Modi Govt Might Push For Wider Adoption Of Insurance For Cows And Livestock, More Targeted Subsidies Planned

The union government is reportedly working on a scheme to push for wider adoption of insurance for cows and other livestock.

The current insurance plan covers only 1% of the livestock population, but it is expected that this percentage could increase to 10% in the next three years.

Indian dairy farmers have recently suffered from a double whammy. The Covid-19 lockdown related fall in livestock was quickly followed by a significant drop in livestock numbers due to lumpy skin disease. Nearly 1.75 lakh cattle are estimated to have been killed due to this disease.

These two factors have led to a steep increase in price of milch animals making it even harder for the dairy farmer. Milk prices have also gone up as a result - sometimes as high as 15%

An official source stated that the plan is in its early stages and it's uncertain how it will develop since the States will have to be consulted. The subsidy allocation for them would rise if the scheme is constructed based on the Pradhan Mantri Fasal Bima Yojana (PMFBY).

A stakeholders' meeting involving insurance companies and State governments was organized by the DAHD last week. Cattle make up more than 19 crore out of the 54 crore total livestock population.

PMFBY charges farmers a fixed 1-2% premium while the central and state governments equally subsidize the remainder of the premium on a 50:50 basis. Nevertheless, some states have withdrawn from the program due to the high cost of premium subsidies.

Andhra Pradesh and Punjab have recently joined the PMFBY scheme, while Telangana may rejoin soon. Subsidies under the NLM are limited to five animals, except for sheep, goats, pigs, and rabbits, which can be insured up to 50 units.

The maximum annual premium for insurance in non-hilly states is 4.5% of the sum insured as per the Centre. However, in hilly states, the permissible maximum premium can be up to 5.5%.

Animal insurance premium is reduced for two or three year coverage. It is being considered whether beneficiaries should include all farmers or only BPL/SC/ST farmers for a "no premium" option.

Farmers from below the poverty line, scheduled caste, and scheduled tribe pay 30% of the premium in all States except for the north-east and Himalayan regions. Other farmers pay half of the premium with the remaining amount being shared by the Centre and State. A farmer’s share is 20% in the north-east and 40% in the Himalayan regions.

“Either the government has to transfer the subsidy amount directly to the beneficiaries or make enrollment free. Currently, the premium comes to around 4 per cent per year, but with the expectation of more participation of insurance companies and higher coverage the premium rate may further come down,” a State government official was quoted by Business Line.