Is it crucial that a project manager know how to develop a business plan?

It's better if PM is part of preparation of business plan but it is not a necessity. But PM must understand the business plan to understand the project requirements.

I am not sure in what context the question is.

If what you meant by a business plan is the company's corporate business strategic plan, then my answer is No.

Project managers does not need to know how to develop the company's business strategic plan although I am sure that project managers can develop such. The corporate business strategic plan is often developed by the company's senior management. Project managers must be aware of the business strategic plan and should know how to create business cases though for projects/initiatives and align these to the company's corporate business strategic plan. Often projects are prioritized with respect to the value that they may add to the corporate business strategy and goals.

Does your organisation differentiate Business plan, business case and project plan?
If business plan are the project plan in your organisation, the answer is yes. like Rami and Stephane previously stated.