MUMBAI - India may impose penalties for delaying claim settlements under its new crop insurance scheme in an effort to remedy shortcomings in earlier insurance programmes, top government officials said on Tuesday.
India's government in January launched a new crop insurance plan beginning in the summer season in June that is expected to cover half of India's 263 million farmers in the next two to three years.
The insurance plan is critical for Prime Minister Narendra Modi's plans to woo the 70 percent of India's 1.3 billion people living in the countryside during upcoming local elections later this year and in 2017.
The government is looking at imposing penalties for delaying farmers' crop settlement claims, Financial Services Secretary Anjuly Chib Duggal said today at a conference, trying to address a key reason behind the failure of earlier crop insurance programmes.
Agriculture accounts for about 14 percent of India's nearly $2 trillion economy but employs about two-thirds of its people.
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However, farmers have suffered under a combination of lower food inflation in India, a sharp fall in global commodity prices, reductions in government subsidies and unfavourable weather conditions
Sensing rising anger in villages, Modi and his ministers worked out a new crop insurance plan which is aimed at faster settlements by adopting the use of technologies like smartphones to capture crop damage.
The crop insurance plan is critical because of poor monsoon rains in last two years, Finance Minister Arun Jaitley said at the conference.
In his Feb. 29 budget, Jaitley earmarked 55 billion rupees ($826.45 million) for implementing the crop insurance plan in the 2016/17 fiscal year.
