1. Agriculture World

Madhya Pradesh Govt Paid out Rs 7,600 crore in Crop Insurance Claims

Madhya Pradesh had implemented an 80:110 plan in both the kharif and rabi seasons of 2020-21, limiting AIC's potential losses. In this case, AIC is not required to pay claims in excess of 110% of the gross premium, and the State assumes responsibility above that level.

Shivam Dwivedi
Picture of Paddy Field
Picture of Paddy Field

After a 16-month wait, over 49 lakh farmers in Madhya Pradesh received crop insurance claims totaling Rs 7,618 crore under the flagship Pradhan Mantri Fasal Bima Yojana (PMFBY) on Saturday after the State government finalized yield data, allowing the disbursement.

The finalized claim amount is 107% of the gross premium of 7,129 crore collected during 2020-21, which is advantageous for the State government because the financial burden is contained within the agreed liability of Agriculture Insurance Company (AIC).

According to PMFBY data, the farmers' share of the 7,129 crore gross premium in 2020-21 was 897.06 crore, while the Centre and States each received 3,115.97 crore.

80:110 Plan

Madhya Pradesh had implemented an 80:110 plan in both the kharif and rabi seasons of 2020-21, limiting AIC's potential losses. In this case, AIC is not required to pay claims in excess of 110% of the gross premium, and the State assumes responsibility above that level. When claims fall below 80%, the insurer will keep a minimum of 20% of the premium and refund the remainder to the state government under this formula. In the case of claims between 80 and 110 percent, the State neither pays nor receives a refund because the insurer bears the entire responsibility.

Chief Minister Shivraj Singh Chouhan said on Saturday in Betul, while announcing the disbursement of claims in the bank accounts of farmers who had suffered crop losses, "We have successfully registered 4.43 crore farmers in the last five years after the launch of PMFBY and have disbursed an aggregate claim amount of 16,750 crore to 73.69 lakh farmers until 2019-20."

In Madhya Pradesh, the claim-to-premium ratio was 157% in 2019-20- 213 percent in kharif and 54% in rabi- with approximately 26 lakh farmers receiving claims totaling Rs 5,812 crore. Soyabean farmers in the state had suffered crop losses due to heavy rains in both 2019 and 2020.

Higher Claims

According to some experts, the claims could be greater than what has been approved for 2020-21 because the 30 districts of west MP received 12% more rain than normal during the 2020 monsoon season (June-September), causing extensive crop damage. While Indore received 46% more rain than normal, Bhopal, Raisen, and Jhabua received 30% more rain than normal, Dewas received 53% more, Sehore received 37% more, and Chhindwara received 36% more.

"After contributing over 3,000 crore as its share of premium subsidy, the state was unable to provide more." Actual losses would have required the state to pay an additional 2,000 crore, which was not financially feasible, according to a government source. Because states have limited resources, there should be some provision for the Centre to bear the burden if crop losses exceed a certain threshold, the official added.

Chouhan stated that the State government is implementing end-to-end computerization of crop insurance, where the process of insurance unit determination is entirely online and integrated with land records. Though he stated that the government has been using remote sensing technology to estimate the average yield from the field, he did not elaborate on the reason for the claims' delayed disbursement.

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