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As millions of farmers in northern states of Uttar Pradesh, Punjab, Haryana, Madhya Pradesh and elsewhere face the wrath of unseasonal rain and hailstorms, a recent study by the private weather forecasting agency, Skymet, and industry body Assocham shows that less than 20 per cent of the total farming population in the country has crop insurance, thereby exposing a vast majority of the farmers to vagaries of weather.
According to government estimates, India has roughly 13 crore farmer families. “At the all-India level, only 19 per cent of farmers reported ever having insured their crops. A very large proportion of 81 per cent were found to be unaware of the practice of crop insurance. Of the un-insured, 46 per cent were found to be aware but not interested, while 24 per cent said the facility was not available to them,” the study showed. Only 11 per cent felt that they could not afford to pay the insurance premium, it added.
According to the joint report, there are about 32 million farmers who have been enrolled in various crop insurance schemes across India. However, issues in design, particularly related to delays in claims settlement, have led to farmers not being covered, despite significant government subsidy.
The rule says farmers insurance claims have to be settled within 45 days of risk assessment, but more often than not that claims are not attended to even after six months.
To address the problems, the government is piloting a modified National Agricultural Insurance Scheme, a market-based scheme with involvement from the private sector.
Compared with the existing scheme, the new programme has a design that can offer more timely, claim settlement, less distortion in the allocation of government subsidies and cross-subsidies between farmer groups, and reduced basis risk.
Besides, the Centre is also working on a farm income insurance scheme, which will be rolled out soon for kharif 2015.
Apart from the government player, private players have developed weather-based crop insurance products. These weather-based insurance products are advantageous over yield- based insurance products in terms of time taken for claim settlement and transparency in settlement of claims, reveals the joint study.
