Farm Insurance Claims Set To Rise On Rain Shortage

Mumbai, July 25 | Updated: Jul 26 2004, 05:50am hrs
The monsoon worries are expected increase claims on the National Agriculture Insurance Scheme (NAIS) if the below normal rains and floods in certain regions of the country hit agriculture production in the current kharif season.

The amount of claims that could generate due to lack of sufficient rains is too early to quantify, agriculture experts foresee sharp rise over last kharifs claims of Rs 191.92 crore.

Since 2000-01, the NAIS has witnessed higher claims than actual insurance premiums received every season with an exception of Kharif 2003. It may be recalled that during kharif 2002, due to insufficient rains NAIS had paid a hefty Rs 1754.28 crore. Last kharif season had witnessed claims amounting to Rs 191.92 crore, of which only Rs 12.02 crore has been paid, according to the latest Economic Survey.

Of the 23 states and two union territories covered under the scheme Assam and Bihar suffered floods while out of 36 meteorological sub-divisions rainfall was excess/normal in 19 and deficient in 17 meteorological sub-divisions for the cumulative Seasonal Rainfall (1st June to 21st July, 2004).

Currently, under the NAIS, all the cereals, millets and pulses are covered. Besides, banana, chillies, cotton, ginger, jute, pineapple, onion, potato, sugarcane, tapioca and turmeric have also been brought under the insurance scheme.

The premium rates are 3.5 per cent of sum insured for bajra and oilseeds, 2.5 per cent for other kharif crops, 1.5 per cent for wheat and 2 per cent for other rabi crops. In case of commercial/horticulture crops. actuarial rates are being charged.

Small and marginal farmers are entitled to a subsidy of 50 per cent of the premium, which is shared on 50:50 basis by the central and state governments. However, this will be phased out in next five years. The insurance scheme is operating on the basis of Area Approach, i.e. defined areas for each notified crops for widespread calamities, and on individual basis for localised calamities such as hailstorm, landslide, cyclone and flood.