Introduction
Agriculture is inherently risky and uncertain, as it depends on climatic conditions, natural disasters, pest attacks, and fluctuating market prices. To protect farmers from financial distress due to crop failure or price volatility, agricultural insurance laws and schemes have been introduced in India. These laws and schemes aim to provide financial security, ensure stability in farm income, and promote sustainable agriculture.
India’s agricultural insurance framework includes government-backed insurance schemes, private sector involvement, and legal frameworks that govern the functioning of agricultural insurance. The Constitution of India allows both the Centre and the States to legislate on insurance-related matters under Entry 47 of the Union List and Entry 17 of the State List in the Seventh Schedule.
Key Agricultural Insurance Laws and Schemes
1. The Crop Insurance Act, 1985 (Historical Reference)
The Crop Insurance Act, 1985 was one of the earliest attempts to provide a statutory framework for crop insurance in India. It was later replaced by government-sponsored insurance schemes, as the original Act was found to be ineffective in addressing the needs of small and marginal farmers.
Key Features
- Established a national crop insurance program.
- Covered only certain notified crops and regions.
- Faced implementation challenges due to low awareness and high costs.
👉 Current Crop Insurance Schemes Have Replaced This Act.
2. The Pradhan Mantri Fasal Bima Yojana (PMFBY), 2016
The PMFBY is the largest crop insurance scheme in India, launched in 2016, replacing earlier schemes like the National Agricultural Insurance Scheme (NAIS) and the Modified NAIS (MNAIS).
Key Features
- Covers all food crops, oilseeds, and commercial/horticultural crops.
- Farmers pay a low premium rate:
- 2% for Kharif crops
- 1.5% for Rabi crops
- 5% for commercial/horticulture crops
- The remaining premium is shared by the Central and State Governments.
- Uses remote sensing, drones, and weather data for faster claim settlements.
- Compulsory for farmers with institutional loans; voluntary for others.
👉 Official PMFBY Guidelines: Click Here
Case Law: Swaraj Abhiyan v. Union of India (2016)
- Issue: The Supreme Court examined whether the government was effectively implementing drought relief measures, including crop insurance.
- Judgment: The Court directed the government to ensure timely crop insurance payments to farmers affected by drought.
3. Restructured Weather-Based Crop Insurance Scheme (RWBCIS), 2016
This scheme differs from PMFBY as it insures farmers against weather-related risks rather than actual crop loss.
Key Features
- Protects farmers from excess rainfall, drought, heat waves, cold waves, hailstorms, and frost.
- Uses scientific weather data from IMD (India Meteorological Department) for claim assessment.
- No requirement to assess actual crop loss, making settlements faster.
- Capped premium rates, with the government covering the remaining cost.
👉 Detailed RWBCIS Guidelines: Click Here
Case Law: Shivnath Singh v. State of Madhya Pradesh (2019)
- Issue: Farmers alleged that insurance companies were delaying claim settlements under RWBCIS.
- Judgment: The Madhya Pradesh High Court ruled that insurance firms must ensure prompt disbursement of claims within the prescribed period.
4. The Agriculture Insurance Company of India Act, 2002
The Agriculture Insurance Company of India (AIC) was established under the Companies Act, 1956, with the objective of providing crop insurance services to Indian farmers.
Key Features
- AIC manages various insurance schemes, including PMFBY and RWBCIS.
- Ensures financial sustainability of agricultural insurance programs.
- Works in collaboration with private insurers, banks, and cooperatives.
- Promotes technological innovations in agricultural insurance.
👉 AIC of India Website: Click Here
5. Livestock Insurance Scheme
In addition to crops, farmers rely on livestock for income generation. The Livestock Insurance Scheme provides protection against cattle loss due to disease, accidents, and natural disasters.
Key Features
- Covers cows, buffaloes, sheep, goats, pigs, and poultry.
- Farmers pay only 20-30% of the premium, while the government covers the rest.
- Claims are settled within 30 days of verification.
👉 Details on Livestock Insurance: Click Here
Case Law: Ram Singh v. State of Rajasthan (2020)
- Issue: A farmer was denied livestock insurance compensation due to technical reasons.
- Judgment: The Rajasthan High Court ruled that insurance companies must follow a farmer-friendly approach and resolve claims fairly.
Challenges in Agricultural Insurance Implementation
| Challenges | Explanation |
|---|---|
| Low Farmer Awareness | Many farmers are unaware of their insurance rights and schemes. |
| Delayed Claim Settlements | Bureaucratic processes and disputes delay payouts. |
| Inadequate Weather Data | Some regions lack accurate weather monitoring systems, leading to disputes in RWBCIS claims. |
| Private Sector Involvement | Insurance companies often prioritize profits over fair claims. |
| Land Ownership Issues | Tenant farmers and sharecroppers struggle to access insurance benefits. |
Recent Developments in Agricultural Insurance
- Expansion of PMFBY Digital Services
- Introduction of satellite imaging, AI, and blockchain technology for fraud detection and claim verification.
- Kisan Drones launched for crop assessment.
- Compulsory Digitization of Land Records for Insurance
- Integration with DILRMP (Digital India Land Records Modernization Programme) to verify land ownership.
- Privatization of Crop Insurance
- Private insurers are being allowed to operate in collaboration with state agencies.
- Inclusion of Horticulture & Perishable Crops
- Insurance schemes now cover horticulture, floriculture, and organic farming.
Conclusion
Agricultural insurance laws in India provide critical financial security to farmers, but implementation challenges remain. The Pradhan Mantri Fasal Bima Yojana (PMFBY) and Restructured Weather-Based Crop Insurance Scheme (RWBCIS) are key initiatives that help mitigate climate and price risks. However, awareness, transparency, and timely settlements are crucial for making agricultural insurance truly effective.
To improve the system, technological advancements, simplified claim processes, and better regulatory oversight are essential. Strengthening farmer education and grievance redressal mechanisms will ensure that agriculture remains a stable and sustainable livelihood option in India.
