Mumbai, Apr 20 (PTI) The Maharashtra government is exploring the possibility of setting up a state-run crop insurance trust to provide direct financial assistance to farmers affected by natural calamities such as floods, excessive rainfall and drought.

This initiative aims to replace the existing system of private crop insurance companies, which has faced criticism from political parties and farmer groups for alleged inefficiency and profiteering, an official said.

“Under the current framework, farmers pay a nominal premium of Rs 1 to a state-designated insurance company, which records their crop details. The state government determines the crop value, and in the event of a natural disaster, the insurance company, in collaboration with local revenue and agriculture officials, assesses the damage and compensates the farmer,” he said.

However, the state has noted that premiums are paid for all insured farmers, even if they do not suffer crop losses, allowing insurance companies to retain unclaimed funds as profit, the official added.

“Union government data has shown that crop insurance companies have earned profits running into crores of rupees. If the same money remains with the state government, it could be utilised for other purposes, including expenses. It can also provide financial help to farmers who are in need. It will also save government expenditure with regard to premium paid,” a senior agriculture official told PTI.

Manik Kadam, a farmer leader from Marathwada, said the current system was inefficient.

“There are instances of insurance companies being asked to insure crops from districts where they do not have offices. It has created havoc when natural calamity hits and farmers are in distress. Farmers are expected to report the loss of their crops immediately, but, generally, farmers remain busy in saving their crop after heavy rain or floods,” he said.

“In remote villages, there have been cases of loss of mobile range, due to which farmers could not make calls and later their claims were denied,” he added.

The state’s agriculture department has faced scrutiny for its implementation of the Rs 1 crop insurance scheme under the Pradhan Mantri Fasal Bima Yojana (PMFBY).

Maharashtra Agriculture Minister Manikrao Kokate disclosed that over 4.3 lakh insurance applications were rejected during the Kharif 2024 season due to irregularities such as insuring crops on government-owned or municipal land, exceeding landholdings, or covering non-eligible crops.

In comparison, 2.85 lakh applications were rejected in Kharif 2023, he had said.

Responding to a query in the legislative council from BJP’s Chitra Wagh, minister Kokate had said the government did not face losses as no premium was paid for these invalid claims.

“The proposed crop insurance trust aims to address these issues, reduce dependency on private companies, and ensure timely support for farmers. We want to curb such practices and save the state’s finances that are already under pressure due to some welfare schemes. The proposed change in crop insurance is still under consideration. Discussions on the proposal are ongoing at senior government levels,” the agriculture officer said.

By establishing a state-run trust, Maharashtra seeks to streamline crop insurance processes, minimise bureaucratic hurdles, and allocate resources more effectively to support its farming community, he added. PTI ND BNM