A premium on the poor

INSURANCE FOR THE MASSES

Finance Minister P Chidambaram on Thursday identified farm and livestock insurance as thrust areas of his Budget but did little beyond remodelling existing schemes and extending their trial runs.

He, however, decided to wind up the Varishtha Pension Bima Yojna launched by the Life Insurance Corporation last July.

While the government has provided Rs 150 crore for the Varishtha Pension Bima Yojna, which guaranteed 9 per cent returns to senior citizens, the scheme is being wound up due to misuse and the fear that it might have been a heavy burden on the Centre and LIC in the long run.

For self-help groups, Chidambaram announced a group insurance scheme with a premium of Rs 120 per person and fixed the sum assured at Rs 10,000.

The Universal Health Insurance Scheme operated by the four public sector insurance companies, was targeted specifically at the poor through a drastic reduction in the premiums.

BPL individuals will now be required to pay an annual premium of Rs 165 instead of Rs 365 earlier. The scheme was re-designed since only 11,400 BPL families had been covered between July 2003 and May this year. The cost to the government is estimated at around Rs 40 crore.

The National Agricultural Insurance Scheme, which insures the yield or crop will also be redesigned.

In addition, the pilot project in 19 districts for insuring rabi crop has been extended to cover kharif crop too. The Agriculture Insurance Corporation will launch another a pilot weather insurance scheme in 20 rain gauge stations in the current crop season.

"Agriculture insurance as well as livestock are complex products and have to be designed with care," Chidambaram said.