India: Cabinet approves new crop insurance scheme
Source: Asia Insurance Review | Feb 2016
The Indian Cabinet has approved a new national crop insurance scheme for farmers that replaces existing plans and aims to ensure that farmers pay less premium and have their claims for the full sum insured settled more quickly. The scheme covers damage from natural disasters.
The heavily subsidised programme, which will cost US$1.3 billion, will come into effect in April, a major crop sowing season. Under it, farmers will pay premiums of as little as 1.5% of the value of their crops.
“The scheme will be a protection shield against instances of farmer suicides because of crop failures or damage because of nature,” Home Minister Rajnath Singh said after the Cabinet approved the scheme at a meeting on 13 January. More than 300,000 farmers have killed themselves in India since 1995.
The take-up rate is as low as 23% for existing schemes which have been criticised for being too complex or for having caps that prevent farmers from recouping the full crop damage.
Agriculture Minister Radha Mohan Singh hopes to increase coverage to 50% under the new scheme.
In the new crop insurance scheme, the limit on the loss covered is removed, and complete loss will be compensated. Existing crop insurance plans cover loss of crop but the new scheme also covers loss of seed. Post-harvest losses on the farm will also be covered. Also covered are inundation due to floods and localised risk such as landslides.
The new scheme envisages the use of drones and other technologies to assess crop damage.