Maharashtra Uncovers Fraud Within PMFBY

January 23, 2025

In 2024, Maharashtra’s agriculture department uncovered fraud within the Pradhan Mantri Fasal Bima Yojana (PMFBY). Over 414,000 crop insurance claims were identified as bogus, denoting the misuse of this subsidised insurance scheme. Farmers attempted to claim insurance on non-existent crops or lands they did not own. The situation prompted immediate action from the state government to prevent further exploitation of the scheme.

About PMFBY

The Pradhan Mantri Fasal Bima Yojana is a government initiative designed to provide farmers with affordable crop insurance.
For a nominal premium of one rupee, farmers can insure their crops against various risks.
The scheme aims to safeguard farmers’ livelihoods and ensure financial stability in the agricultural sector.

Rise in Bogus Claims

In 2024, the Maharashtra agriculture department reported that approximately 2.5% of the total applications—totaling 4.14 lakh—were rejected due to fraudulent claims. This was the highest rejection rate since the scheme’s inception, indicating a growing trend of misuse. The previous years saw lower rejection rates, with only 11,761 claims rejected in 2022 and 3.8 lakh in 2023.

Methods of Fraud

Farmers employed various tactics to submit false claims. Some claimed insurance for crops that were never planted, while others attempted to insure land they did not own. Instances included claims on government land and even non-agricultural plots, such as petrol stations and religious sites. The involvement of common service centres (CSCs) in submitting these claims raised further concerns about the integrity of the application process.

Geographic Distribution of Fraudulent Claims

The highest number of bogus claims originated from Beed district, with over 109,000 fraudulent applications. Other districts, such as Jalgaon and Parbhani, also reported numbers of bogus claims. This regional concentration of fraud raised alarms within the agriculture department and brought into light the need for targeted inspections.

Government Response and Preventative Measures

In response to the rampant fraud, the Maharashtra government initiated a cross-verification process. This involved physical inspections of claims before processing payments. The agriculture department aimed to deter fraudulent applications by implementing stricter verification measures. Officials also instructed district collectors to take action against 96 CSCs involved in the irregularities.

Financial Implications of Fraudulent Claims

The financial impact of the rejected claims remains to be fully assessed. The insurance payout per hectare varies based on the type of crop, ranging from ₹20,000 for moong to ₹90,000 for onions. The total liability for the government and insurance companies is yet to be calculated, as multiple factors influence these amounts.

Future Actions and Regulations

To combat fraud, the agriculture department plans to impose penalties on those found guilty of submitting bogus claims. Potential actions include criminal charges and a five-year ban from applying for government insurance. The department is committed to refining the scheme to prevent future misuse and ensure that genuine farmers receive the support they need.

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