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The government wants to cover 50% of all farmers under a new and revamped crop insurance policy that seeks to shield farmers from weather-related risks, Prime Minister Narendra Modi said on Thursday.

The new scheme, Pradhan Mantri Fasal Bima Yojana (PMFBY), was approved by the cabinet on 13 January to address rural distress resulting from back-to-back droughts in parts of the country in 2014 and 2015.

The scheme forms the centrepiece of the National Democratic Alliance government’s strategy to address weather-related risks associated with farming in a country where the annual June-September monsoon accounts for 80% of annual rainfall and irrigates half the farmlands.

“We have capped the premium to be paid for farmers but their crops will be fully covered now," Modi said in a speech to farmers in Sehore, Madhya Pradesh, where he released the operational guidelines of the new scheme.

“Even if a single farmer’s crop is damaged in a village he will get the benefits of insurance," Modi added.

In earlier schemes, sub-districts were taken as a unit of assessment and individual farmers got paid if crops were damaged across a wide area. In the new scheme, either a village panchayat or individual farmer’s field (in case of localized calamities such as hailstorms) will be the unit of assessment.

Explaining the features of PMFBY, Modi said that in case farmers are unable to sow their crops for lack of rainfall, they will be covered by the policy. “The risk of damage to crops after harvest will be covered too," he said.

Additionally, farmers will be immediately paid 25% of the claim amount and delays in payments will be cut through use of technology, Modi said.

Under PMFBY, the premium paid by farmers is capped—1.5% on rabi crops, 2% on kharif crops and 5% on commercial/horticultural crops. Additionally, the scheme contains features to reduce delays and leakages in payment by direct transfers into the bank accounts of farmers.

Under previous crop insurance schemes, risks were only partially covered, meaning farmers could, at best, recover a fraction of their losses. Also, the premium for commercial and horticulture crops was calculated on an actuarial basis, meaning premiums could be as high as 25%, depending on the risk involved.

The new scheme is a step in the right direction but to make it work on the ground, the government needs to quickly set up the infrastructure for faster and science-based loss assessment, said Ashok Gulati, agriculture chair professor at the Indian Council for Research on International Economic Relations, Delhi.

“This includes setting up of automated weather stations in every block and employing drones or low-earth orbital satellites for quicker assessment of damage. Faster payouts are a litmus test for any insurance and the success of this scheme will hinge on this," Gulati added.

The new scheme will kick in from April, before planting for the next rain-fed kharif crop begins.

Smartphones will be used to capture and upload data on crop cutting (to estimate loss in yield) to reduce delays in settling claims; remote-sensing will be used to reduce the number of crop-cutting experiments.

According to the operational guidelines, a farmer can report a crop loss within 48 hours to a toll-free centralized number, or banks and agriculture officials. Loss assessment will be completed in 10 days and claims settled in the next 15 days.

The difference between the actuarial premium rates and the farmer’s share of the premium will be subsidized by the centre and state governments.

Several farm organizations flagged problems with the new scheme.

“In the new scheme—like the old ones—the insurance companies will use banks (to sell the product) and have no direct interface with the farmer," said Kavitha Kuruganti of the Alliance for Sustainable and Holistic Agriculture, one of the nine farmers organizations that sent out a statement on the issue.

“This creates an accountability problem as the farmer cannot reach out to the company in case of problems. Further, it seems, banks will continue adjusting insurance claims with the loan, and effectively the insurance will continue to be for bank loans and not for crop loss (for loanee farmers)," she added.

Apart from the new crop insurance scheme, the centre will connect 550 mandis (wholesale markets) across the country through an electronic platform (National Agriculture Market) that will be unveiled on 14 April, Modi told farmers, adding, “this will give farmers a choice to sell their produce anywhere in the country and help them get better prices".

Centre, states and farmers should take a pledge to double farm incomes by 2022, the 75th year of independence, Modi said.

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