In the light of these parameters, GIC prepared a modified comprehensive Crop Insurance Scheme (MCCIS) on 17th May 1999 which was further modified after consultation with the finance ministry on May 31. This again raised reservations by the agriculture ministry.

To thrash out the differences, finance minister, Yashwant Sinha called for a meeting with the agriculture minister Sompal and finance secretary V Kelkar, expenditure secretary EAS Sarma, insurance secretary BK Chaturvedi, chief economic adviser, Shankar N Acharya.

Some of the salient features of the latest modified comprehensive crop insurance scheme are: The crops covered under the existing scheme including cereals, millets, pulses and oil seeds are covered alongwith sugarcane, potato and cotton. The scheme will be extended to other commercial crops in due course.

The indicative premia rates on the basis of sum assured are, two per cent of the for sugarcane, three per cent of the for potatoes six per cent for cotton. The premia rates may go up by two to three times in the case of some States where the claims experience is extremely adverse. As per the data available from 1985-86 to 1996-97 the revised rates as proposed would reduce the claims ratio for Kharif season from 677 per cent to 373 per cent, Rabi season from 160 per cent to 134 per cent. This makes the overall reduction in the claims ratio from 560 per cent to 334 per cent.

The new scheme suggests that since the non-lonee farmers are to covered under the scheme, GIC and banks would be given an administrative subsidy which would be tapered of over a three year period.

In the first year, the subsidy will be 100 per cent, in the second 50 per cent, in the third 25 per cent and thereafter no subsidywill be given by the Government.

Earlier it was proposed that the cost will be shared between the Central and State Goverments. GIC will make efforts to obtain reinsurance cover for losses upto 200 per cent of the premium which would be treated as normal losses. If no reinsurance cover is available at affordable rtaesthe GIC will meet these expenses themselves.

Beyond the loss of 200 per cent, the Government will act as reinsurere. A corpus fund shall be created with the contribution from GIC and Government of India and State Government to meet the catastrophic losses.

A comprehensive Crop Insurance Scheme is being operated by the GIC on behalf of Ministry Of Agriculture since 1985. Though the scheme is voluntary and can be availed by all the states in the country, at present, only 15 states and two Union territories partcipate in the scheme.

The farmers availing loan from the banks for insured crops in the notified areas are eligible for coverage subject to subject to a maximum of Rs 10,000 perfarmer.