Pradhan Mantri Fasal Bima Yojana: A harvest of discontent in Maharashtra

Farmers in the State are reaping more frustration than compensation from the country’s flagship agricultural insurance scheme.

Farmers protest delayed payouts while state officials consider alternatives for PMFBY. Other States’ exit from PMFBY raises questions about Maharashtra’s continued involvement. | Photo Credit: Vivek Bendre

Despite objections from many States, the Central government continues to promote the Pradhan Mantri Fasal Bima Yojana (PMFBY) every year. Even though States like Gujarat, Bihar, and West Bengal opted out of the scheme allegedly over the financial constraints of the State governments and low claim ratio during normal seasons, Maharashtra has participated in the scheme every season for the past eight years since its launch in 2016-17. However, emerging details about the scheme’s utility in Maharashtra are overwhelmingly negative, raising questions about whether the State should follow Gujarat’s example and exit the programme.

Frontline accessed government documents showing the scheme’s implementation in Maharashtra from the 2019-20 agricultural year. The data reveals that only in 2019-20 did farmers’ compensation exceed the collected premium amount. In all other years up to 2023-24, premium collection significantly outpaced compensation paid to farmers.

In 2023-24, 2.42 crore farmers joined the scheme in Maharashtra. The total premium collected this year is Rs.10,141 crore, with farmers contributing Rs.2.41 crore, the State government Rs.6,048 crore, and the Central government Rs.4,090 crore. However, compensation was paid to only 71.19 lakh farmers, totalling Rs.3,551 crore. According to the data, the 2023-24 premium collection is the highest since the scheme’s inception.

The record-high premium collection is attributed to Maharashtra’s severe drought in 2023-24. Drought or drought-like conditions were declared in 165 out of 385 tehsils. Crop insurance was a lifeline for farmers, leading to the highest enrollment in PMFBY. Yet, nearly 60 per cent of farmers are still awaiting compensation. Throughout July, farmers across Maharashtra have protested, demanding insurance payouts. In the second week of July, hundreds of farmers demonstrated on the Latur-Solapur highway for immediate release of insurance funds. On July 29, farmers initiated a sit-in protest at the Solapur District Collector’s office, also demanding insurance money. 

The issues with PMFBY are not new; they have persisted for years. Data reveals that in the 2020-21 agricultural year (time between the sowing of a crop and its harvest), 1.19 crore farmers joined the scheme. The gross premium collected was Rs.5,806 crore, but compensation was given to only 17.18 lakh farmers, amounting to just Rs.1,116 crore.

This pattern continued in 2021-22—96.38 lakh farmers joined the scheme, with a gross premium of Rs.5,179 crore, while only Rs.3,484 crore was paid as compensation. In 2022-23, 1.04 crore farmers enrolled, with Rs.4,691 crore collected in premiums and Rs.2,908 core given as compensation.

Only in 2019-20 did the compensation amount exceed the gross premium collection. That year, 1.4 crore farmers joined the scheme, with a gross premium collection of Rs.4,922 crore and a compensation payout of Rs.5,537 crore. 

These figures raise significant questions about the PMFBY, which is powered by public and private general insurance companies. Ajit Nawale, farmers’ leader and General Secretary of All India Kisan Sabha, Maharashtra, stated, “This is the reality of the PMFBY. We’ve been saying that this scheme is not for the farmers. It’s designed for insurance companies in the name of farmers.” Nawale says that companies are not paying farmers as they should. “The State government has no control over these companies. As many other States have opted out of the PMFBY, it is time for Maharashtra to exit as well.” 

Concerns about the need to exit PMFBY have also emerged within the State’s bureaucracy. A district collector from a drought-prone area told Frontline that there’s an urgent need to address the crop insurance issue. “When we encourage farmers to join the scheme, it is our responsibility to ensure they receive compensation. We merely receive data from the insurance companies. Farmers need immediate relief. Currently, the insurance scheme is failing here,” the officer said.

A senior officer in the State’s finance department suggested that the State government should develop its own scheme. “Why did Gujarat opt out? Because the premiums were higher. If we compare Maharashtra’s share in PMFBY for the last five years with the compensation amount, they are almost the same. This means the Central government’s funds are not benefiting the State’s farmers. In such cases, implementing a scheme with full compensation, similar to insurance and disaster relief funds, would be more effective. This would provide faster and smoother payouts to farmers,” the officer explained.

With the State Assembly election scheduled for later this year, farmers’ issues are likely to become a central political focus in Maharashtra. During this time, it is crucial to evaluate the status of ongoing farmer-oriented schemes. A thorough discussion about the effectiveness of the PMFBY is essential, say farmer organisations. The pressing question is, they point out, whether any political faction, ruling or opposition, will propose a more robust scheme than the PMFBY, which is the need of the hour.