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Contents
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)
Problems with the Scheme
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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
