Indian government to announce new crop insurance scheme early 2016

Indian government to announce new crop insurance scheme early 2016

Our bureau

New Delhi, Dec 23:

The Indian government would bring out a new crop insurance scheme by early next year in which the farmers would have to pay lower premium while the settlement of insurance claim would lesser time, agriculture minister Radha Mohan Singh today said.

“Often in the existing policies like Modified National Agricultural Insurance Scheme , National Agricultural Insurance Scheme , and weather-based crop insurance scheme charge very high premium rates from the farmers, which is discouraging,” Singh said after launching two mobile phone APPs for farmers.

Singh said that the new schemes would be announced by next month. He said in a couple of places premium amounts for crop insurance are as high as 30% to 40% of the total sum insured which is key reason for slow expansion of the policies. “Besides, the time taken for settlement of claims takes from six months to one year,” Singh said.

As reported in the media earlier only two crore of an estimated 12 crore farmers in the country — earning for a population four to five times as many — had crop insurance cover in 2014-15, even as the facility was just against the cost of cultivation and barely provided any income protection. According to agriculture ministry data, a major chunk of farmers who took crop insurance were in Rajasthan, Bihar, Uttar Pradesh, Maharashtra, Karnataka and Andhra Pradesh.

The insurance scheme is virtually a non-starter in states like Punjab, Haryana and Odisha that contribute significantly to the central pool stocks of rice and wheat. Only a tiny segment of the farmer community availed of the facility last fiscal in Jharkhand, Tamil Nadu, Telangana, Himachal Pradesh and Kerala.

Given the tepid performance of current schemes, the government plans to launch a new scheme that would cap the premium paid at about 3% of the insured value, cover a substantial part of India’s farmland and crop output and make processing of claims hassle-free.  The dismal performance is attributed to the low insurance payouts, level of premium that the farmers found unaffordable and hassles in settlement of claims.

Under the crop insurance being offered by various public and private sector companies, farmers are presently paying a premium in the range of 3.5-8% of the insured value of the crop and the rest is borne by the government. Currently, around 20% (40.27 million hectares) of the total agricultural land is insured.

The agriculture ministry has identified issues such as high variability in premium rates among adjacent districts, higher premium in districts with high crop-risk profile and the cumbersome “crop-cutting experiments” to ascertain the extent of crop damage as factors that hit the spread of crop insurance across the country.

“Insurance based on input-cost mechanism is not going to help. The policy should be to protect the income of farmers from agriculture risks. Besides land record digitisation, satellite images should be used for quicker assessment of crop damage and settlement of dues to farmers,” said Ashok Gulati, former chairman, Commission for Agricultural Costs and Prices (CACP).

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