In 2024, Maharashtra’s agriculture department revealed widespread fraud in the Pradhan Mantri Fasal Bima Yojana (PMFBY). A staggering 414,000 crop insurance claims were flagged as bogus, highlighting significant misuse of the subsidized insurance scheme. Farmers were found claiming insurance for crops they didn’t grow or for lands they didn’t own, prompting swift action from the state government to address the issue.

About PMFBY

The Pradhan Mantri Fasal Bima Yojana (PMFBY) is a flagship government scheme aimed at providing farmers with affordable crop insurance.

• Farmers can insure their crops for as little as ₹1 premium, protecting them from risks such as natural disasters or crop failure.
• The scheme is designed to safeguard farmers’ livelihoods and promote financial stability in the agricultural sector.

Alarming Rise in Bogus Claims

The fraudulent claims in 2024 represented 2.5% of total applications, the highest rejection rate since the scheme’s launch.

• 2024: 4.14 lakh claims rejected.
• 2023: 3.8 lakh rejections.
• 2022: Only 11,761 claims were found fraudulent.

This significant increase underscores a growing trend of misuse, with farmers exploiting loopholes in the scheme.

Methods of Fraud

Fraudulent activities uncovered during inspections included:

• Non-existent crops: Farmers claimed insurance for crops that were never planted.
• Unauthorized land: Claims were filed for land not owned by the applicants, including government land, non-agricultural plots, petrol stations, and religious sites.
• Common Service Centres (CSCs): Some CSCs were involved in processing fake claims, raising concerns about their role in perpetuating fraud.

Regional Breakdown of Fraud

The highest concentration of bogus claims was reported in the Beed district, with over 109,000 fraudulent applications. Other districts, such as Jalgaon and Parbhani, also recorded significant numbers of false claims. This regional disparity has prompted targeted inspections in fraud-prone areas.

Government’s Response and Preventative Measures

To curb the misuse, the Maharashtra government launched a robust cross-verification process:

• Physical inspections: Claims are now being verified on-site before payments are processed.
• Action against CSCs: District collectors were directed to take punitive action against 96 CSCs involved in irregularities.
• Stricter guidelines: New measures aim to improve oversight and reduce loopholes in the application process.

Financial Implications of Fraud

The exact financial impact of the rejected claims is still under assessment. Insurance payouts vary based on the crop type:

• ₹20,000 per hectare for crops like moong.
• ₹90,000 per hectare for high-value crops like onions.

The fraud’s overall cost to the government and insurance companies could be substantial, given the sheer volume of rejected claims.

Future Actions and Reforms

To deter future misuse, the agriculture department plans to enforce stricter penalties:

• Criminal charges: Legal action against individuals submitting fake claims.
• Five-year ban: Farmers found guilty of fraud will be barred from applying for government insurance for five years.
• Policy refinements: The government is committed to improving the scheme’s structure to ensure genuine farmers benefit while fraudsters are excluded.

Ensuring Credibility of PMFBY

The Maharashtra government’s proactive measures aim to restore trust in the Pradhan Mantri Fasal Bima Yojana. By tightening verification processes and holding fraudsters accountable, the initiative seeks to protect the scheme’s integrity and ensure that the intended beneficiaries—genuine farmers—receive the support they deserve.