"The corporation will be farmer-oriented in the sense that it will be aimed at stabilising and upgrading the country's agro-produce and also protect farmers from the vagaries of the nature," Som Pal added. The AICI is part of the Comprehensive Crop Insurance Policy cleared by the Union cabinet on Thursday.

Som Pal was in Mumbai to participate in Agro Advantage, the country's first Global Investors' Convention for the agriculture sector organised by the Maharashtra government and inaugurated earlier today by Prime Minister Atal Behari Vajpayee.

Speaking to The Financial Express after the inauguration ceremony, Som Pal said comprehensive crop insurance is part of the National Agricultural Policyannounced by the government in its 1998-99 budget proposals.

"We have already finalised various proposals of the National Agricultural Policy which awaits cabinet approval. The approval is likely to be given within the next few weeks".

Under the proposed Comprehensive Crop Insurance Policy, crop insurance will be made available initially to all segments of farmers engaged in rice paddy, oilseeds and cash crops like sugarcane and cotton. It will then be extended for all possible crops and agricultural activities, including dairy farming, animal husbandry and even poultry.

According to Som Pal, the insurance premium payable by farmers will be a graded one depending on the size of the insurance required by the farmer. This way, a part of the premium payable by small and marginal farmers will be subsidised by large farmers who will have to pay a higher premium for insuring their larger crops.

"We are currently thinking of evolving a commonly acceptable premium structure, the rates of which will be fixedin joint consultation with the state governments, the finance ministry and the planning commission," Som Pal added.

According to Som Pal, the premium structure will be devised in such a manner that it will not be a burden on any particular segment of farmers. Also, it will take care of the recurring financial needs of the proposed corporation. "If the corporation runs into losses, which we hope not, the government will pump in more funds."

Past governments have run several crop insurance schemes for more than a decade. The one devised in 1985, for example, was too restrictive. The one devised in 1996--the Experimental Crop Insurance Scheme--covered insurance only upto Rs 10,000, and was meant for very small or marginal farmers. It was insufficient to meet the needs of the agricultural sector. "Effectively, the scheme was implemented in just 14 of the 26 districts and, therefore, it was very poor in its reach."

"The new comprehensive crop insurance scheme, cleared yesterday, will do away with theExperimental Crop Insurance Scheme, while the earlier one will be continued with necessary modifications," Som Pal said. "We will see to it that the proposed AICI will be made into a professional body, by inducting professional damage-assessment personnel from across the country."

Speaking about the continued onion shortage, Som Pal said: "The onion crisis will not be over till the next rabi crop is available by mid-April. Also, we do not intend to continue with imports to meet the shortages. We have asked the concerned departments to device minimum support prices while simultaneously increasing and improving the storage facilities so that such instances of acute shortages do not occur in future."

The need for a comprehensive crop insurance policy flows from the frequent natural calamities that affect the country's agricultural sector.

Recently, there has been crop damage resulting from devastating floods in various parts of the country, especially in the north-eastern states, landslides in the northernHimalayan region, and cyclones in western India (Gujarat and adjoining regions).

The Diwali rains--unheard of for several decades now--have damaged crops in various parts of Maharashtra and Gujarat. All these have called for urgent measures on crop insurance.

Asked whether foreign insurance companies will be permitted to offer crop insurance schemes once the industry is opened up, Som Pal said: "At this stage foreign insurance companies will not be allowed to participate. However, if at a later stage, the insurance policy changes they can participate."

Speaking at the inaugural session earlier in the day, Som Pal said India's agro sector is a clear-cut case of capital starvation. A new era in capital infusion in this sector will, therefore, emerge out of the efforts of the four-day Agro Advantage Maharashtra seminar. The funds invested in this sector will have a recurring impact on the economy, in that funds and technology invested in this sector will yield good returns to farmers, which in turn willgenerate overall demand for goods in the economy.