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Maharashtra floats tenders to implement Beed model in crop insurance

Maharashtra government, after getting the green signal from the Centre, has decided to implement the Pradhan Mantri Fasal Bima Yogna (PMFBY) in the format of what is known as the “Beed Model”. The model, which was first experimented in Beed, entails insurance companies returning portion of the premium collected in case compensation payout falls below a certain ceiling.

Back in 2020, drought-prone Beed in Maharashtra failed to attract any bids for implementation of the PMFBY scheme. The government-controlled Agricultural Insurance Company was asked to implement the scheme with a few changes. In case the compensation amount crossed 110 per cent of the amount insured, the state government would bridge the excess but in case the compensation calculated fell below the premium collected, the company was to return 80 per cent of the premium collected to the state government. The 20 per cent amount was to account for the administrative costs of the company.

PMFBY, the Centrally sponsored scheme, has been a lifeline to farmers. A low rate of premium and more sufficient cover has made the scheme popular in the state. Under the scheme, farmers have to pay for a small portion of the premium while the Central and state government picks up the majority of share. For the season of 2019-20, 140.24 lakh farmers had taken part in the scheme.

While the scheme has been given a thumbs-up by the farmers, there have been repeated calls for change in it. One of the major issues, which farmer leaders across parties have highlighted, is the profit insurance companies have made in years of low payment. This, they said, overrides the compensation companies had to pay in other years. Non-transparency in the way the scheme is implemented as well as lack of ground level grievance redress mechanism were other complaints against the scheme.

The Maharashtra government this season has made two major changes in the way the scheme would be implemented. Thus, companies have been asked to submit their bids under two models i.e; 80-110 and 60-130. In the first one, the state government would pay the excess amount if compensation exceeds 110 per cent of the gross premium collected. Insurance companies would have to return surplus up to 80 per cent of the premium collected in case of low payment. Similarly, in the second model, the government would pay the bridge amount if compensation exceeds 130 per cent of the premium collected.

Another change is the inclusion of satellite imagery to calculate threshold yield collected. Thus, as per the formula, 90 per cent weightage would be given for crop cutting experiment and 10 per cent would be given for satellite imagery. This is a bid to reduce the human angle in yield measurement. The last date for filing bids is Wednesday.

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