With the kharif season sowing about to start in 20 days, Maharashtra has sought the Centre’s approval to implement the ‘Beed formula’ or ‘80:110’ plan under the flagship Pradhan Mantri Fasal Bima Yojana (PMFBY) while Tamil Nadu has expressed its willingness to return to the original scheme. But Madhya Pradesh, like the previous year, is yet to take a call.

As per the guidelines of PMFBY, the enrolment should have started from April 1 for kharif season and premium rate fixed before that. However, the delayed enrolment has become a regular feature due to several factors, including less interest by States. This year also, enrolment for kharif season is yet to start in all major agricultural States, sources said.

Farmers pay fixed premium under PMFBY, at 1.5 per cent of the sum insured for rabi crops and 2 per cent for kharif crops, while it is 5 per cent for cash crops. The balance premium is subsidised by the Centre and States at 50:50 ratio.

Citing concerns over high premium quoted by insurance companies, more than the average ‘burned out’ cost, Maharashtra wants to implement the 80:110 plan, which was first approved for Beed district during kharif 2020 when no insurer participated in the tender due to two successive years of deficient monsoon which led to high claims.

The split-up

Under the 80-110 plan, the insurance company’s potential losses are circumscribed, below 110 per cent of the gross premium. The company is assured of 20 per cent of gross premium, if claims ratio remains within 80 per cent and any premium surplus (gross premium minus claims) exceeding 20 per cent is refunded to the State government. While insurance company is liable to pay upto 110 per cent of gross premium, it is the State government’s liability to pay when claims exceed beyond that.

For instance, if claims to premium ratio is 70 per cent, the insurer keeps 20 per cent and returns 10 per cent to the State government.

The Centre is likely to approve the plan since Maharashtra has a genuine concern about high premium despite a prediction of normal monsoon and the State has also agreed to use technology in arriving at the yield losses, sources said. Once approved, the State will again invite bids for premium, the sources said.

On the other hand, Tamil Nadu will take a call after analysing the premium bids under normal PMFBY plan, which will be out soon, the sources said. The State had implemented a co-insurance model under 80:20 plan in last kharif season in which its both liability and gross premium collected got shared between of the State and insurer at 80:20 ratio. Now, the State does not want to implement 80:20 model and may opt for either normal PMFBY or 80:110 formula, official sources said.

After implemented in kharif 2020 in Beed, the claims to premium ratio dropped to 1.7 per cent from as high as 245 per cent in kharif 2018 and 89.4 per cent in kharif 2019. Beed is one of the high enrollments districts where gross premium was Rs 798 crore in 2020 kharif season.

In February, Maharashtra’s Agriculture Minister Dada Bhuse, after meeting farmers organisations had said that the government would consider their demand for a State level crop insurance scheme similar to what Andhra Pradesh, West Bengal and some other States had done.

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