Maharashtra Government Reverts Crop Insurance Scheme

The Maharashtra government reinstated the original Pradhan Mantri Fasal Bima Yojana (PMFBY) after scrapping the controversial Re 1 crop insurance scheme. This decision was made due to rampant fraud associated with the Re 1 scheme, which had initially aimed to make crop insurance accessible to farmers. The shift back to PMFBY reflects a need for stricter controls and a more sustainable insurance framework.

Background of the Re 1 Crop Insurance Scheme

The Re 1 crop insurance scheme was launched in March 2023 by the Eknath Shinde-led government. It was designed to provide farmers with subsidised crop insurance. The scheme allowed farmers to pay only Re 1 as a premium, with the government covering the rest. This initiative aimed to increase insurance uptake in rural areas.

Surge in Applications and Fraudulent Claims

Following the introduction of the Re 1 scheme, applications skyrocketed. In 2023, applications surged to 2.42 crore, more than double the previous year. However, proportion of these claims turned out to be fraudulent. By early 2025, over 4 lakh claims were rejected due to ineligibility or manipulation.

Types of Fraudulent Claims

Fraudulent claims involved falsified land records and claims for crops that were never sown. Some applications were made for land owned by government entities or religious trusts, and even for non-agricultural land. In one notable case, a claim was submitted for a petrol pump site.

Role of Common Service Centres

Common Service Centres (CSCs) played role in the submission of bogus claims. Operators allegedly used fake identities and land details without the knowledge of actual landowners. This raised serious concerns regarding data security and verification processes within the scheme.

Government Response to Fraud

Once the extent of the fraud became clear, the Maharashtra government took decisive action. The agriculture department initiated physical inspections and cross-verification of claims. An expert committee was established to evaluate the fraud and recommend corrective actions. The committee’s report led to the scrapping of the Re 1 scheme and a return to the original PMFBY structure.

Measures for Future Integrity

To enhance integrity and prevent future fraud, the government introduced stricter verification measures. Those found guilty of submitting bogus claims would face a five-year ban on receiving government subsidies. Additionally, CSC operators involved in fraudulent activities faced blacklisting and potential criminal charges.

Impact of the Changes

The return to PMFBY has already shown signs of reducing misuse. Enhanced verification processes have reportedly saved amounts of public funds. The government aims to ensure that only genuine farmers benefit from the insurance programme.

Questions for UPSC:

1. Critically analyse the impact of crop insurance schemes on rural agriculture in India.
2. Point out the challenges faced by the Pradhan Mantri Fasal Bima Yojana in its implementation.
3. Estimate the role of technology in preventing fraud in government schemes.
4. What are the implications of fraudulent claims on public trust in government initiatives? Discuss with examples.

Answer Hints:

1. Critically analyse the impact of crop insurance schemes on rural agriculture in India.

1. Crop insurance schemes provide financial security to farmers against crop failures due to natural disasters.
2. They promote risk-taking in agriculture, encouraging farmers to invest in better seeds and technologies.
3. Insurance schemes can improve farmers’ creditworthiness, allowing easier access to loans.
4. However, inadequate awareness and understanding of the schemes can limit their effectiveness.
5. Fraudulent claims, as seen in Maharashtra, can undermine the credibility and sustainability of these schemes.

2. Point out the challenges faced by the Pradhan Mantri Fasal Bima Yojana in its implementation.

1. Complexity in the application process can deter farmers from enrolling in the scheme.
2. Inadequate infrastructure for data verification leads to issues with fraudulent claims.
3. Low awareness and understanding among farmers about the benefits and procedures of PMFBY hinder participation.
4. Delayed claim settlements can discourage farmers from relying on the scheme.
5. Insufficient government oversight and monitoring can exacerbate fraud and misuse of funds.

3. Estimate the role of technology in preventing fraud in government schemes.

1. Technology can enhance data verification processes through digital land records and biometric identification.
2. Real-time monitoring systems can track applications and flag suspicious claims for further investigation.
3. Mobile apps and online platforms can facilitate easier access and transparency for farmers regarding their claims.
4. Blockchain technology can ensure secure and tamper-proof record-keeping of claims and beneficiaries.
5. Training for Common Service Centre operators on digital literacy can reduce the risk of fraudulent submissions.

4. What are the implications of fraudulent claims on public trust in government initiatives? Discuss with examples.

1. Fraudulent claims erode public confidence in government schemes, leading to skepticism about their effectiveness.
2. In Maharashtra, the surge in bogus claims under the Re 1 scheme led to a rollback, signaling a loss of faith in the system.
3. When genuine beneficiaries are denied benefits due to fraud, it creates resentment and distrust among the farming community.
4. Widespread fraud can lead to calls for policy changes, which may disrupt ongoing support for farmers.
5. Examples like the Re 1 scheme illustrate how fraud can necessitate stricter regulations, impacting access to support for honest farmers.