To provide a safety umbrella to the farmers against the natural disasters (droughts, floods), pests, and diseases, along with post-harvest losses due to local risks like hailstorms and landslides, an alluring scheme, Prime Minister Fasal Bima Yojana (PMFBY), was launched by the central government in the country from Kharif 2016 season.
The central Government has approved the continuation of PMFBY and Restructured Weather Based Crop Insurance Scheme (RWBCIS) till 2025-26 with a total outlay of Rs. 69,515.71 crore for the period 2021-22 to 2025-26.
Describing its key benefits, the government claims that PMFBY aims to process claims within two months of the harvest to ensure that farmers get the compensation quickly, preventing them from falling into debt traps. It also adds that PMFBY integrates advanced technologies like satellite imaging, drones, and mobile apps for precise estimation of crop loss, ensuring accurate claim settlements.
But the situation on the ground does not seem to match with the government claim. Farmers of Bhiwani district in Haryana are on agitational path since long against the alleged embezzlement of Rs 350 crore by the insurance companies, as claimed by the farmer unions, and now on July 16,2025 they have started an indefinite sit-in at Loharu, the focal centre of the alleged scam after an impassioned Road-March.
If the claim settlements are so accurate and time bound, as stated by Government, then why do the farmers have to agitate from time and again to demand for compensation, which they don’t get even after years? Why do the farmers allege that their claims are rejected on false, fabled and deceitful grounds?
Why the farmers’ delegations, holding the bundle of papers related to the Fasal Bima claims, are compelled to plead their case before the Members of Parliament from Haryana and Rajasthan?
The Delegation leaders state, “To further strengthen the movement, our team meets the MPs and informs them about our problems and we are getting the assurance of full cooperation from them.”
Divulging the grievance, Farmer leader and RTI activist Dr. Balbir Singh alleges that after due assessment of the cotton crop damaged by pink bollworm in Kharif crop 2023 in Bhiwani-Dadri districts of Haryana, the insurance company has tried to illegally embezzle the amount of Rs 350 crore acting in connivance with the senior officials of the Agriculture Department, but the All-India Kisan Sabha has exposed this scam and we are agitating against the same.
Not only the Haryana farmers facing this problem, but the farmers of neighbouring state, Rajasthan, also allege victimization due to defective implementation system and lacunas of PMFBY.
Supporting the farmers’ issue, General Secretary of All India Congress Committee, former Union Minister and MP from Sirsa, Kumari Selja alleges that the Agricultural insurance schemes are no longer in the interest of farmers but have become profit-making tools for companies. In a press statement issued on July 12, she says the Officials are benefiting insurance companies through illegal means instead of helping farmers.
Kumari Selja further alleged that in the cotton-producing regions, a ₹300 crore insurance scam occurred during the determination of Kharif-23 cotton claims in Bhiwani and Charkhi Dadri due to the collusion between the agriculture department and CIC company officials. To date, neither have the guilty officials been punished, nor have the affected farmers received any compensation.
She demands that strict action must be taken against officials involved in scams under the name of crop insurance.
Expressing concern over the serious flaws in the crop insurance scheme in the state and the injustice being done to farmers, Kumari Selja has demanded immediate intervention from the central and state governments.
Is the PMFBY a defective scheme?
Kumari Selja termed the present PMFBY system as faulty and captious and allege that the insurance companies treat an entire village as a single unit while assessing damage. If a particular field suffers actual loss but the entire village is not declared as a damaged area, that farmer does not receive a claim. This system is anti-farmer and must be changed immediately. She added that in the era of climate change, disasters like floods, excessive rainfall, and hailstorms have become common. If a farmer’s crop is destroyed, he should receive compensation immediately so that he can prepare for the next crop. However, under the current system, delays of 2 to 3 years are common, pushing farmers deeper into debt. Selja said that governments take responsibility only up to collecting premiums, but when it comes to disbursing claims, farmers are left at the mercy of insurance companies. This situation must be changed immediately.
Has PMFBY become a profit gainer tool for the Insurance Companies?
Former President of Congress Party and presently Leader of opposition in Lok Sabha, Rahul Gandhi alleges that the PMFBY is not in the favour of farmers, but it nourishes the insurance companies of bigwigs.
While addressing a rally in Orissa on July 11, 2025, Gandhi said, “The PM Fasal Bima Yojana has only one goal – to take money from poor farmers, take government money and put it all in the pockets of 3-4 billionaires. They don’t care what happens to farmers during a disaster.”
“Modi ji launched a crop insurance scheme… he said it would help farmers in times of disaster. But what happened? He collected money from poor farmers, from state and Central governments, and gave it to three or four big companies. When disasters strike… storms, hail… farmers don’t get compensation. Thousands of crores of rupees have been diverted to these companies, but they never return the money to the farmers. Ask any farmer in Odisha… when disaster struck, did you get insurance money? And you’ll hear one voice: No, our money was stolen. This is an attack on the Constitution. The Constitution protects the poor, the farmers, the workers. It doesn’t say that this country belongs to Adani, Ambani, or billionaires. It belongs to every citizen”, a press release of congress party, dated July 11, 2025, quotes Gandhi’s version.
On the other hand, stating the PMFBY a successful and beneficial scheme for the farmers, Union Minister of Agriculture and Farmers Welfare, Narendra Singh Tomar in a written reply in Rajya Sabha on 21 July, 2023 submitted details about Premium Collection and Insurance Claims under Pradhan Mantri Fasal Bima Yojana and shown that a claim amount of Rs. 140037.88 crore has been paid to the farmers from 2016-17 to 2022- 23 by the insurance companies.
Year Premium collected Claim Paid Profit
2016-17 21949.87 16826.75 5123.12
2017-18 24468.36 22087.97 2380.39
2018-19 29687.75 29336.91 350.84
2019-20 32362.06 27372.97 4989.09
2020-21 31689.95 20771.05 10918.90
2021-22 29598.43 17881.43 11717.00
2022-23 27900.78 5760.80 22139.98
TOTAL 197657.20 140037.88 57619.32
(AMOUNT IN CRORES, FIGURES OF PREMIUM AND CLAIM PAID -SOURCE PIB, AND PROFIT CALCULATIONS MADE BY THE AUTHOR)
Doesn’t the figure table itself assert the allegation levelled by Rahul Gandhi?
The eagle eyes, keeping a deep watch on government schemes, comment that the above ‘Table’ clearly shows that against the total Premium of Rs.197657.20 crore collected in six years from 2016-17 to 2022-23, the Claim Paid was Rs. 140037.88 crore, hence a Profit of Rs. 57619.32 crore has been piped into the pockets of insurance companies.
Now some questions are necessary to arise— “Despite huge lucrative profits, why are the insurance companies rejecting the claims of the farmers on this or that pretext? Why do they delay in settlement of the claims due to which the loanee farmers have to bear heavy penal interest on their Kisan Credit Card advances? Shouldn’t the insurance companies bear this burden? (Describing its key benefits, the government claims that PMFBY aims to process claims within two months of the harvest to ensure that farmers get the compensation quickly, preventing them from falling into debt traps.)?”
Furthermore, when the central government has its own Agriculture Insurance Company (AIC), then why is the government engaging the private insurance companies, which keep profit as their first motto and harass the farmers?
It is pertinent to mention here that Agriculture Insurance Company of India Limited (AIC) was formed at the behest of Government of India, consequent to the announcement by the then Hon’ble Union Finance Minister in his General Budget Speech FY 2002-03 that, “to subserve the needs of farmers better and to move towards a sustainable actuarial regime, it was proposed to set up a new Corporation for Agriculture Insurance”.
