The Hindu : Centre to launch Farmer Insurance Income Scheme

Online edition of India's National Newspaper
Tuesday, Nov 04, 2003

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National

Centre to launch Farmer Insurance Income Scheme

By Gargi Parsai

New Delhi Nov. 3. The Centre is all set to launch its Farmer Insurance Income Scheme from kharif 2004, which will gradually replace the National Agriculture Insurance Scheme.

The scheme is one of the high priority projects identified by the Prime Minister's Office.

It is meant to reduce the food subsidy bill, which stands at Rs. 28,000 crores, of which 35 per cent is contributed by the carrying costs of foodgrains in Government godowns. Besides, the export subsidy on wheat and rice last year was over Rs. 5,000 crores.

The scheme is available to all States and, subject to approval by the Union Cabinet, will be compulsory for farmers involved in seasonal agricultural operations taking loans from financial institutions and optional for non-loanee farmers.

The new scheme is meant to cover the issues of yield and price through a single policy instrument.

To start with, it will cover wheat and paddy. The total normal area to be covered is estimated to be 25 million hectares under wheat and about 45 million hectares under paddy.

Under the scheme, if the actual income made by a farmer as a product yield falls short of the minimum support price (guaranteed income), the farmer is eligible for compensation to the extent of indemnity from the Agriculture Insurance Company.

Premium subsidy

It is proposed to give a premium subsidy of 75 per cent in the case of the small and marginal farmers and 50 per cent for other farmers on the normal area under wheat and paddy amounting to Rs. 5,200 crores. There will be no subsidy on the account of claim settlement by the insurance company.

It is expected that the total premium at 90 per cent indemnity level for the covered area will come to Rs. 9,000 crores and that in the extreme situation of fluctuation, the total claim will not exceed Rs. 12,000 crores.

The methodology for computing the yield and price management will be the same as in the National Agriculture Insurance Scheme. Initially, it will be implemented as a pilot scheme during rabi 2003-04 in 23 districts in 18 States.

Under the NAIS, during the last six crop seasons from 1999 to 2002, 3.15 crore farmers over an area of 4.87 crore hectares were insured for Rs. 2,7291 crores.

Estimated claims, including disputed ones to the tune of about Rs. 3,700 crores became payable against a premium of Rs. 858 crores.

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