crop insurance scheme In a surprising and shocking turn of events, several farmers in Maharashtra have received compensation amounts as low as ₹3 under the central crop insurance scheme. This bizarre payout has sparked outrage among the farming community and raised serious questions about the implementation and transparency of the Pradhan Mantri Fasal Bima Yojana (PMFBY).
While the scheme aims to provide financial protection to farmers in the event of crop loss due to natural calamities, the minuscule compensation highlights the gaps between policy design and ground-level execution. Let’s take a closer look at what happened, why such low compensation was given, and how authorities are responding.
Background: What is the Crop Insurance Scheme (PMFBY)?
The Pradhan Mantri Fasal Bima Yojana (PMFBY) was launched in 2016 to support farmers by covering crop losses due to events like drought, floods, pests, or unseasonal rains.
Key objectives of the scheme include:
- Providing financial support to farmers suffering from crop loss.
- Ensuring stability in farm income.
- Encouraging farmers to adopt modern agricultural practices.
- Reducing dependence on moneylenders after crop damage.
Under the scheme, farmers pay a small premium (2% for Kharif crops, 1.5% for Rabi crops), while the rest is subsidized by the government. Insurance companies, selected through tenders, are supposed to pay compensation after crop loss assessments.
The Incident: Farmers Receive ₹3 as Compensation
In districts like Beed, Osmanabad, and Nanded, many farmers recently reported receiving ridiculously low insurance payouts — ₹3, ₹5, or ₹10. Some even shared screenshots of their bank statements on social media, triggering widespread criticism.
A farmer from Beed, for instance, cultivated soybean on over two acres of land but received ₹3 as crop insurance compensation. Another farmer reported ₹9 credited to his account, despite losing nearly his entire crop to heavy rains. crop insurance scheme
Why Did This Happen?
Officials and experts cite multiple reasons for such low payouts:
- Area-Based Assessment
The scheme uses area-based yield estimation, not individual farm losses. Compensation is calculated based on average yield data from a particular cluster or village circle.
If overall yield in that area doesn’t drop below the threshold, individual farmers may receive nominal or no compensation — even if their personal loss was high. - Data and Technical Issues
Satellite imagery, crop-cutting experiments, and manual reporting often cause delays and inaccuracies.
Inconsistent or outdated data can lead to incorrect loss estimation. - Insurance Company Calculations
After government subsidies and administrative deductions, the remaining claim amount sometimes becomes negligible.
Moreover, insurers follow strict formulae, resulting in such absurd payouts when yield losses are minimal on record. - Delay in Settlement & Transparency Gaps
Many farmers allege delayed assessments, poor communication, and lack of clarity about how compensation is calculated.
Government Response
After the issue went viral, the Maharashtra government and the Union Agriculture Ministry took notice.
Officials have reportedly asked insurance companies to review the calculations and submit detailed reports explaining the low compensation.
The State Agriculture Department said it will seek accountability and consider revising guidelines to prevent such instances. Meanwhile, farmer unions have demanded that compensation be based on individual losses rather than area averages.
Farmers’ Reactions
Farmers expressed deep frustration and disappointment.
One farmer sarcastically said, “What can I buy with ₹3? Even a cup of tea costs ₹10.”
Others accused the system of favoring insurance companies at the expense of farmers.
Many agricultural activists argue that the insurance system has become more beneficial to private insurers than to those it was meant to protect.
In Maharashtra alone, insurance companies have reportedly made large profits, despite widespread crop losses.
Expert Opinions
Agricultural economists and rural policy experts have repeatedly pointed out structural flaws in the PMFBY:
- Overdependence on area-based assessments.
- Lack of transparency in yield data.
- Poor grievance redressal mechanisms.
- Delayed claim settlements causing distrust among farmers.
Experts recommend using technology-driven solutions — such as real-time satellite mapping, AI-based crop monitoring, and mobile-based reporting tools — to ensure fair compensation.
Possible Reforms
To make the scheme more effective and farmer-friendly, experts suggest:
- Individual Farm Assessment via drones or satellite data.
- Transparency in Claim Calculation – Farmers should have online access to yield data.
- Timely Payouts within 45 days of assessment.
- Grievance Redressal Portals for dispute resolution.
- Periodic Audits of insurance companies’ operations.
- Higher Awareness Campaigns to educate farmers about their rights and claim processes.
Conclusion
The incident of Maharashtra farmers receiving ₹3 as compensation is not just a statistical error — it reflects deep-rooted flaws in the system meant to protect India’s farmers.
While the PMFBY was envisioned as a lifeline for farmers, its execution continues to face challenges like data inaccuracies, poor communication, and weak accountability.
Reforms in transparency, technology use, and local accountability are essential to restore trust and ensure that every farmer gets the compensation they rightfully deserve.
If left unresolved, such cases risk eroding confidence in government schemes designed to safeguard the agricultural backbone of India.
