Gujarat govt/BJP oppose new crop insurance scheme

Ahmedabad, 3 April 2014

Gujarat BJP today said the Congress-led UPA government’s Agriculture minister Sharad Pawar has enforced new crops insurance scheme to grant huge benefit to private insurance companies. BJP suspects ‘leti deti’ (give and take) behind the decision which according to him is favorable for ten private insurance companies, but disastrous for farmers.

Addressing a press conference in Ahmedabad at Gujarat BJP’s city headquarters Finance Minister Shri Nitin Patel said: The Government of India had launched Agriculture Crops Insurance scheme(NAIS) in year 1999 to give protection to farmers against crop failure. In old scheme, farmers had to pay just 1.5 to 2% premium on loan taken from cooperative banks for crop. During bad monsoon, farmers were paid 50% amount from state government and 50% from central government after survey. Insurance company was functioning under Agriculture department of central government.

But now the Government of India has compulsorily enforced a new insurance scheme from 1st of April. The government company has been replaced with ten private companies; ICICI-Lombard General Insurance Co. Ltd, IFFCO-Tokio General Insurance Co. Ltd, HDFC-ERGO General Insurance Co. Ltd, Cholamandalam MS General Insurance Co. Ltd, Tata-AIG General Insurance Co. Ltd, Future General Insurance Co. Ltd, Reliance General Insurance Co. Ltd, Bajaj Allianz General Insurance Co. Ltd, SBI General Insurance Co. Ltd, Universal Sompo General Insurance Co. Ltd.

The Gujarat government had asked central government not to implement the news cheme and continue the old scheme through a letter on 3-12-2013. But central govt has made implementation of this scheme compulsory for states and has done deal with ten private companies.

As per clause no. 17.3 Private insurance companies will be allowed to deny premium if monsoon conditions are not found favorable.

Farmers will have to pay 12-15% premium instead of 1.5-2% rate at present.

The amount of premium will be deducted by private insurance companies from loan amount irrespective of whether farmers withdraw the amount or not.

Nitin Patel said, Gujarat government’s share in crop insurance scheme is around Rs. 500 crore per year, same share is contributed by central government too. Gujarat govt had proposed to set up its own mechanism of crop insurance, but centre choose private insurance companies over Gujarat government.