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Under the revamped National Crop Insurance Programme, the government has allowed companies providing crop insurance to charge premia at commercial rates, albeit with a cap, for which the government will provide subsidy of up to 75 per cent.
Officials said so far, companies were largely allowed to charge premia at a flat rate for both weather-based and yield-based crop insurance schemes to make these attractive to farmers.
An official said the cap on premia had been fixed at 11 per cent and nine per cent of the sum insured for food and oilseed crops, respectively. For the commercial and horticulture segments, it has been proposed at 13 per cent of the sum insured.
For the weather-based insurance scheme, the cap has been is 10 per cent for kharif and eight per cent for the rabi season. For commercial crops, a 12 per cent cap has been proposed. These caps will be reviewed after every five years.
The National Crop Insurance Programme, formed after merging three existing pilot schemes and dropping a scheme, will be implemented across the country from the 2013-14 rabi sowing season. It says crop insurance is compulsory for any farmer who takes a loan against the crop.
“We have framed the new guidelines after extensive consultation with all stakeholders---the government of India, state governments, private and public sector insurance companies and farmers,” said a senior Department of Agriculture official. He added the new scheme was not only farmer-friendly, but also in favour of the industry.
Both the yield-based and weather-based crop insurance schemes have been in operation since the last few years.
So far, only a quarter of the 120 million farmer families have been covered under the crop insurance scheme. About 70 per cent of these are accounted for by farmers who own less than four hectares.
“We believe by the time the 12th five-year Plan ends in 2016-17, more than 50 per cent of India’s 120 million farmer families will be covered under crop insurance,” the official said.
Agriculture Insurance Company Ltd, formed specifically to provide crop insurance to farmers, along with other private sectors insurance companies have been allowed to implement the scheme, with conditions.
