Soon, farmers can insure against losses from natural disasters

The Centre is devising an insurance product for farmers that will guarantee to make good their loss in income from natural calamities for at least seven years. For crops with minimum support prices (MSPs), the loss in income will be based on the MSP; for others, it will be calculated based on the average market price of the commodity for the past seven years. If states do not want to avail of the central scheme, they can frame individual income insurance schemes, depending on their geographical and agro-climatic needs. The proposed scheme, to be called the National Agriculture Income Insurance Scheme, will be run on a pilot basis from 2015-16.

“The farm income insurance scheme will have two components — price-based insurance and yield-based insurance. A committee comprising senior agriculture officials and representatives from state governments will be formed to look into the suggestions of state governments to prepare a national insurance product,” Agriculture Minister Radha Mohan Singh told reporters at the end of a day-long meeting with state officials. Currently, the Department of Agriculture runs two crop insurance schemes, one of which is weather-based. Guarantee compensation for loss of yield in case of natural disasters but do not make good the loss in income. “The Centre will give the same financial assistance to states that want to have their own income insurance scheme as it does for other crop insurance schemes,” Singh said. Haryana and Uttarakhand have decided to devise individual income insurance schemes. For crop insurance schemes, 75 per cent of the premium is borne by the central and state governments, while farmers bear the rest.

In India, crop insurance is provided by state-run Agriculture Insurance Company and 10 private insurers, including ICICI Lombard, HDFC Ergo and Iffco Tokio.

According to Insurance Regulatory and Development Authority of India guidelines, at least six per cent of the premium should be from crop insurance products for all insurers.