New farm cover plan from this rabi season

It will gradually replace the existing National Agricultural Insurance Scheme, which compensates only for the loss in yield.

This was announced by Agriculture Minister Rajnath Singh, at a meeting of the parliamentary consultative committee attached to his ministry.

He said the scheme would be started in 23 districts of 18 states for wheat and rabi rice. Based on the outcome of the pilot project, it would be fine-tuned and formally launched from kharif 2004 in other areas.

It will be implemented by the Agriculture Insurance Company of India (AIC).

There will be no subsidy outgo from the government for the claim settlements by the AIC. The farmers will get subsidy on their premium, which will be 75 per cent for small and marginal farmers and 50 per cent for others.

The new scheme would target both the critical components of the farmer's income -- yield and price -- through a single policy instrument. The existing NAIS, which came into effect from rabi 1999-2000, provided relief in the case of yield fluctuations only.

When fully operational, it will cover all the states though the farmers availing of seasonal agricultural loans will have to compulsorily take the insurance policy. For others, it will be optional. The FIIP will essentially ensure the farmers a guaranteed minimum income, rather than guaranteed minimum support price through actual procurement of the produce.

If the actual income of a farmer falls short of the guaranteed income (calculated by multiplying the yield by prevailing market price), he will be eligible for a compensation to the extent of indemnity from the AIC.