A least two states – Maharashtra and Rajasthan – have written to the Centre seeking the ‘Beed district formula’ also called “80-110 plan” to run the Pradhan Mantri Fasal Bima Yojana (PMFBY), for the upcoming kharif season.
- Under the 80-110 plan, the insurer’s potential losses are circumscribed – the firm won’t have to entertain claims above 110 per cent of the gross premium.
- The state government has to bear the cost of any claims above 110 per cent of the premium collected to insulate the insurer from losses.
- However, the premium surplus, which is calculated by subtracting claims from gross premium (Premium surplus=gross premium-claims) exceeding 20 per cent of gross premium is refunded by insurer to the state government.
- In 2020, two far-below-normal monsoon rainfalls in Maharashtra’s Beed district dissuaded insurers from covering farmers in the district under the Pradhan Mantri Fasal Bima Yojana for kharif 2020.
- Consequently, the Centre asked public sector Agriculture Insurance Company of India (AIC) to oblige.
- AIC was assured that it won’t have to entertain claims above 110 per cent of the gross premium.
- AIC was also told that the state government could bear the cost of any claims above the premium collected to insulate the insurer from losses. The scheme ran successfully.
About Pradhan Mantri Fasal Bima Yojana (PMFBY)
- On 13th January 2016, the Government of India approved the flagship crop insurance scheme – the Pradhan Mantri Fasal Bima Yojana (PMFBY).
- Under the scheme only 2 per cent of the insurance amount for paddy, pulses, ground nut, corn and millet has to be paid by the farmers and only 5 per cent of total insurance amount for cotton crops.
- The scheme is optional for all farmers including farmers who have been sanctioned short-term Seasonal Agricultural Operations loans/Kisan Credit Card for the notified crops.
- Aadhaar has been made mandatory for availing Crop insurance from Kharif 2017 season onwards.
- The PMFBY has been restructured with states given option to determine scale of finance at district level as per average yield. Central subsidy will be 30 percent for unirrigated crops and 25 per cent for irrigated areas.
- Premium cost over and above the farmer share is equally subsidized by States and Government of India. However, GoI shares 90 per cent of the premium subsidy for North Eastern States to promote the uptake in the region.
(Source: Financial Express)
