The total subsidy outgo would be footed equally by the Centre and state governments and the scheme proposes to cover all farmers availing loans from financial institutions, he told a press conference here.

The scheme would cover all crops, including coarse crops of all pulses and oilseeds and in addition three cash crops-sugarcane, cotton and potato- have been brought under its purview to start with, he said.

It would be optional for farmers who do not avail loans from financial institutions to be part of the scheme, but state governments must come forward to foot the subsidy if their farmers have to benefit from the scheme."All remaining crops, including horticultural and commercial crops, will be covered under thescheme within the next three years," Sompal said.

While the premium for wheat would be 1.5 per cent of the sum insured, for other rabi crops it would be 2-2.5 per cent. For kharif crops, which are more vulnerable to various calamities, the premium would be 3.5 per cent of the sum insured. Sompal said the premium rates would be decided based on the average yield and minimum support price fixed by the government for the crop.The average yield in a particular area would be determined through a random survey, he said.

"For example, the premia for a farmer cultivating wheat in 2.5 acres will be Rs 270 per annum," he said, adding for those farmers who required insurance cover over the average yield, the insurance company would charge commercial premia.

The General Insurance Corporation (GIC) would launch the scheme to begin with before the proposed Rashtriya Krishi Bima Nigam was set up, he said.The agriculture minister said the premia for other crops were being worked out based on the yield data availablewith the government.

Small and marginal farmers would be entitled to a subsidy of 50 per cent of the premium charged from them. However, the premium subsidy would be phased out over a period of five years when the scheme was expected to be self-sustainable.

The subsidy outgo would include bank charges, premium charges, administrative expenses, claims, settlements and provisions for catastrophe, he said. Sompal said the scheme would be operated on the basis of area approach. All farmers of the area affected by a calamity would be entitled to payment of insurance claim according to the rates prescribed for the area.

In the event of localised calamities, however, individual claims of affected farmers would be entertained separately, he said adding localised calamities would include hailstorm, landslide, cyclone and flood.

The minister said the number of crop cutting experiments would be increased to suitable numbers in order to arrive at a realistic assessment of yield level in particular areas.