Govt set to launch new crop insurance schemehttps://indianexpress.com/article/india/india-news-india/govt-set-to-launch-new-crop-insurance-scheme/

Govt set to launch new crop insurance scheme

Will bring down rate of premium to be paid by farmers, govt will pay the rest; Cabinet clearance likely on January 13

An Indian farmer sprays pesticide on his mustard crop in Mayong village, outskirts of Gauhati, India, Monday, Dec. 14, 2015. Agriculture is the main livelihood of about 60 percent of India's 1.2 billion people.(AP Photo/ Anupam Nath)
The proposal also envisages a cap of 5 per cent on premium a farmer has to pay to get horticulture crops (including fruits, vegetables and commercial crops) insured. (Source: AP)

In a major policy outreach towards farmers, the Centre is set to roll out a new Crop Insurance Scheme through which it will bring down the rate of premium to be paid by farmers to a maximum of 2.5 per cent of the sum insured. The remainder will be paid by the government. Currently, farmers have to pay premium ranging from 4 to 15 per cent to insure crops.

Government sources told The Sunday Express that following several rounds of discussion, the government has decided to go ahead with bringing down and fixing the maximum premium amount.

Under the new formula, a farmer will not have to pay more than 2.5 per cent of the sum insured as premium for kharif crops (paddy, maize, millet, etc), 2 per cent for all rabi crops except wheat, 1.5 per cent for wheat and 2 per cent for all pulses. The proposal also envisages a cap of 5 per cent on premium a farmer has to pay to get horticulture crops (including fruits, vegetables and commercial crops) insured. The Union Cabinet is likely to clear this in its upcoming meeting on January 13.

“The remaining premium will be paid by the Centre and the state governments,” said an official. The Centre’s payout of its share of premium is expected to rise from the current Rs 3,000 crore to Rs 7,500 crore as a result of the new provisions, officials said.

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The Centre’s move, sources said, follows a growing realisation that farmers were being made to pay high premiums under the existing scheme. As an illustration, officials cited the case of Lalitpur in Uttar Pradesh’s Bundelkhand region, where the actual premium for paddy is 22 per cent of the sum insured and farmers have to pay a premium as high as 5.75 per cent.

“Once the new scheme kicks in, farmers in high-risk areas such as Lalitpur would stand to benefit the most since they wouldn’t have to pay a premium more than 2.5 per cent,” an official said.

By lowering premiums substantially, the government is banking on increasing the coverage of farmers from the existing 23 per cent to 50 per cent in the next two to three years. While Uttar Pradesh, Rajasthan, Uttarakhand, Kerala and a few districts in Andhra Pradesh have notified the existing crop insurance scheme, states like Punjab and Haryana have not done it so far.

The new scheme will also seek to address a long-standing demand of farmers and provide farm-level assessment for localised calamities, including hailstorms, unseasonal rains, landslides and inundation. “Because of area-based assessments in which the results of crop cutting experiments over a small area are used to pay claims for a larger area, farm-level assessment is not done at all. Once farm-level assessments begin, claims for losses suffered in localised calamities will get paid,” an official said.

Moreover, with insurance companies settling claims of farmers on the basis of yield data, which is often delayed, the government is planning to use smartphones to capture crop cutting data to reduce the time taken to finalise yield data, sources said.