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Agriculture Insurance : Simpler and easy to settle farm insurance policy

The Modi government is finalising a new farm insurance policy with lower premiums and simpler norms for prompt payments.

Hoping to ameliorate a farm crisis and quell criticism that it is paying more attention to industrialisation, the whole point of a new farm insurance policy is to make it “simpler and easy to settle”, an official said.

Less than a quarter of India’s farmers insure their crops under three state-bankrolled policies, which are cumbersome and archaic. Due to back-to-back drought in some states of country has decreased farm incomes.

Under the draft proposal, premium is aimed to be brought down to 3% from the current levels between 3.5% and 8%. The insurance scheme will be tied to agro-climatic and land conditions – such as hilly, rain-fed and irrigated – that determine farm output, rather than just crop value.

The Modi government’s proposal, which will come up for the Cabinet’s approval, may require certain categories of farmers who take farm loans – and are thus ‘risk-taking’ – to compulsorily buy insurance.

The government wants to make agricultural insurance in India universal and popular, which will automatically take care of losses in farm income without the need for laborious, clumsy state interventions that often don’t work.