The farmers are unlikely to reap the benefit of the Pradhan Mantri Fasal Bima Yojana (PMFBY) for the Kharif 2021 season as many state governments have failed to meet the deadline for finalising the premium. The implementation of the scheme for the season has also hit a roadblock as many states have opted out of the scheme, citing their own subsidy programmes for farmers.
The PMFBY is the Centre’s flagship crop insurance scheme where the premium amount is split equally between the Centre and the states. The farmers bear a minuscule percentage of the premium for crop insurance each season.
The states of Gujarat, Andhra Pradesh, Telangana, Jharkhand, West Bengal and Bihar have decided to opt out citing the higher percentage of the premium subsidy to be borne by the state governments. Madhya Pradesh and Tamil Nadu are yet to finalise the premium despite extensions in deadline. Chhattisgarh and Maharashtra are yet to complete the enrolment of farmers. They were given time till July 31 and July 23, respectively to complete the process. Uttarakhand and Jammu and Kashmir have been asked to complete the enrolment of farmers by July 31, according to a Financial Express report.
The enrolment of farmers for the PMFBY should be completed by April every year as per the existing norms. According to the PMFBY guidelines, farmers need to pay 1.5 percent of the sum insured for Rabi crops, 2 percent for Kharif crops and 5 percent for cash crops as premium to get their crops insured. The rest of the premium is equally split between the state governments and the Centre.
However, several states are demanding that their premium subsidy should be capped at a maximum of 30 percent.
Punjab has never implemented the PMFBY scheme till date. West Bengal and Bihar have their own similar schemes, under which farmers receive a fixed compensation only in case of crop failure.
Taking the lead from West Bengal and Bihar, a few states are toying with the idea of introducing their own schemes, while a few are contemplating plans to waive off the share of premium paid by the farmers.
A few weeks back, the Centre had written to the states asking their opinion on the ‘Beed formula.’ The Beed formula, also known as the 80-110 plan, allows insurance companies not to pay more than 110 percent of the gross premium. It means the insurance company’s losses are protected and they need not accept claims above 110 percent of the gross premium. Over here, the insurer will refund the premium surplus exceeding 20 percent of the gross premium to the state government. The premium surplus is gross premium minus the claims.
According to the Beed formula, if the claim is 60 percent of the premium collected, the insurer will refund 20 percent to the state government. In case the claims are 70 percent, it would be a refund of 10 percent. If it is 80 percent of the claims, the state does not get any refund, and in case, there is a claim above 110 percent of the premium collected, the respective state government has to bear the cost.
(Edited by : Shoma Bhattacharjee)