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Changes in Agricultural Insurance Scheme under consideration
Consultative Committee of Agriculture Ministry Meets
New Delhi: August 21, 2003

The Government is considering some changes in the National Agricultural Insurance Scheme (NAIS) to make it more effective, realistic and farmer-friendly. The Agriculture Minister, Shri Rajnath Singh said this while addressing a meeting of the Consultative Committee attached to his Ministry here this morning. The subject of the meeting was "Agriculture Credit and Insurance". The changes in the NAIS under consideration include rationalization of premium rates, reduction in the unit area of insurance to the Gram Panchayat level and voluntary participation by loanee farmers. Efforts are also being made to ensure early settlement of claims. The Minister pointed out that the condition of farmers continues to be precarious due to natural calamities, price fluctuations etc. Vagaries of nature significantly effect agricultural production and it is essential to revitalize the Agricultural Insurance Scheme to help farmers mitigate their financial difficulties in the event of natural calamities.

About agricultural credit, Shri Rajnath Singh pointed out that the Government has recently announced a reduction in the rate of interest on agricultural loans along with other measures like introduction of direct refinancing facility by NABARD to the District Central Cooperative Banks, easier loan terms for farm equipment and franchising agricultural credit through post offices. All the Public Sector Banks have been advised to reduce their lending rate for agriculture to a single digit rate of not more than 9% per annum on crop loans upto a ceiling of Rs.50,000/-. Banks have also been advised to ensure that the volume of credit to the agriculture sector does not decline due to reduction in the interest rate.

Despite all these measures, a lot still remains to be done to achieve the growth rate of 4 per cent in the agriculture sector, as envisaged in the National Agriculture Policy. The Minister said that the role of credit is critical for technological upgradation and commercialization of agriculture. He also emphasized the need for rationalizing lending procedures.

Participating in the deliberations, members called for revitalization of cooperative banks which have a vast network of institutions for providing credit to the farming community. They said that the loans provided by these institutions should be available at lower rates and easier terms. Some members pointed out that without proper credit support, diversification of crops may not be achieved.

Responding to the suggestions, Shri Rajnath Singh said that efforts are being made to see that cooperative banks are also able to provide loans to farmers at about 9 per cent rate of interest.

The Minister of State for Agriculture, Shri Hukumdeo Narayan Yadav was also present at the meeting. The Members who attended were: S/shri Bhartruhari Mahtab, Chunni Lal Bhau Thakur, Rattan Lal Kataria, Parsuram Majhi, Mahboob Zahedi, Mahendra Singh Pal and Smt. Praneet Kaur.

Press Release by: PIB/OK:RC:PM
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