Union Cabinet Approves New Crop Insurance Scheme

13 January, New Delhi

The Union Cabinet today approved a new crop insurance scheme- Pradhan Mantri Fasal Beema Yojna that aims to reduce the premium burden on farmers and ensure early settlement of claim for the full sum insured, sources said.The premium charged in the new scheme will be up to 2.5 per cent of the sum insured for food crops and up to five per cent of the sum for horticulture crops.

At present, premiums charged in crop insurance schemes go up to 25 per cent of sum insured.The Cabinet meeting was chaired by Prime Minister Narendra Modi.The government proposes to implement this scheme from the next kharif season, beginning in June.

It plans to cover 50 per cent farmers through the scheme in next 2-3 years, as against the current coverage of 23 per cent.Besides lower premium, the ministry has proposed that there will not be a cap on the premium and reduction of the sum insured, that 25 per cent of the likely claim will be settled directly on farmers account.

It has also proposed that there will be one insurance company for the entire state, and also farm level assessment of loss for localised risks and post harvest loss.

The ministry has proposed that private insurance companies, along with the Agriculture Insurance Company of India Limited (AIC), will implement the scheme. It has recommended that all claim liability will be on insurer and the government would give upfront premium subsidy.

The new crop insurance scheme has been proposed to replace the existing National Agricultural Insurance Scheme (NAIS) and Modified National Agricultural Insurance Scheme (MNAIS).