New crop insurance to give farmers more for less, says Jaitley

Jaitley says a veil of some of security around farmer needs to be put, especially due to the inadequate monsoons faced in the past two crop seasons

The crop insurance scheme, Pradhan Mantri Fasal Bima Yojana (PMFBY), will enable farmers get more for less, said Union Finance Minister Arun Jaitley at an event in Mumbai on Tuesday.

The government had launched the PMFBY and the Unified Package Insurance Scheme for farmers.

“The main difference between the old crop insurance scheme and the new one is that farmers are going to pay less. There has been a considerable debate on the crop insurance schemes. The older schemes were linked to loans. They met with modest success,” said Jaitley. He said farmers need security, especially now, with two back-to-back bad crop seasons.

Under the new schemes, the risks covered would be larger and the compensation paid higher, and thus, these would be attractive to farmers. “For the past two years, we have had deficit monsoons. We hope for a better monsoon this year. But with the new scheme in place, we shall be better equipped to safeguard farmers,” said Jaitley.

The government is looking to cover half the farmers in the country in the first phase of the scheme. At present, only 20 per cent cultivators are covered by crop insurance. A detailed protocol for assessment of losses after harvest and payment of claims, prevented sowing and localised risks will be followed.

“For the insurance and reinsurance companies, the idea of low-cost accident and life insurance is that 50 per cent of agricultural community can also benefit for it, which will add to the overall numbers. Numerically, it will be of great significance ,” he added.

The government is planning to spend Rs 5,500 crore for the crop insurance scheme that was announced earlier. In his Budget speech, Finance Minister Arun Jaitley said the farmers would pay a nominal premium for the coverage. PMFBY was approved by the Cabinet in January. Here, there will be a uniform premium of 2 per cent to be paid by farmers for all kharif crops and 1.5 per cent for all rabi crops. In case of annual commercial and horticultural crops, the premium to be paid by farmers will be only 5 per cent. The balance will be paid by the government.  For a premium of Rs 5,145 a year, farmers will be able to avail of minimum insurance cover for their crop, tractors, pump-sets, self and accidents under the Unified Package Insurance scheme being readied along with the PMFBY.

This package of seven products will be first tried in 45 districts. Expansion will be decided after the response.  PMFBY has officially already been launched for the entire country.

The Centre and state governments plan to subsidise up to 90 per cent of the premium a farmer has to pay under the new scheme. The seven insurance components apart from PMFBY in the united package are fire insurance; a personal accident coverage of Rs 2 lakh under the Pradhan Mantri Suraksha Bima Yojana; agriculture pump-set insurance; agriculture tractor insurance provided by a third party; life insurance through the Pradhan Mantri Jeevan Jyoti Bima Yojana, and student safety insurance.