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Maharashtra Scraps Nominal Re 1 Crop Insurance Scheme

Source:universalinstitutions ↗

Why It Matters

Crucial for MPSC aspirants tracking state-specific agricultural schemes, farmer welfare policies, and fiscal burdens associated with heavy public subsidies.

Summary

The Maharashtra government has decided to scrap its heavily subsidized 'Re 1 crop insurance scheme', which provided crop insurance to farmers for just one rupee, shifting back the policy framework regarding agricultural risk mitigation in the state.

Key Points

  • The Maharashtra government scrapped the popular Re 1 crop insurance scheme, which allowed farmers to insure their crops for a nominal fee of Re 1.
  • The scheme was originally introduced to ease the financial burden on farmers and encourage wider participation in crop insurance.
  • The decision rolls back the heavily subsidized model, reverting closer to standard premium structures or alternative state-level configurations under national guidelines like PMFBY.

Important Terms

Re 1 Crop Insurance Scheme

A state-subsidized agricultural insurance initiative launched by Maharashtra in 2023 allowing farmers to secure crop insurance by paying a token premium of just one rupee, which was scrapped in 2025 due to massive financial strains and fraudulent claims.

UPSC context

Important for MPSC Economy and Agriculture (Maharashtra specific), testing welfare schemes, state fiscal burdens, and systemic policy governance.

Source
Pradhan Mantri Fasal Bima Yojana (PMFBY)

A flagship central crop insurance scheme providing financial protection to farmers against crop loss, with farmer-paid premium rates capped at 2% for Kharif, 1.5% for Rabi, and 5% for commercial/horticultural crops.

UPSC context

Crucial for MPSC General Studies Paper III (Agriculture & Economic Development), testing flagship agricultural risk mitigation schemes and premium caps.

Source

Prelims Trap

The Re 1 crop insurance scheme was a mandatory central component of the Pradhan Mantri Fasal Bima Yojana.

Aspirants often confuse state-specific experiments like the Re 1 scheme with central mandates under the Pradhan Mantri Fasal Bima Yojana (PMFBY).

Static Concepts Connected

Economy Agriculture and Welfare Schemes

What are the key features and premium rates under the Pradhan Mantri Fasal Bima Yojana (PMFBY)?

  • Kharif Premium: Kharif crops carry a uniform farmer premium of 2% of the sum insured.
  • Rabi Premium: Rabi crops carry a uniform farmer premium of 1.5% of the sum insured.
  • Commercial Crops: Commercial and horticultural crops carry a uniform farmer premium of 5%.
  • Subsidy Sharing: The balance premium is shared equally between the Centre and the State.

Cross-Topic Patterns

  • Crop Insurance vs State Fiscal Deficit

    The shift from universal state-subsidized schemes to standard central frameworks like PMFBY highlights the fiscal burden of populist agricultural policies on state exchequers.

  • Agrarian Distress and Credit Linkages

    Reverting to standard premium models directly impacts rural credit uptake, cooperative bank loan repayments, and overall agrarian distress management in Maharashtra.

Maharashtra's crop insurance policy shift + PMFBY mechanics is a prime target for MPSC statement-based questions on state welfare schemes.

Linked PYQs · 2

Linked PYQs · 2

  • 2020MPSC_PRELIMSGS1

    Pradhan Mantri Jan Dhan Yojana (PMJDY) envisages : (a) Financial inclusion (b) Financial literacy (c) Insurance cover (d) Crop insurance Answer Options :

  • 2026MPSC_PRELIMSGS1

    Select the correct statements from the following about PM Dhan-Dhaanya Krishi Yojana. (a) The Union Cabinet approved the PM Dhan-Dhaanya Krishi Yojana on 16th July, 2025. (b) The scheme identifies 100 districts based on low productivity, low cropping intensity and less credit disbursement. (c) The scheme will be governed through a four-tier implementation structure.