In a major decision, the Union Cabinet on Wednesday cleared the new crop insurance scheme christened as 'Pradhan Mantri Fasal Bima Yojana. Under the scheme, farmers would have to pay low premium of 2% on kharif crops, 1.5% on rabi crops and 5% on annual commercial and horticulture crops like cotton. The scheme will come into force from April 1 for kharif plantation. Since the premium rate is unviable for any insurance company, the central and the state governments will share the balance premium. Also, there would be no upper cap on the central subsidy even if it goes up to 90%. As against the Centre's present annual subsidy bill of Rs 3,000 crore, the new scheme will cover 30% farmers in the first year with subsidy of Rs 5,400 crore, 40% in the second year (Rs 7,200 crore subsidy) and 50% in the third year (Rs 8,800 crore). The central government has also asked states to give legal rights to tillers who take land on lease or rent in order to enable them to take out the insurance of the crops. Asked about the insurance companies involved in the new scheme, agriculture minister Radhe Mohan Singh said none has been selected so far, but tenders would be floated soon to have one or two insurers in each state. For better coordination, a cluster of 15 to 20 districts would be created for choosing the insurers. So far the farmers had to pay 15% premium, mandatory if they take the bank loans, and that too with a cap to limit the government outgo on the premium subsidy. This cap has been removed and the farmers will get the claim against the full sum insured without any reduction. They can insure crops even if they take no bank loan. Delay in payments in case of crops destroyed in the natural calamities has been addressed by planning capture of the damage through the smartphones and remote sensing system to ensure payment to farmers at the earliest. Earlier, there was a provision of capping the premium rate which resulted in low claims being paid to farmers. This was done to limit government outgo on the premium subsidy. This clause has now been removed and farmers will get claim against full sum insured without any reduction. The use of technology will be encouraged to a great extent. Smartphones will be used to capture and upload data of crop cutting to reduce the delays in claim payment to farmers. Remote sensing will be used to reduce the number of crop cutting experiments. The definition of crops is also being expanded to cover the damage to both seeds and the harvested crops instead of limiting it to the standing crops, and the insurance will even cover loss of cattle, cattle sheds, etc destroyed in any natural calamity. The localised risks from inundation as also hailstorms and landslides will be covered while the post-harvest losses will be covered in case of cyclonic or unseasonal rains. Source - dnaindia.com