Indian farmers get a new crop protection insurance scheme

Indian farmers, battling two consecutive drought years, received much-needed help from the government when it announced a new crop insurance scheme aimed at protecting farmers from the unpredictability of the monsoon.

A government statement said that farmers’ premium has been kept at a maximum of 2 per cent for foodgrains and oilseeds and up to 5 per cent for horticulture/cotton crops.

To be rolled out from the kharif season this year, will replace the existing two schemes, which were largely seen to have inherent weaknesses.

The new scheme will increase the insurance coverage to 50 per cent of the total crop area of 194.40 million hectare from the existing level of about 25-27 per cent crop area at an estimated cost of around Rs 9,500 crore.

It will be implemented by private insurance companies, along with the Agriculture Insurance Company of India Ltd.

The highlights of this scheme are as follows:

  • There will be a uniform premium of only 2% to be paid by farmers for all Kharif crops and 1.5% for all Rabi crops. In case of annual commercial and horticultural crops, the premium to be paid by farmers will be only 5%. The premium rates to be paid by farmers are very low and balance premium will be paid by the Government to provide full insured amount to the farmers against crop loss on account of natural calamities.
  • There is no upper limit on Government subsidy. Even if balance premium is 90%, it will be borne by the Government.
  • Earlier, there was a provision of capping the premium rate which resulted in low claims being paid to farmers. This capping was done to limit Government outgo on the premium subsidy. This capping has now been removed and farmers will get claim against full sum insured without any reduction.
  • The use of technology will be encouraged to a great extent. Smart phones will be used to capture and upload data of crop cutting to reduce the delays in claim payment to farmers. Remote sensing will be used to reduce the number of crop cutting experiments.

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