Agriculture Insurance: RBI Recommended Crop Insurance Scheme Covering All Crops.
A Reserve Bank of India (RBI) panel has recommended doing away with interest subvention schemes. Ploughing back subsidy amount into a universal crop insurance scheme for marginal and small farmers.
Interest subvention has played havoc with the repayment patterns of the agriculture loans. To improve the last-mile credit delivery and financial inclusion for farmers, the committee headed by RBI executive director Deepak Mohanty has put out a discussion paper.
The committee has recommended that a mandatory universal crop insurance scheme covering all crops to be introduced starting with small and marginal farmers at affordable rates.
A graded crop insurance could be made available to medium and large cultivators with higher monetary ceiling and lower government subsidy. The insurance should be mandatory for all agricultural loans with the farmer paying a nominal premium and the balance coming from government subsidy.
Some calculations suggests that the overall premium will fall to less than 3% from the current rates of 8-11% if the area covered increases to say 100 million hectares. For successful crop insurance, it has to be made available and affordable to all farmers with a substantial government subsidy, which could also be commercially viable for insurance companies.
The committee recommended should be introduced for borrowers with prompt repayment records. The government-sponsored personal insurance may be dovetailed with the KCC scheme. The committee also mooted the introduction of the 'Gold KCC' (Kisan Credit Card) with higher flexibility.