The delay in confirming the yield under Madhya Pradesh's Pradhan Mantri Fasal Bima Yojana (PMFBY) for the Kharif 2020 season has kept many producers waiting for relief for the past fifteen months. Even though the soybean crop was severely damaged in 2020, the state government is reluctant to pay more than its portion of the premium.
Madhya Pradesh delayed its registration in PMFBY until the Kharif season of 2020 when it joined the scheme under the so-called "Beed formula," or 80:110 sharing plan. Agriculture Insurance Company (AIC), the State's sole insurer, has received Rs 4,581.32 crore in gross premiums for a sum insured (SI) of Rs 27,070.50 crore (16.9 percent of SI). Farmers received Rs 559.13 crore from the gross premium, with the remainder split evenly between the state and the center.
In MP, the entire premium was 15.6% of the SI of Rs 18,083,23 crores in Kharif 2019. In the 2019 Kharif season, the claim-to-premium ratio in MP has been 213%, owing mostly to damage to the soybean crop, which reduced production by 27% to 48.87 lakh tonnes from the previous year. As a result, the gross premium increased in the next season's bids, increasing the load on the state government.
It has been learned that the total claims are 100% of the gross premium received, and if approved, the State government is not required to pay more than its part. However, there are some disagreements between the State government and AIC on whether to estimate yield as a whole or per cluster to establish the 80:100 liability, according to sources. If claims are computed cluster-wise, claims exceed 140% in some clusters, implying that the State's liability increases under the 80:110 rule. A top member from the State Agriculture Department declined to respond when contacted.
The split-up of 80: 110 Plan
When no bidders came up for the 2020 Kharif season, this 80:110 plan was implemented in the Beed district as a one-time alternative. During the same season, Madhya Pradesh sought and got approval for a similar methodology, which limits AIC's expected losses. In this case, AIC is not required to pay claims above 110% of the gross premium, and the State assumes responsibility above that threshold.
Under the methodology, the insurance firm will retain a minimum of 20% of the premium whenever claims drop below 80% and refund the remainder to the state government. In the event of claims between 80 and 110 percent, the state neither pays nor receives a refund because the insurer bears the whole responsibility.
Apart from Pradhan Mantri Fasal Bima Yojana, there are many schemes of crop insurance available for farmers. In order to take benefit from these schemes it is importance to have clear idea about crop insurance and its benefits.
