The agricultural sector and its continuous related industries to be the fundamental basis of the Indian economy, providing numerous employment possibilities. This sector contributes considerably to the country’s GDP and has a direct impact on food security, as well as to support livelihoods and economic growth.
Despite several steps, government tasks to protect farmers against crop losses due to calamities and natural diseases through Pradhan Mantri Bima Yojana Fasal (PMFby), the livelihood of farmers and sections.
Even with all ads to implement several schemes, agricultural insurance in India is still small with focus only on crops. There must be a holistic vision and more schemes to provide full financial protection to farmers, encourage sustainable practices and include broader coverage of livestock, agricultural tools and other assets of the celebms.
What bone has done so far
In India, crop insurance has traveled a long way in the last five decades. It has improved to be only performance -based models to a system enabled for technology and multiple interested parties that includes farmers, the State, the central government, banks, related private agencies and insurers.
Returning to 1985, when the integral scheme of crop insurance (CCIS) was established, the objective of the scheme was to help farmers obtain money if their crops failed because or drought. The Indian government established the National Agricultural Insurance Plan (NAI) at the end of 1999 to protect the farms of natural disasters.
But the real Gamechanger arrived in 2016 when Pradhan Mantri Bima Yojana was launched, which caused subsidized rates in a broad spectrum of crops, including food grains, oilseed seeds and horticulture crops.
According to the PMFby, the farmers’ premiums declared an extremely low rate throughout the country. Farmers are charged a maximum or 2 percent of the sum insured for Kharif crops, a maximum of 1.5 percent of the sum insured for Rabi crops and the maximum 5 percent of the sum secured for commercial or horticultural crops.
The remaining part of the premiums is equally shared by the central and state government in bases 50: 50 in most states, except the northeast states, where it is 90:10. PMFby manages risks such as drought, floods, pests and disease attacks. But ongoing reforms and innovations are key to ensure that it remains sustainable, inclusive and efficient to protect the fixed agricultural population of India.
Cattle and equipment insurance
Even so, crop insurance is the most common type of agricultural insurance. Livestock and team insurance is still large unknown. Livestock and cattle insurance began in 1970. However, penetration has not been significant. Again in 2005-06, the insurance won was pushed with more thrust and structured efforts. Often, equipment insurance, such as tractors or irrigation systems, is part of more specific agricultural policies.
The unified packages insurance scheme (UPIS) tries to cover everything, such as crops, cattle, tools and personal belongings, but it is not very popular because not many people are familiar. We need to analyze the numbers in the context of general insurance, for example, only 21.01 LAKH of the cattle have insured bones in the previous financial year.
In our country, livestock insurance under the National Livestock Mission (NLM) operates on the basis of demand and the department is encouraging states to send proposals from insurance schemes so that more and more lives are covered by insurance.
According to recent responses in Lok Sabha, there are 10.08 homes of millions of rupees that have cattle or poultry. Therefore, one must imagine the scope of ensuring cattle in India and the benefits for final farmers. Just although the government is trying to obtain the penetration of livestock insurance, the participation of the farmer’s premium, which was in the range of 20-50 percent, was reduced to 15 percent, while the portion will be paid by the central and state government.
What can be done
The agricultural insurance panorama of India is ready for transformation by adopting cattle, equipment and emerging sectors. By adopting global best practices and use technology, India can create a dynamic and inclusive insurance framework. At one end, government subsidies for premiums and robust data systems remain crucial, while private and innovative technological insurers drive progress. Among the climatic challenges and agricultural diversification, inclusive insurance will anchor a strong agricultural system in the country
To achieve this, policies must cover wide and small indigenous ruminants. The microinsur with premiums such as axis under ₹ 50-100 per animal can empower low-income farmers. Linking veterinary care reduces livestock mortality. Community models, such as farmers’ cooperatives, can reduce costs. For equipment, tools subsidies, rental equipment coverage and maintenance linked to maintenance are key. Public-private associations with manufacturers can further integrate insurance, ensuring a prosperous and sustainable agricultural future.
The author is Chief of Rural and Agricultural Insurance in Probus
Posted on April 27, 2025