Indian Prime Minister Narendra Modi is planning to give farmers comprehensive insurance coverage as he looks to win state elections in largely rural areas.
The government will start the new insurance program in the winter crop running from October to March, Agriculture Secretary Siraj Hussain said in a phone interview on Tuesday. It also wants to make it easier for India’s 263 million farmers to access health and accident insurance, he said.
Modi’s party must do well in upcoming state elections to gain control of the upper house and pass stalled legislation. Investors have lowered their expectations for Modi’s government, with the benchmark S&P BSE Sensex index little changed this year compared with a 30 percent advance in 2014.
He’s seeking to counter attacks from opponents who say farmers will suffer from a proposed law to ease land acquisitions. Five states with more than 300 million people must hold elections by the middle of next year.
Only about 20 percent of India’s farmers are currently covered under three government-sponsored crop insurance programs. These plans might be integrated in the proposed insurance plan, Hussain said.
Farm insurance penetration is poor in the country because premiums are high. Once the existing programs are integrated, insurers would be able to use technology to assess farmer claims and settle them at a faster pace.
The low participation rates increase the costs to insure farmers, requiring federal and state governments to subsidize insurance companies. In the last fiscal year, state-run Agriculture Insurance Company of India Ltd. spent more on claims than it received in premiums from farmers.
The government currently sponsors the National Agricultural Insurance Scheme, Modified National Agricultural Insurance Scheme and Weather-Based Crop Insurance Scheme.
–With assistance from Bibhudatta Pradhan in New Delhi.
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