The Cabinet is likely to take up tomorrow the proposal of a new crop insurance scheme that aims to reduce the premium burden on farmers and ensure early settlement of claim for the full sum insured. The proposal, moved by the Agriculture Ministry, was discussed in a Cabinet meeting last year, but the decision was deferred due to differences over the premium rate. "The Agriculture Ministry's proposal on crop insurance scheme is listed on the agenda of the Cabinet meeting tomorrow," a source said. Meanwhile, the sticky issue of premium, whether to charge zero or 1 per cent from farmers, was sorted out in the meeting held last week by Prime Minister Narendra Modi with his Cabinet colleagues. However, in the Cabinet note, the ministry has proposed a premium between 1.5 and 2.5 per cent for food grains and oilseeds crops and a maximum of up to 5 per cent for horticultural crops and cotton, the source said. The government proposes to implement this scheme from the next kharif season starting this June. "The government's liability is expected to be Rs 18,000 crore if 1 per cent premium is charged from farmers and if 50 per cent of the crop area is covered, while the expenditure would be Rs 20,000 crore if premium is kept at 0 per cent," the source said, adding expenses would go up if coverage increased to 80 or 100 per cent crop area. Besides lower premium, the ministry has proposed that many private insurance companies along with Agriculture Insurance Company of India Limited (AIC) will implement the scheme. It has recommended that all claim liability will be on insurer and the government would give upfront premium subsidy. The new crop insurance scheme has been proposed to replace the existing schemes, National Agricultural Insurance Scheme (MNAIS) and Modified National Agricultural Insurance Scheme (MNAIS) which have inherent drawbacks. Under NAIS launched in 1999, being implemented in 14 states by government insurance company AIC, the premium burden on farmers is up to 3.5 per cent for foodgrains and oilseeds crops and actuarial rates for horticultural crops and cotton, but the all claims liability is on the government. Whereas under MNAIS launched in 2013 but implemented in only six states, the premium burden on farmers varies between 2 to 15 per cent but the actuarial premium goes up to 57 per cent depending on the risky crops and areas. But due to capping of the premium, the sum insured gets reduced and as a result, farmers are getting lower claim amount. The ministry also implementing a Weather-based Crop Insurance Scheme since 2013 in 12 states. Last year, only 27 per cent of the crop area was insured under these three crop insurance schemes, which cost Rs 3,150 crore to the national exchequer. Source - economictimes.indiatimes.com