In a bid to provide a social security to farmers, Union Cabinet has approved a new crop insurance scheme, having premiums as low as 1.5% of the sum insured.
- Dubbed as Pradhan Mantri Fasal Bima Yojana (Prime Minister’s Crop Insurance Scheme), it will charge a uniform premium 2% of the sum insured from farmers for all kharif crops and 1.5% for rabi crops. For horticulture crops, the annual premium will be 5% of the sum insured.
- The balance premium would be paid by the government to the insurance companies. This would be shared equally by the Centre and state governments.
PMFBY will replace the existing two schemes National Agricultural Insurance Schemeas well as Modified NAIS which have had some inherent drawbacks.
- PMFBY will increase the insurance coverage to 50% of the total crop area of 194.40 million hectare from the existing level of about 25 – 27% crop area.
- The expenditure is expected to be around Rs 9,500 crore
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