MUMBAI: The state cabinet decided to scrap its Rs 1 crop insurance scheme, where farmers in the state paid just a nominal fee to enrol. This decision followed the discovery of major irregularities in the scheme, with 5.9 lakh bogus applicants detected in 2024-25. The state and central govt paid a premium of Rs 478.5 crore to insurance companies for these fraudulent applications.
If the bogus applicants had not been discovered, they could have received a payout of up to Rs 6,000 crore in the event of a calamity. The state initially decided to offer the Prime Minister’s Crop Insurance Scheme at the nominal fee of Rs 1 from March 2023. It will now revert to the Centre’s premium charges for farmers. Under the central scheme, farmers are charged 1.5% of the sum insured for kharif crops, 2% for rabi crops, and 5% for horticulture crops.

The cabinet has approved a revamped scheme for Kharif 2025. Sources indicate that the savings from bogus applicants and their liabilities will be redirected into capital investment in agriculture.
“In recent times, many irregularities were detected in the Rs 1 crop insurance scheme. There were lakhs of bogus applications. We did not want poor farmers to be deprived of the scheme and for insurance companies to benefit. We have cleared an improved version of the scheme,” said Chief Minister Devendra Fadnavis.
He mentioned that an SIT was investigating the irregularities in the scheme, and action would be taken after its report was released. Meanwhile, a state inquiry found 5.9 lakh bogus applications for crop insurance. The problem was exacerbated by those managing Common Service Centres (CSC) set up nationally to aid in the delivery of govt schemes, officials said. Bogus applications were processed by over 96 CSCs.
There were cases where applicants for crop insurance were from other states, or the land insured was not farmland but belonged to places of worship, was non-agricultural land, or even govt land.
“The CSCs receive an honorarium of Rs 40 per application, and it seems they were trying to increase the number of applicants to earn a higher honorarium,” said a senior official. The districts with the largest number of bogus applicants included Beed, Satara, Parbhani, and Jalgaon.
The inquiry recommended scrapping the Rs 1 crop insurance scheme and presenting a revamped scheme for the kharif season in 2025. It also recommended using the additional premiums generated towards capital investment in agriculture.
The state inquiry found that the number of applicants for the crop insurance scheme almost doubled after the fee paid by farmers was reduced to a nominal Rs 1 by the state in March 2023.
“In 2023-24, the number of applicants increased from 1.4 crore to 2 crore for both the kharif and rabi seasons,” said a senior official.