Pilot Project on Farm Income Insurance Scheme - Sa-Dhan

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AGRICULTURE INSURANCE COMPANY OF INDIA LTD.H. PREMIUM SUBSIDY :The Premium Subsidy allowed is:Small / Marginal farmersOther farmers: 75% of Premium: 50% of PremiumThe Premium Subsidy is borne by the Government of India, and is released toAIC at the beginning of the Season based on estimates.I. SCHEME APPROACH :The Scheme shall operate on “Area Approach” basis.• The Yield shall be calculated at the District/Taluka/Block/Circle etc. level.• The Market Price shall be measured at District/State level.J. SEASONALITY DISCIPLINE :• Loanee farmers: As per the criteria to be fixed by the State LevelCoordination Committee on Crop Insurance (SLCCCI)• Non-loanee farmers: As decided by the SLCCCI, keeping in mind theonset of monsoon, sowing period etc.• The seasonality discipline can be same for loanee and non-loanee farmersK. INDEMNITY PROCEDURE :• Actual Income = current season’s Actual Yield x current season’s MarketPrice.• Market Price of a crop = the current sales price of its “common (i.e.,generic) variety” in the Market.• These prices are recorded by the ‘Agricultural Produce MarketCommittees’ [APMC].• From the first arrival of grain in the Market, each APMC shall record theDaily Modal Price of grain. This exercise shall be done for 8 weeks.• This DMP with quantity transacted shall be sent to AIC on a weeklybasis.• AMB / Mandi Board shall work out the APMC-wise weighted average ofthe DMP (weighted with quantity transacted) for the entire 8 weeks.• Finally, AMB / Mandi Board will submit the Market Price of the Districtbased on weighted averages of all APMCs in the District.• To limit the effects of external pressures on the market prices, a“capping” & “ cupping” range of 20% of MSP shall be applied on thecurrent season’s Market Price.• “Capping” is a limiting factor on the rising graph of prices.• “Cupping” is a limiting factor on the falling graph of prices.
AGRICULTURE INSURANCE COMPANY OF INDIA LTD.• Claims (i.e., ‘Shortfall in Income’) = Guaranteed Income – ActualIncome.L. SHARING OF CLAIMS:The Product is new with unforeseen financial liabilities, as the Actual Incomeis based on Market price, while Guaranteed Income is based on MSP, (anotional price without a link to Market Price). Moreover, appropriate ratingmethodology is also not available at this stage. In view of the above, all claimsexceeding 100% of premium, will be borne by the Government of India. Thepremium for the purpose will be 100% of premium less the components ofloading towards administrative and marketing expenses.M. AGENTS COMMISSION AND BANK SERVICE CHARGES :• Agents Commission – 5% of Gross Premium, ONLY in respect of Non-Loanee farmers. This is available to Rural Agents who are authorized toprocure the business directly from farmers.• Bank Service Charges – 2.5% of Gross Premium, in respect of ALLfarmers. This is available to Banks who are directly serviced by them.N. REVIEW OF SCHEME : Review shall be done before launching a countrywideScheme.O. REINSURANCE : AIC shall make efforts to obtain reinsurance cover in theinternational market.P. AREAS FOR PILOT PROJECT :• The Crop-wise and State-wise Districts selected for pilot project to beconducted during RABI 2003-04 season are:CROP STATE DISTRICTWHEAT BIHAR BuxarCHATTISGARHDurg & RajanandagaonGUJARATBanaskanthaJAMMU & KASHMIR JammuJHARKHANDHazaribagh & SahebganjMADHYA PRADESH Hoshangabad, Thikamgarh & RaisenMAHARASHTRAParbhaniRAJASTHANKota & PaliUTTAR PRADESHEtawah, Kannauj, Mirzapur & MathuraUTTARANCHALDehradunRICE ASSAM KamrupKARANATKAMysoreTAMIL NADUMadurai• In these experimental districts/crops, NAIS shall be suspended ; in the restof the country, NAIS shall continue.
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Pilot Project on Farm Income Insurance Scheme - Sa-Dhan

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