Skewed scheme: Crop insurance must benefit farmers first

THE Pradhan Mantri Fasal Bima Yojana (PMFBY), which completes 10 years today, stands at a crossroads. Rolled out in 2016 by the Modi government as a flagship risk mitigation scheme, its primary aim was to shield farmers from the growing volatility of climate and markets. However, reports from Haryana and Rajasthan — both BJP-ruled states — indicate that insurance companies, not farmers, are largely reaping the benefits of this initiative. Between 2023 and 2025, insurance firms in Haryana collected gross premiums amounting to Rs 2,827 crore under the PMFBY but paid out claims to the tune of only Rs 731 crore, pocketing more than Rs 2,000 crore as profit. The nationwide numbers are even starker: Rs 82,015 crore collected, Rs 34,799 crore disbursed and profits of over Rs 47,000 crore in just three years.

Crop insurance need not eliminate profit-making, but it should ensure a level playing field. Farmers have been staging dharnas over delayed or rejected claims in parts of Haryana, while allegations of large-scale irregularities — including forged forms and fraudulent bank accounts — have surfaced in Rajasthan. If insurers consistently earn windfall margins while cultivators grapple with erratic weather, mounting debt and bureaucratic hurdles, the balance of the scheme tilts dangerously.

To its credit, the PMFBY integrates satellite imagery, drones and a tech-based yield estimation system to enhance transparency. Affordable premiums are heavily subsidised by the Centre and states. Yet, the bulk of the premium pool is public money. When the claim ratio is disproportionately low, taxpayers have every reason to demand accountability. As the PMFBY enters its 11th year, reforms should define its future. Transparent audits, faster claim settlement, stricter oversight of insurers and greater representation of farmers are essential. The scheme can remain a safety net for India’s annadata only if it restores trust.