Budget 2025-26: Disasters on the rise but crop insurance gets lowest allocation in last seven years

Allocation to the Union government’s flagship crop insurance scheme in the Union Budget 2025-26 released on February 1, 2025, was the lowest in last seven years, even as just a day ago the government’s Economic Survey admitted how an increase in extreme weather events was causing heavy crop yield losses for farmers.

The scheme, ‘Pradhan Mantri Fasal Bima Yojana’ (PMFBY), received an allocation of Rs 12,242.27 crore in the Union Budget 2025-26, a sharp reduction of almost 23 per cent compared to 2024-25 revised estimates (RE) of Rs 15,864 crore.

This allocation is the lowest since 2019-20.

The scheme was launched by Prime Minister Narendra Modi in February 2016 with an aim to provide a comprehensive insurance cover to farmers against crop failure, thus helping in stabilising their income. 

In the economic survey released on January 31, 2025, the government highlighted how PMFBY acts as a safety net for farmers against crop losses due to natural calamities, pests, and diseases, and ensures financial stability.

The sharp dip in the allocation, at the time when extreme weather events have been causing yield losses and supply chain disruptions, could be a tacit acknowledgement of PMFBY not being able to benefit farmers, even as general insurance companies reduce their exposure to crop insurance under the scheme.

This could be seen in government’s own data; insurance claim paid to farmers has seen a drastic decline—from Rs 29,444.66 crore in 2018-19 to Rs 10,391.39 crore in 2023-24.

Non-payment or delayed payment of claims under PMFBY have been the major reasons behind farmers’ disillusionment with the scheme.

At the same time, there has been a notable increase in the frequency of extreme weather conditions, particularly heatwaves. On an average, during 2022-2024, India experienced heatwaves on 18 per cent of days compared to 5 per cent of days in 2020 and 2021, according to the Economic Survey.

The report cited Down To Earth’s data to show how the total crop area damaged in 2024 was higher compared to the last two years due to extreme weather events.