Context:
Maharashtra’s government has decided to discontinue its Re 1 crop insurance scheme after uncovering major irregularities.
- Bogus applicants: The state detected 5.9 lakh bogus applicants in the 2024-25 cycle. For these applicants, the state and Centre had paid ₹478.5 crore in premiums to insurance firms.
- Potential risk: Had the fraudulent claims gone unnoticed, the bogus applicants could have received ₹6,000 crore in payouts during a calamity.
Re 1 Crop Insurance Scheme
The Re 1 crop insurance scheme was launched in 2023 by the Mahayuti government, under which farmers were to pay only Re 1 as premium on their part while the rest was borne by the government. This led to a massive increase in the number of applicants compared to previous years and over 5.82 lakh bogus claims in 2024-25.
Scheme Revisions and Return to Centre’s Crop Insurance Model
- New plan: Maharashtra will revert to the Centre’s premium charges for crop insurance.
- Premium rates: Under the Centre’s scheme, farmers will now pay:
- 1.5% of the sum insured for kharif crops,
- 2% for rabi crops, and
- 5% for horticulture crops.
Impact of the Decision
- Improved scheme: The Maharashtra government has proposed an improved version of the crop insurance scheme, aiming for better transparency and accountability.
- Farmer protection: The decision to move away from the Re 1 scheme aims to ensure that only legitimate farmers benefit from the insurance coverage, maintaining the integrity of the system.
