The delay in finalising the yield under the Pradhan Mantri Fasal Bima Yojana (PMFBY) by Madhya Pradesh for kharif 2020 season has left many farmers waiting for the relief for the past 15 months. The State government is said to be not inclined to pay more than its share of premium even as there was heavy damage to soybean crop in 2020.

During the kharif season in the year 2020, Madhya Pradesh delayed its enrollment under PMFBY and joined the scheme under the so called “Beed formula” or 80:110 sharing plan. For a sum insured (SI) amount of Rs 27,070.50 crore, Agriculture Insurance Company (AIC), which was the sole insurer for the State, had collected Rs 4,581.32 crore as gross premium (16.9 per cent of SI). Farmers’ share was Rs 559.13 crore in the gross premium while remaining was equally shared by the State and the Centre.

The overall premium was 15.6 per cent of SI of Rs 18,083,23 crore in kharif 2019 in MP. The claim to premium ratio was 213 per cent in MP in kharif season in 2019, mainly due to damage to the soybean crop production dropping 27 per cent to 48.87 lakh tonnes from year-ago. This resulted in the gross premium skyrocketing in the next season during the bids, which increased the burden on the State government.

It is learnt that the overall claims are 100 per cent of the gross premium collected and if accepted the State government does not have to pay more than its share. However, there are some issues between the State government and AIC on whether to calculate yield as a whole or cluster-wise to determine the 80:100 liability, sources said. If claims are calculated cluster-wise, claims are more than 140 per cent in some clusters in which liability of the State increases under the 80:110 formula. When contacted, a top official of the State agriculture department declined to comment.

The split-up

This 80:110 plan was introduced in Beed district in the 2020 kharif season as a one-time solution when no bidder came forward. In the same season, Madhya Pradesh also sought and received approval on the same formula, in which AIC’s potential losses are circumscribed. In this case, AIC is not obliged to pay claims above 110 per cent of the gross premium and the State takes the responsibility beyond that threshold. The insurance company will keep a minimum 20 per cent of premium when claims fall below 80 per cent and refund the remaining to the State government, under the formula. In case of claims between 80 and 110 percent, neither the State pays extra nor gets refund as the entire responsibility lies with insurer.

“Unfortunately, the Centre is silent in this case even though it has promised to intervene if the State does not submit the yield estimation in two months. The responsibility lies with both the Centre and State governments since farmers already paid their premium. Ultimately, farmers are suffering in getting the claims,” said farmer leader Shiv Kumar Sharma (Kakkaji).