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Parametric Insurance for Farmers: Climate-Linked Cover Plan

27 October 20251 min read
AGRICULTURE & RURALParametric Insurancefor Farmers:Climate-Linked CoverPlan27 October 2025safalsetu.com

Why in the news

With smallholders exposed to climate shocks, the Centre plans a data-driven cover that pays quickly after weather-linked crop losses.

Key facts

  • Agriculture: nearly 50% of employment, about 18% of GDP; around 86% of farmers are smallholders.
  • Parametric (index-based) cover: payout when rainfall, temperature or wind speed crosses a preset level; no field inspection, based on satellite, weather station or remote sensing data.
  • Benefits: speed, transparency, simplicity, lower costs.

Limits of PMFBY

  • Launched in 2016, replacing NAIS and MNAIS.
  • Issues: high premiums, slow claims, low reach, complex procedures, weak trust.

Significance

  • Timely relief, less dependence on costly informal loans, data-driven governance.
  • Supports SDG 13 and SDG 1.

Exam angle

  • Parametric = index-based; trigger = predefined parameter.

Test yourself

1. What triggers a payout under parametric (index-based) insurance?

Payout is automatic when a preset parameter like rainfall crosses a threshold.

2. In which year was PMFBY launched, replacing NAIS and MNAIS?

The notes state PMFBY was launched in 2016.

3. Which SDGs does climate-linked parametric insurance for farmers support, as per the notes?

It supports SDG 13 (Climate Action) and SDG 1 (No Poverty).

This topic is part of Daily Current Affairs 26 & 27 October 2025 (18 topics).

All topics of the dayDay quizOctober 2025

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