The government is contemplating modifications in the National Agricultural Insurance Scheme to make it more effective and farmer-friendly.

Agriculture Minister Rajnath Singh disclosed this at the meeting of the parliamentary consultative committee attached to his ministry.

The meeting discussed issues concerning the agriculture credit and crop insurance.

The changes under consideration include rationalisation of premium rates, reduction in the unit area of insurance to the Gram Panchayat level and voluntary participation by loanee farmers. Efforts are also afoot to ensure early settlement of claims.

The minister pointed out the condition of farmers continued to be precarious due to natural calamities, price fluctuations and other reasons.

As farm production was significantly influenced by vagaries of nature, it was essential to revitalise the agricultural insurance scheme to help farmers mitigate their financial losses.

Referring to agricultural credit, Singh pointed out that the government had recently announced a reduction in the rate of interest on farm loans.

Other measures in this field included 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.

The minister said the role of credit was critical for technological upgradation and commercialisation of agriculture. He also emphasized the need for rationalising lending procedures.

All public sector banks had been advised to reduce their lending rate to a single digit of no more than 9 per cent per cent per annum on crop loans up to a ceiling of Rs 50,000.

Banks had also been advised to ensure the volume of credit to the agriculture sector did not decline due to reduction in the interest rate.

Participating in the discussion, the members called for revitalisation of cooperative banks, which had 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. Without proper credit support, diversification of cropping pattern might not be possible, they said.

Responding to these suggestions, Singh said efforts were on to ensure that the cooperative banks were also able to provide loans to farmers at about 9 per cent rate of interest.