Table-15: Premium Subsidy – Farmer Capping Model
Premium cap for
Small / Marginal farmers
Premium cap for
Other farmers
S.No Crop Groups
Kharif Rabi
Kharif
Rabi
1 Rice and Wheat 2.5%
2 Other Cereals & Millets
4%
3%
6% 5%
3 Pulses 4%
4 Oilseeds
4%
2%
6% 4%
5 Sugarcane 2%
6 Annual commercial horticultural crops
4%
4%
6%
6%
The disadvantage of this method is that the risk is not adequately discriminated.
Irrespective of differences in rates across states, farmers will pay the same rate. Rice actuarial premium rate during Kharif is 6.5% in Orissa and 9.4% in Gujarat. However, in both the cases, the other category farmer, would be required to pay 5%. Similarly groundnut actuarial premium in Gujarat is about and 5% in Maharashtra. As per the model suggested above, the Maharashtra farmer pays full groundnut premium (as the premium rate is within the cap) and Gujarat farmer, only 6 %, leaving the balance 29 to be borne by the government.
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