In a landmark move to uplift the agricultural sector, the Government of Punjab has announced the launch of a new Risk Coverage Scheme for farmers. This initiative aims to protect small and marginal farmers from the financial instability caused by natural disasters, climate change, and crop failures. With agriculture being the backbone of Punjab’s economy, this scheme is poised to bring much-needed relief and empowerment to the rural farming community.
A Major Step Towards Farmer Welfare
The Economic Coordination Committee (ECC) recently approved the “Risk Coverage Scheme for Small Farmers,” which will play a pivotal role in increasing financial inclusion and economic resilience among low-income farmers. The scheme is set to officially roll out in August 2025 and is part of the broader agricultural reforms introduced by the Punjab government under the leadership of Chief Minister Maryam Nawaz Sharif.
The plan is to integrate 750,000 previously unbanked farmers into the formal credit system through subsidised crop insurance and loan risk coverage. This transformation is expected to inject over Rs. 300 billion in new agricultural loans into the economy by 2028, enhancing productivity and reducing the vulnerability of rural livelihoods.
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How the Scheme Works
The Risk Coverage Scheme is essentially a form of insurance protection for farmers, which covers losses caused by:
- Drought
- Floods
- Pests and diseases
- Other natural disasters
Under this program, the Punjab government will pay a significant portion of the insurance premium, making it affordable for small landholders. In case of a crop failure or disaster, the farmer will receive compensation that will help cover the loan amount or reinvest in the next crop cycle.
Budget Allocation and Duration
To implement the scheme effectively, the government has allocated Rs. 37.5 billion over a five-year period (2027–2031). This budget will support administrative operations, premium subsidies, and the development of a digital monitoring system. The program is designed to work in collaboration with commercial banks and microfinance institutions, ensuring smooth disbursement and claim processing.
Complementary Initiatives
In addition to the Risk Coverage Scheme, the Punjab government is also strengthening the agricultural sector with other supportive programs, including:
- Kissan Card Scheme: A digital identity for farmers allowing access to interest-free loans, fertilisers, and subsidies.
- Green Tractor Scheme: Providing tractors to small farmers with up to Rs. 1 million of subsidy through a transparent draw system.
- Solar Tubewell Subsidy: Helping farmers reduce energy costs by shifting to solar-powered irrigation systems.
- Wheat Subsidy Program: Offering Rs. 5,000 per acre to eligible farmers for wheat production.
These complementary programs aim to create a robust agricultural framework where farmers not only have access to resources but are also protected against financial setbacks.
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Eligibility Criteria
To qualify for the Risk Coverage Scheme, the farmer must:
- Be a permanent resident of Punjab
- Own or rent land for farming that is no bigger than 12.5 acres.
- Be registered with the Punjab Agriculture Department or hold a valid Kissan Card
- Not have received similar insurance compensation in the previous cycle (for the same crop season)
Registration will be facilitated via mobile units, local agriculture offices, and designated bank branches. We also anticipate the launch of a mobile app and web portal prior to the scheme’s implementation in August 2025.
Expected Impact
The Punjab Government expects this initiative to have a wide-reaching impact:
- Reduction in rural poverty by minimizing debt burdens
- Improved crop planning due to financial safety nets
- Boost in credit disbursement to the farming sector
- Encouragement for youth participation in agriculture
By reducing the risks associated with farming, more rural families are likely to invest in agriculture, leading to increased food security and economic growth in Punjab.
Conclusion
The Risk Coverage Scheme is a visionary step by the Punjab Government to transform the agricultural landscape. By safeguarding farmers from natural and economic uncertainties, the initiative promotes sustainability and revives confidence among the farming community.
As the rollout date approaches, awareness campaigns and on-ground registration drives will be critical. With the integration of technology and targeted subsidies, Punjab is setting a new benchmark in pro-farmer governance and rural development.
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