal farmers lost at least half of their crops due to extreme weather conditions, according to a private survey conducted in 2023.

Farmers belonging to the Scheduled Caste community were also affected, as their share shrank over the seven years of the schemes existence.

SC farmers’ share declined from 6.8 percent to 6.1 percent between 2018 and 2024 for the Kharif season and from 7.2 percent to 5.4 percent for the Rabi season.