Page 26 - Insurance Times April 2017 Special Issue on Newindia

premium charged would be up to 2% of the sum insured. respectively for kharif crops and 1.5% for rabi crops
For Rabi crops, the premium would be up to 1.5% of the respectively-but the coverage was capped, meaning
sum assured. For annual commercial and horticultural farmers could, at best, recover a fraction of their farming
crops, premium would be 5 per cent. losses. The farmers' premium has been kept at a maximum
of 2 per cent for food grains and up to 5 per cent for annual
The remaining share of the premium will be borne equally commercial horticultural crops.
by the central and respective state governments. Insurance
There will be one insurance company for the whole state. For rabi crops, it is 1.5%. The balance premium will be paid
Private insurance companies will be roped along with by the government to furnish full insured amount to the
Agriculture Insurance Company of India Limited (AIC) to farmers. Since there is no upper cap on government given
implement the scheme. Losses covered Apart from yield subsidy, even if the balance premium is about 90 percent,
loss, the new scheme will cover post-harvest losses also. It the government will bear it.
will also provide farm level assessment for localised
calamities including hailstorms, unseasonal rains, landslides This scheme provides full coverage of insurance. While NAIS
and inundation. had full coverage, it was capped in the modified-NAIS
scheme. It also covers the localized risks such as hailstorm,
Use of Technology landslide, inundation etc. Earlier schemes did not cover
inundation. It provides post harvest coverage. The NAIS did
The scheme proposes mandatory use of the remote sensing
not cover while the modified NAIS covered only coastal
technology, smart phones and drones for quick estimation
regions.
of crop loss. Definitely this will speed up the claim process
faster. Other features within next 2-3 years-the scheme
aims to bring 50% farmers under the scheme domain, the Challenges in Implementation
settlement of claims will be fastened for the full sum Success of any government scheme largely depends on its
assured, further about 25% of the likely claim will be settled sincere implementation effectively. The key problems issue
directly on farmers account, further there will not be a cap such as poor land records, flawed land titles, and the major
on the premium and reduction of the sum insured. focus is corruption etc. are common challenges any crop
insurance scheme in India faces. Further, the success of the
Comparison with earlier crop insurance scheme wholly depends on how sincerely it is implemented
by the insurance companies throughout India. Further, we
schemes. need to wait and watch as to how the scheme is monitored

The new scheme is different from earlier schemes on the and supervised.
account of following: It is open to all farmers but NOT
mandatory to anyone. It is optional for loanee as well as Conclusion
non-loanee farmers. It has so far lowest premium. The
The new scheme is significant as the country is facing
existing premium rates vary in between 2.5% and 3.5%
drought for the second straight year due to the poor
monsoon rains and the government wants to enhance
insurance coverage to more crop area to protect farmers
from vagaries of monsoon.

Thus, new crop insurance scheme has the biggest potential
to deal with the vagaries of nature on Indian farming. The
premium to be paid by the farmers is kept very low when
compared with earlier crop insurance schemes. Finally we
can say that it is going to prove as a destiny changer for
our farmers.

References:

Newspapers, Magazine and Websites. 
26 The Insurance Times, April 2017

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