The government proposes to roll out an integrated farmer security plan by reworking insurance schemes and consolidating all other risk management schemes to benefit farmers at large.
According to the new plan, crop insurance, price protection for farmers and market intervention scheme (MIS) would now fall under the umbrella of the national farmer security cover programme. The farmer crop insurance cover is proposed to be named Modified National Agriculture Insurance Scheme (MNAIS) and will replace the existing National Agriculture Insurance Scheme (NAIS). A pilot version of MNAIS was launched in the 2010-11 rabi season in 34 districts across 12 states.
Based on that version, the new policy would provide insurance cover to be sold by insurance companies, where 90 per cent would be upfront subsidy premium paid by the government and 10 per cent premium by farmers, said official sources.
The government subsidy will be shared in the ratio of 75:25 by the Centre and the state, respectively. In case of failed sowing, claim up to 25 per cent is payable while rest gets terminated. The scheme provides minimum indemnity level of 70 per cent instead of 60 per cent in the original NAIS. Sources said the new insurance cover may extend the premium subsidy to lower and medium risk farmers. “We are also looking at requests of states for extending the scheme to localised calamities, which presently covers only hailstorms and landslides,” said an official source.
Another area of concern is the subsidy payment mechanism where the criteria to be reworked are mode of transfer, nature of recipients, calculation methodology of subsidy, nature of beneficiary regions, type of crops to be insured and nature of risk. The government is also looking at variants of insurance covers to be included under the agriculture insurance schemes.
One is the weather index-based crop insurance, which is currently undergoing pilot studies. The second product is a combination of weather-based index and crop yield-based index. Existing products are either yield-based assessment of risk or weather-based risk. The combination product is based on the total sum insured for a crop insured by the farmer to be divided in two categories — influence of yield and weather on crop.
Thereafter, the product could decide the weight age of risk factors depending on its influence. Sources said for a crop like wheat, heat plays a vital role; so the weather weightage will be more. Similarly, livestock insurance scheme is also getting fine-tuned to make it more farmer-friendly and to increase the existing adverse claim ratio.
Other components that may be designed into the modified insurance scheme is to add savings-linked crop insurance since cultivators are less enthusiastic to buy insurance products if there are no payouts in the previous season. Therefore, some amount of the premium paid will be invested on behalf of the farmer to earn reasonable investment return and the farmer can take the money after full year of remaining invested in the scheme or certain percentage in between.
MIS and price protection schemes, on the other hand are similar to minimum support price for fruits, vegetables and other types of cash crops.
