Business Daily from THE HINDU group of publications
Wednesday, Aug 02, 2006
Business Daily from THE HINDU group of publications Wednesday, Aug 02, 2006 |
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Money & Banking
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General Insurance Agri-Biz & Commodities - Natural Calamities Farmers may get part of claim before harvest Radhika Menon
Up to 50 per cent of the anticipated loss can be paid prior to the harvest, in the event of extreme weather conditions like flood or drought
A FILE picture of farmers ploughing the fields.
Mumbai , Aug. 1 Farmers may soon be able to get immediate relief from their insurance company after a flood or a drought. Some 1.7 crore farmers under the Government-run National Agriculture Insurance Scheme (NAIS) are now likely to receive partial compensation for projected losses during the season itself. Currently, the farmers have to wait until the harvest because the claims are settled on the basis of the yield data. Agriculture Insurance Company (AIC), which provides insurance cover to farmers, is examining the possibility of evolving a weather index as a proxy indicator to decide and release a portion of the claims settlement during the season.
MR M. PARSHAD
This would be one of the most crucial improvements being made by the Government in the overhaul of the NAIS, said an AIC official. "The index will be created based on agro-meteorological data as well as satellite images received using remote sensing technology. "This is with a view to provide quick settlement of a part of the claims, which would be adjusted against final claim, calculated based on yield data," said Mr M. Parshad, Chairman and Managing Director of AIC. According to officials from AIC, up to 50 per cent of the anticipated loss can be paid prior to the harvest, in the event of extreme weather conditions like flood or drought. However, there has to be sound scientific basis to the weather index for assessment of the projected losses, so that excess payments are avoided, said officials. As of now, settlements under the NAIS are based on yield data and there has been criticism from agriculture economists and analysts about the long wait for farmers to receive compensation. For the bulk of the farmers under the NAIS, insurance is linked to the loans from banks and financial institutions. As the compensation is paid one or two months after the harvest, it increases the debt burden of farmers. AIC also plans to extend the coverage of its weather insurance product, Varsha Bima, which was launched last year and covered 1.27 lakh farmers. Last year, the company received premium of Rs 3.17 crore from Varsha Bima and received claims to the tune of Rs 20 lakh. "The important modifications for the year are: cover for excess rainfall, the vegetative phase of the crop and for stage-specific water requirement of the crop. We plan to cover double the number of farmers this year," said Mr Parshad.
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