Mumbai: Terming agriculture as "absolutely critical to the country`s economy," union Finance Minister Arun Jaitley on Tuesday launched the "Pradhan Mantri Fasal Bima Yojana" and "Unified Package Insurance Scheme".
He said that the revamped insurance schemes that were launched had the potential to reduce distress in the farm sector and would be rolled out in a "mission mode" from April 1 to cover Kharif crops.
Though the country had crop insurance schemes in the past, they were partially successful as they were mainly linked to crop loans, Jaitley held.
"This is a crop insurance scheme with a difference, and the difference is absolutely critical to the Indian farmer," he said.
Since it is dependent on large volumes, the new scheme could cover much larger risks at a very low premium, he said.
While the farmers` premium would be 2 percent for Kharif foodgrains and oilseeds, it would be 1.5 percent for Rabi crops, and in the event of a crop failure, the farmers would be paid more.
The government plans to cover 50 percent of the farmers in the country, mostly those dependent on rain-fed agriculture, and would be a significant step to making India an "insured and pensioned society", Jaitley said.
Urging that agriculture will have to grow faster for the country to get rid of poverty and push the overall GDP, Jaitley said with two successive deficient monsoons, another poor rainfall this year (2016) could put the systems to test.
In such an eventuality, the successful implementation of the new crop insurance schemes could prove to be a game-changer and the entire Indian banking, insurance and financial system would be mobilised to ensure its success, he said.
Secretary, Financial Services, Anjuly Chibb Duggal and National Bank for Agriculture and Rural Development (NABARD) chairman Harsh Kumar Bhanwala were also present on the occasion.
Prime Minister Narendra Modi is slated to meet senior officials of all banks and insurance companies at NABARD to discuss the implementation of the government`s crop insurance scheme.
The meeting will discuss ways to bring more farmers under the `Pradhan Mantri Fasal Beema Yojana` (PMFBY) so as to realise the target of 50 percent insurance coverage.
Of the farm credit target of Rs.8.5 lakh crore set for this fiscal, only Rs.75,000 crore is under crop insurance.
Currently, only around 25 percent of the country`s total crop area is covered by insurance.
Drought and unseasonal rains last year forced the state governments to seek over Rs.10,100 crore from the National Disaster Response Fund.