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Cabinet nods to new crop insurance plan, GIC to float new co, no direct subsidy

The Union Cabinet today approved a proposal to introduce a modified crop insurance scheme replacing the present one, which was ''restrictive in nature,'' with effect from the kharif crop of 1999.

The new scheme will cover all farmers and crops and General Insurance Corporation will float a new specialised insurance company for the implementation of the scheme, Union Minister of State for Agriculture Som Pal announced after the Cabinet meeting.

He said the modalities, including fixation of premium will be decided. ''Farmers have to contribute to the insurance premium as the present scheme was not sustainable and financially viable,'' he added.

The present scheme, which was introduced by the United Front government on experimental basis in select districts, was financed mainly by the state and Central governments. The limit of insurance cover was fixed at Rs 10,000 irrespective of losses incurred by the farmers, Som Pal pointed out.

Som Pal said the proposed insurance company would be named as Agriculture Insurance Corporation. The losses to the proposed company will be underwritten by the government, he clarified.

Under the scheme, the farmers will directly deal with the insurance company and the government will not provide any subsidy directly, he said.

The farmers can insure the crop of any quantity and the insurance amount, in case of loss, would be assessed by the proposed company.

An official spokesman said the Cabinet has also decided to discontinue the implementation of Experimental Crop Insurance Scheme and to allow operation of comprehensive CIS in those districts, where implementation of ECIS is proposed to be discontinued.

The proposed scheme will ensure greater satisfaction to farmers and improve financial viability of the crop insurance scheme. It will also result in greater coverage of crops and farmers under the crop insurance regime, the spokesman added.

He explained the CCIS insures a sum equal to the value of the loan obtained by a farmer subject to a maximum of Rs 10,000. No actual premia are charged and insurance charges are collected between one and two per cent respectively for oilseeds/pulses and foodgrains.

Half of the insurance charges payable by small and marginal farmers are subsidised equally the by the Central and state governments. The liability on account of the claims is shared by the Central and state governments in the ratio of 2:1.

The GIC functions only as the agent of the Central and state government for implementing the scheme.

UNI

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