Successful implementation of schemes to be a game changer: Arun Jaitley

Finance Minister says schemes have potential to reduce the distress in farm sector.

Finance Minister Arun Jaitley with NABARD Chairman Harsh Kumar Bhanwala at a seminar for the roll-out of Pradhan Mantri Fasal Bima Yojana and the Unified Package Insurance Scheme in Mumbai on Tuesday. (Express Photo: Ganesh Shirsekar)

Finance Minister Arun Jaitley on Tuesday said the successful implementation of the new farm insurance schemes could become a game changer with the potential to reduce the distress in the farm sector and the entire strength of the Indian banking, insurance and financial system would be mobilised to ensure its success.

Addressing a seminar for the roll-out of the government’s insurance schemes for the agriculture sector — the Pradhan Mantri Fasal Bima Yojana (PMFBY) and the Unified Package Insurance Scheme — in Mumbai, Jaitley said these schemes would be launched on a ‘mission mode’ from April 1, 2016 to cover kharif crop. With two successive deficit monsoons behind us, a poor rainfall this year would put the systems to test, he said. “Agriculture is absolutely critical to the economy” and it will have to grow faster for the country to get rid of poverty and push the overall GDP expansion,” he said.

Unlike the earlier schemes which focused on protecting bank loan taken by a farmer, Jaitley said the focus of the new schemes is on protecting farmers against vagaries of the nature which can affect his crop. The farmer will have to pay a lower premium and will get higher compensation in the scenario of crop damages, he said, adding the sheer number of the covered will make it possible for companies to deliver the benefits.

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“If the schemes are to succeed, then the scar on us that the indebted farmer commits suicide… we need to wash away this scar from the face of our society. The success of the schemes can actually ensure that,” he said. Though the country had crop insurance schemes in the past, those were mainly linked to the crop loans and therefore met with a modest level of success, he said.

“These are insurance schemes with a difference, and the difference is absolutely critical to the Indian farmer,” Jaitley said and added that since the new schemes were dependent on large volume, it would cover much larger risks at a very low premium. The farmers’ premium for the PMFBY would be 2 per cent for kharif foodgrains and oilseeds crops and 1.5 per cent for rabi crops. In the event of a crop failure, a farmer will be paid more. The scheme also provides for a change in criteria to determine crop losses by providing local level assessment for calamities like hailstorms. Technology through phones and remote sensors would be used for quick estimation and early settlement of claims.

Anjuly Chibb Duggal, Secretary, Department of Financial Services said the scheme had been drafted after consultations with stakeholders and the government might impose a penalty if there were delays in settling claims. The delays in the functioning of schemes stem from factors including delays in crediting the premiums to the insurance companies and also settling claims, which ultimately cause difficulties to the farmers. “It is something that is going to be computerised, there is going to be no delay in sending consolidated proposals to insurers, no delays in settling claims, there are time-frames that are set up,” she said.