Maharashtra government ends ₹1 crop insurance scheme due to irregularities, saving ₹7,000 crore amid fiscal deficit, plans new scheme for kharif season.

The state government is winding up its ambitious ₹1 crop insurance scheme launched with much fanfare two years ago. A new version of the scheme will be introduced from the new kharif season starting in May.

The announcement follows a decision by the state government on Friday, to cancel the loan wavier offered to the state’s farmers. Cautioning them not to believe every promise the government made, state finance minister and deputy chief minister Ajit Pawar told farmers they would have to repay all pending loans.

Scrapping the ₹1 crop insurance scheme, albeit ridded with irregularities, will save the Mahayuti government ₹7,000 crore at a time when it is confronted by a fiscal deficit of ₹1.33 lakh crore in FY2024-25.

The decision to scrap the scheme came after the state agriculture department made a presentation to chief minister Devendra Fadnavis and his two deputies Ajit Pawar and Eknath Shinde on March 20. Launched by the Mahayuti government in 2023, the scheme was plagued with irregularities, mainly bogus claims.

The number of applications under the scheme had gone up to 1.71 crore, against 1.70 registered farmers. Moreover, the number of applicants was almost three times the number under the previous scheme – the Prime Minister’s Crop Insurance Scheme. The old scheme required farmers to pay 2-5% of the premium, while the remaining would be paid by equally the state and centre. Under the ₹1 scheme, the state government paid the farmer’s share of the premium while the centre’s share didn’t change.

“This resulted in an additional burden of ₹7,000 crore as the state ended paying ₹10,500 crore from the premium share of ₹3,500 crore in the old scheme. Moreover, despite the massive increase in the premium burden, the payout to farmers was low,” said an officer from the agriculture department.

He said the new scheme was riddled with complaints. The state government found more than 4.5 lakh fake applicants, who had applied for compensation for crops grown on government land, public land, temple lands and even dams! “In some cases, facilitators in the common service centres, filled out forms by downloading details from websites without knowledge of the farmers. They did this to get the application fee of ₹40 paid by insurance companies. We have found 4.5 lakh fake applications and 96 CSCs have been suspended. This has saved us ₹80 crore in premium,” the officer said.

In the run-up to the assembly elections last year, the BJP-led Mahayuti government had announced a series of welfare schemes, which helped them win a landslide victory in November last year. Now that the state’s coffers cannot support these schemes, the government has been scrapping some of them and amending others.

When scrapping the loan waiver for farmers last week, Pawar said that ₹4.57 lakh was spent on a power subsidy to farmers, the Ladki Bahin payout, and salary-pension of state government employees. Given the poor fiscal health of the state, the Mahayuti alliance has started taking steps to save money lavished on unproductive schemes.

According to the state’s annual budget, the state’s revenue deficit in 2024-25 is estimated at ₹26,536 crore and the fiscal deficit ₹1.33 lakh crore. Thanks to populist schemes, it is expected to increase further. In 2025-26, the estimated revenue and fiscal deficits are estimated to be an unprecedented ₹45,892 crore and ₹1.36 lakh crore, respectively. The state’s debt is estimated to reach ₹9.32 lakh crore by the end of FY2025-26.

When scrapping the loan waiver for farmers last week, Pawar said that ₹4.57 lakh was spent on a power subsidy to farmers, the Ladki Bahin payout, and salary-pension of state government employees. Given the poor fiscal health of the state, the Mahayuti alliance has started taking steps to save money lavished on unproductive schemes.

According to the state’s annual budget, the state’s revenue deficit in 2024-25 is estimated at ₹26,536 crore and the fiscal deficit ₹1.33 lakh crore. Thanks to populist schemes, it is expected to increase further. In 2025-26, the estimated revenue and fiscal deficits are estimated to be an unprecedented ₹45,892 crore and ₹1.36 lakh crore, respectively. The state’s debt is estimated to reach ₹9.32 lakh crore by the end of FY2025-26.

Source - https://www.hindustantimes.com