Floods Expose Crop Insurance Gap In Punjab

Punjab has been severely affected by recent floods, leaving its farmers in a precarious position as concerns over extensive crop loss mount. As per state government figures, close to 3 lakh acres of farmland and nearly 1.25 lakh residents have been affected. Farmer unions, such as the Kirti Kisan Union, have renewed their call for a stronger crop insurance system to protect cultivators from such disasters.

The PMFBY and Punjab’s Position

The Union Government launched the Pradhan Mantri Fasal Bima Yojana (PMFBY) on 18 February 2016 to provide financial protection to farmers against losses caused by natural disasters, pests, and diseases.

Under this scheme, farmers are required to pay just 2–5 percent of the insurance premium, with the rest being shared equally between the state and central governments.

Punjab, however, has never implemented the scheme in its entirety. The state government has consistently maintained that the model does not align with Punjab’s requirements, and has expressed the intention to develop a state-specific alternative, though such a policy has not yet been finalised.

Officials have argued that Punjab’s 99 percent irrigation coverage, compared with the national average of 55 percent, reduces risk levels. In addition, concerns have been raised over the 40 percent crop loss threshold required for claims and the high premiums applicable to commercial and horticultural crops.

Even after the 2020 revamp of PMFBY, which made enrolment voluntary, Punjab chose not to participate.

Efforts Toward a State Policy

Attempts to establish a Punjab-specific insurance framework have been repeatedly delayed. In 2016, the Shiromani Akali Dal–BJP alliance government under then Chief Minister Parkash Singh Badal rejected PMFBY.

So did the Congress administration that followed, without an alternative in 2017, citing financial constraints and lack of clarity of policy.

In 2022, the Aam Aadmi Party (AAP) government first expressed readiness to adopt PMFBY but later declared plans to introduce its own state-level insurance scheme.

On 16 September 2024, the Punjab Farmers’ Commission issued a draft proposal advocating for a state-level crop insurance scheme and the creation of a ₹200 crore contingency fund to address losses concerning crops, livestock, and agricultural workers.

The draft predicted a 0.1 percent farmer contribution, with a matching contribution from the state. However, the proposal has not progressed beyond the discussion stage.

AAP’s Relief Contribution

In light of the current flooding, AAP national convener Arvind Kejriwal announced on Tuesday that all party MLAs and MPs would contribute one month’s salary to the Punjab Chief Minister’s Relief Fund. The initiative, he stated, is intended to bolster flood relief operations in the state, where farmers remain vulnerable in the absence of a comprehensive insurance safety net.