Fraud in PM Crop Insurance Scheme: ₹1 Premium Scheme Discontinued in Maharashtra

Key Highlights:

• The ₹1 crop insurance scheme discontinued due to fraud.

• 5.9 lakh fake applications found in 2024-25.

• Farmers now have to pay 2% for Kharif, 1.5% for Rabi, and 5% for cash crops.

• The government may save ₹5,000–6,000 crore annually.

• A new scheme version is under planning for better transparency.

The Pradhan Mantri Fasal Bima Yojana (PMFBY), a major crop insurance scheme by the Central Government, has recently seen a big change in Maharashtra. The state government has decided to stop the ₹1 crop insurance scheme due to large-scale fraud and irregularities. The scheme has now returned to its earlier structure, where farmers pay a share of the insurance premium.

Let’s understand what led to this decision and how it will impact farmers.

Why Was the ₹1 Crop Insurance Scheme Discontinued?

In March 2023, the Maharashtra government started offering crop insurance under PMFBY at just ₹1. This meant farmers had to pay only ₹1 as a premium, and the rest was covered by the state and central governments. This move attracted a huge number of applicants.

However, in 2024-25, 5.9 lakh fake insurance claims were discovered. According to the government, these fraudulent claims were processed through Common Service Centers (CSCs), with over 96 centers involved in scams. People from other states and even uncultivable or empty land were used to file false claims.

Due to this, the government decided to discontinue the ₹1 scheme to prevent further misuse. Officials estimate that stopping the scheme will save the state ₹5,000 to ₹6,000 crore annually.

What’s the New System Under PMFBY in Maharashtra?

After removing the ₹1 premium scheme, Maharashtra has now returned to the original structure of the PM Crop Insurance Scheme. As per the updated system:

• Farmers will pay a 2% premium for Kharif crops

• 1.5% premium for Rabi crops

• 5% premium for commercial and horticulture crops

The rest of the premium will continue to be paid by the state and central governments.

The government stated that this step ensures the scheme reaches genuine farmers, and insurance companies do not make unfair profits due to fraud. Until a better alternative is prepared, the old crop insurance model will be followed.

Fake Claims and Rising Applicant Numbers

Due to the ₹1 premium scheme, the number of applicants rose sharply in the last few years:

Because CSCs received ₹40 per application as honorarium, many centers filed fake entries to earn more. As a result:

• ₹478.5 crore of premium was wrongly paid to insurance companies

• Potential loss of ₹6,000 crore if claims had been approved after a natural disaster

In the 2024-25 Kharif season, the government paid ₹7,539 crore in premium:

• Centre: ₹3,060 crore

• State: ₹4,479 crore

For the Rabi season, ₹1,684 crore was paid:

• Centre: ₹643 crore

• State: ₹1,040 crore

Agriculture Minister’s Statement on the Change

Maharashtra Agriculture Minister Manikrao Kokate confirmed during a recent press conference that fraud had been reported in the ₹1 scheme. He mentioned that there is no plan to permanently shut down the scheme, but steps are being taken to prevent its misuse.

He also hinted at the possibility of a new and better version of the scheme, which will be more transparent and beneficial to genuine farmers.

What Are the Benefits and Losses for Farmers?

Benefits:

• Genuine farmers will still get insurance cover for crop losses.

• A more secure system ensures faster and fair claim settlements.

• The return to the old system may bring better transparency.

Losses:

• Farmers now need to pay more premium (2%, 1.5%, or 5%) compared to ₹1 earlier.

• Small and marginal farmers may feel burdened by the cost.

• Immediate financial relief for poor farmers may be reduced.

Also Read: PM Kisan 20th Installment 2025: Expected Date, Payment Details & Updates for Farmers

CMV360 Says

The discontinuation of the ₹1 crop insurance scheme in Maharashtra is a major step to stop misuse and save public funds. While it brings back the burden of a small premium on farmers, it ensures long-term benefits by securing the scheme’s credibility and improving its fairness. The government is working on a new version of the scheme to balance affordability and transparency for all farmers.​