Centre plans income insurance 
for farmers

From KS Narayanan DH News Service NEW DELHI, Sept 20

The Centre is planning to introduce an income-cum-insurance scheme for farmers to protect them against adverse price and yield fluctuations.
“The scheme is aimed at insuring farmers against the difference between market price and minimum support price (MSP)”, Union Agricultural Minister Rajnath Singh told Deccan Herald. A committee comprising Union Agriculture Secretary R C A Jain, Finance Secretary D C Gupta, Banking Secretary N S Sisodia are working out details of the scheme. The committee has been asked to submit its report by September-end. 

Mr Rajnath Singh said that Finance Minister Jaswant Singh has agreed in principle to the scheme. If the scheme is implemented the food subsidy will come down automatically. The large- scale foograin procurement will be limited to public distribution system.

Asked about states where the scheme would be implemented, Mr Singh said, “The scheme would be implemented on a pilot basis. If the scheme picks up then it will be extended to rest of the country.”To begin with, the two most predominantly grown crops in every agro-climatic zone will be covered under the scheme. Subsequently, it will be extended to all crops.

On the role of private insurance companies in the scheme, Mr Singh said, “The General Insurance Corporation cannot handle such a huge task. That is why we have planned to rope in private insurance companies.” The total cost of subsidy on the new scheme is expected to be lower than the cost of subsidy being incurred by the government on the procurement-based price support operations, Mr Singh added.

The scheme would be operated on an actuarial premium basis though the government would provide subsidy on the premium for the benefit of farmers.
Explaining the necessity of this kind of a scheme, the minister said the existing procurement system covered only a few crops and that too in three or four states only. 

The new scheme would be different from both the existing crop insurance scheme which compensated for the loss in production and the present open-ended procurement system, under which the produce was actually bought by state agencies at the MSP.