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09 February 2016 K2_CATEGORY IAS Blog



  • To provide insurance coverage and financial support to the farmers in the event of failure of any of the notified crop as a result of natural calamities, pests & diseases.
  • To stabilize the income of farmers to ensure their continuance in farming.
  • To encourage farmers to adopt innovative and modern agricultural practices.
  • To ensure flow of credit to the agriculture sector.

The Scheme shall be implemented through a multi-agency framework by selected insurance companies under the overall guidance & control of the Department of Agriculture, Cooperation & Farmers Welfare (DAC&FW) (under Ministry of Agriculture & Farmers Welfare (MoA&FW), Government of India (GOI)) and the concerned State.

3. FARMERS TO BE COVERED: All farmers growing notified crops in a notified area during the season who have insurable interest in the crop are eligible.

3.1. COMPULSORY COVERAGE: The enrolment under the scheme, subject to possession of insurable interest on the cultivation of the notified crop in the notified area, shall be compulsory for following categories of farmers:

3.1.1. Farmers in the notified area who possess a Crop Loan account/KCC account (called as Loanee Farmers) to whom credit limit is sanctioned/renewed for the notified crop during the crop season.

3.1.2. Such other farmers whom the Government may decide to include from time to time.

3.2. VOLUNTARY COVERAGE: Voluntary coverage may be obtained by all farmers not covered in 3.1 above, including Crop KCC/Crop Loan Account holders whose credit limit is not renewed.

4.1. RISKS: Following risks leading to crop loss are to be covered under the scheme:

4.1.1. YIELD LOSSES (standing crops, on notified area basis): Comprehensive risk insurance is provided to cover yield losses due to non-preventable risks, such as

  • Natural Fire and Lightning
  • Storm, Hailstorm, Cyclone, Typhoon, Tempest, Hurricane, Tornado etc.
  • Flood, Inundation and Landslide
  • Drought, Dry spells
  • Pests/ Diseases etc.

4.1.2. PREVENTED SOWING (on notified area basis): In cases where majority of the insured farmers of a notified area, having intent to sow/plant and incurred expenditure for the purpose, are prevented from sowing/planting the insured crop due to adverse weather conditions, shall be eligible for indemnity claims upto a maximum of 25% of the sum-insured.

4.1.3. POST-HARVEST LOSSES (individual farm basis): Coverage is available upto a maximum period of 14 days from harvesting for those crops which are kept in “cut & spread” condition to dry in the field after harvesting, against specific perils of cyclone / cyclonic rains, unseasonal rains throughout the country.

4.1.4. LOCALISED CALAMITIES (individual farm basis): Loss / damage resulting from occurrence of identified localized risks i.e. hailstorm, landslide, and Inundation affecting isolated farms in the notified area.

4.2. EXCLUSIONS: Risks and Losses arising out of following perils shall be excluded: War & kindred perils, nuclear risks, riots, malicious damage, theft, act of enmity, grazed and/or destroyed by domestic and/or wild animals. In case of Post–Harvest losses the harvested crop bundled and heaped at a place before threshing, other preventable risks.


In case of Loanee farmers under Compulsory Component, the Sum Insured would be equal to Scale of Finance for that crop as fixed by District Level Technical Committee (DLTC) which may extend up to the value of the threshold yield of the insured crop at the option of insured farmer. Where value of the threshold yield is lower than the Scale of Finance, higher amount shall be the Sum Insured. Multiplying the Notional Threshold Yield with the Minimum Support Price (MSP) of the current year arrives at the value of sum insured. Wherever Current year’s MSP is not available, MSP of previous year shall be adopted. The crops for which, MSP is not declared, farm gate price established by the marketing department / board shall be adopted.

Further, in case of Loanee farmers, the Insurance Charges payable by the farmers shall be financed by loan disbursing office of the Bank, and will be treated as additional component to the Scale of Finance for the purpose of obtaining loan.

For farmers covered on voluntary basis the sum-insured is upto the value of Threshold yield i.e threshold yield x (MSP or gate price) of the insured crop.

The rate of Insurance Charges payable by the farmer will be as per the following table:


Risk will be shared by IA and the Government as follows:

The liability of the Insurance companies in case of catastrophic losses computed at the National level for an agricultural crop season, shall be upto 350% of total premium collected (farmer share plus Govt. subsidy) or 35% of total Sum Insured (SI), of all the Insurance Companies combined, whichever is higher. The losses at the National level in a crop season beyond this ceiling shall be met by equal contribution (i.e. on 50:50 basis) from the Central Government and the concerned State Governments.

7. Salient Features and Benefits:

  • The farmers package policy will be underwritten by the General Insurance Companies empanelled by DAC&FW under crop insurance programmes and/or designated by this Department or through GIC Companies having tie-up with concerned F.I./Banks for non-crop sections of the policy.
  • The policy contains 7 Sections. Crop Insurance is mandatory. However, farmers have to choose at least two other sections also to avail the applicable subsidy under crop insurance section.
  • In case of crop insurance, applicable Farmer’s share of premium ranging between 1.5% to 5% based on their insured crops is payable by farmer & in case Actuarial premium is more, the Government will provide subsidy equivalent to the difference between Actuarial premium and premium paid by farmer. The crop insurance is based on area approach whereas all other sections are on individual basis.
  • If the farmers already availed any insurance policy of similar nature and sum insured not less than as mentioned in the policy than they would be exempted from taking such section(s). However, details of such policy would be provided in their proposal form.
  • The rates above are indicative & subject to the concurrence of the insurers.
  • Sum Insured and premium rates are provisionally taken and may change according to the risk(s).
  • The above premium rates are without service tax which is likely to be exempted.

8. The new Crop Insurance Scheme is in line with One Nation – One Scheme theme. It incorporates the best features of all previous schemes and at the same time, all previous shortcomings/weaknesses have been removed. Comparison of various Agricultural Insurance Schemes is given below:

9. Other facts

  • ICAR celebrated ‘Jai Kisan Jai Vigyan’ Week from 23 December to 29 December 2015 on the birth anniversary of former Prime Ministers Shri Atal Bihari Vajpayee and Late Shri Chaudhary Charan Singh. The celebration was organized keeping in view their immense contribution for promoting use of science for the welfare of farmers.
  • UN declared 2015 as the Year of Soils
  • The UN General Assembly has declared 2016 as the international Year of Pulses