The Centre on Wednesday unveiled a new crop insurance scheme that restricts the premium to be paid by farmers at a standard 2 per cent for kharif crops and 1.5 per cent for rabi crops. The decision was taken at a meeting of the Union Cabinet, which also renamed the scheme as the Pradhan Mantri Fasal Bima Yojna.

The annual premium for commercial and horticultural crops has been fixed at 5 per cent.

The Centre and States will equally share the estimated expenditure of ₹8,000 crore as premium. Currently, the Centre pays about ₹3,000 crore as premium.

Prime Minister Narendra Modi said the new scheme includes successful aspects of the existing ones while effectively addressing their deficiencies. “The scheme has the lowest premium. It entails easy use of technology like mobile phone, quick assessment of damage and disbursement within a timeframe,” he said in a series of tweets. Agriculture Minister Radha Mohan Singh told reporters there is no upper limit on the government subsidy. “Even if the balance premium is 90 per cent, it will be borne by the government. This will help farmers claim the full sum insured,” he said.

Under the scheme, 25 per cent of the compensation will be paid directly into the farmer’s bank account. It will also provide coverage against localised risks of hailstorms, landslides and inundation as well as post-harvest losses of cyclonic and unseasonal rains.

“The reduced premium and inclusion of localised calamities and post-harvest losses for insurance will certainly help farmers to overcome their distress,” said Food Minister Ram Vilas Paswan.

The scheme will use tech products such as smart phones to capture and upload data of crop cutting in order to reduce delays in claim payments to farmers. “Remote sensing will be used to reduce the number of crop cutting experiments,” said an official statement. The Centre aims to double the coverage of the scheme to 50 per cent of the total crop area of 194.40 million hectares from the current level of about 23 per cent.

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