What is Maharashtra’s “Beed model” of crop insurance?
Red Book
Red Book

Interview Guidance Program (IGP) for UPSC CSE 2024, Registrations Open Click Here to know more and registration
What is the news?

Maharashtra Chief Minister has asked the Prime Minister for state-wide implementation of the ‘Beed model’ of the Pradhan Mantri Fasal Bima Yojana (PMFBY).

About Pradhan Mantri Fasal Bima Yojana (PMFBY)

  • The scheme was launched in 2016 by the Ministry of Agriculture and Farmers Welfare.
  • Aim: To provide comprehensive insurance cover against failure of the crop thus helping in stabilising the income of the farmers.
  • Coverage of crops: It covers
    • food crops
    • oilseed crops
    • annual commercial/horticultural crops
  • Premium: The prescribed premium is
    • 2% for Kharif crops
    • 1.5% for Rabi crops
    • 5% for commercial and horticultural crops.
  • Completely voluntary: The enrollment under the scheme is 100% voluntary for all farmers.
    • Earlier, the scheme was compulsory for loanee farmers.

Problems with the Scheme

  • Delay in claim settlement
  • Failure to recognize localized weather events
  • Stringent conditions for claims
  • Alleged profiteering by insurance companies
Why was the Beed Model of Crop Insurance launched?
  • Beed is a drought-prone district in Maharashtra. Farmers here have repeatedly lost crops either to failure of rains or too heavy rains.
  • Due to this, insurance companies have sustained losses given high payouts. Moreover, the state government also had a difficult time getting bids for tenders to implement the scheme in Beed.
  • Hence, the Maharashtra Government decided to modify the crop insurance guidelines for the district.
Also read: Flash Droughts in India
What is the Beed Model of Crop Insurance?
  • Under this model, the insurance company provides a cover of 110% of the premium collected.
  • In case the compensation amount exceeds the 110% mark, the state government would pay the bridge amount.
  • But if the compensation was less than the premium collected, the insurance company would keep 20% of the amount as handling charges and reimburse the rest to the state government.
Benefits of Beed Model for Government
  • In a normal season where farmers report minimal losses, the state government is expected to get back money that can form a corpus to fund the scheme for the following year.
  • However, the state government would have to bear the financial liability in case of losses due to extreme weather events.
  • Hence, in the model, the profit of the company is expected to reduce, and the state government would have access to another source of funds.

Source: Indian Express


Discover more from Free UPSC IAS Preparation Syllabus and Materials For Aspirants

Subscribe to get the latest posts sent to your email.

Print Friendly and PDF
Blog
Academy
Community