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Agriculture Insurance In India
Pratik Nichit
Written by Pratik Nichit

Agriculture Insurance, Crop Insurance, Agri Insurance also check out for agriculture insurance in india, crop insurance & crop insurance scheme. Need of Agriculture Insurance in India: India is mainly an agricultural country. In India, agriculture contributes about sixteen percent (16%) of total GDP and ten percent (10%) of total exports.

Agriculture Insurance

From ancient times India’s agriculture has been dependent on monsoons rain. Any change in monsoon trends drastically affects agriculture. Even the increasing temperature is affecting Indian agriculture. The major impacts of climate change will be on rain-fed or un-irrigated crops, which are cultivated on nearly 60 percent of cropland.

Agriculture is the most important occupation for most of the Indian families. Agriculture in India is highly susceptible to risks like droughts and floods. It is necessary to protect the farmers from natural calamities and ensure their credit availability for the next season. For this purpose, the Indian government introduced many agricultural schemes throughout the country from time to time.

Comprehensive Crop Insurance Scheme (CCIS)

The Comprehensive crop Insurance Scheme (CIS) covered 15 states and 2 union territories. Participation of farmer in the scheme was voluntary. Around five million farmers and between eight – nine million hectares were annually covered by this scheme. If the actual yield in any area covered under the scheme fell short of the guaranteed yield, the farmers were entitled to an indemnity as compensation to the extent of the shortfall in yield. The General Insurance Corporation of India (GICI) administered the scheme on behalf of the Ministry of Agriculture, GOI.

Introduction Comprehensive Crop Insurance Scheme CCIS Agriculture Insurance

Introduction Comprehensive Crop Insurance Scheme CCIS Agriculture Insurance, Image Source: actuariesindia.org

The major failure of the Agriculture Insurance scheme was seen from the fact that out of all the all-India claims of 16.23 billion (US$240 million), Gujarat alone received 7.92 billion (US$120 million) for a single crop, groundnut.

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The scheme was discontinued in 1997.

Experimental Crop Insurance

An experimental crop insurance (ECI) scheme was introduced in year 1997-98, covering non-loanee small and marginal farmers growing specified crops in selected area. The premium was subsidized. The premium collected was about three crore (US$450,000) and the claims amounted to Rs. forty crore (US$5.9 million).

The Government scrapped the scheme during 1997-98 itself.

 

Farm Income Insurance Scheme

The Central Government formulated the Farm Income Insurance Scheme (FIIS) during year 2003-04. The two critical components of a farmer’s income are farm yield and yield prices. The Farm Income Insurance Scheme (FIIS) targeted these two components via a single insurance policy so that the insured farmer could get a guaranteed income.

This Agriculture Insurance scheme had provided income protection to the farmers by ensuring production and market risks. The insured farmers were ensured a minimum guaranteed income (i.e, average yield * minimum support price (MSP)). If the actual income was less than the guaranteed income, the insured farmer would be compensated by the Agriculture Insurance Company of India (AICI). Initially, the scheme could cover only wheat and rice and would be compulsory for farmers availing crop loans. NAIS could withdraw for the crops covered under FIIS but would continue to be applicable for other crops.

The FIIS was scrapped in 2004. The recent attempt made by the Gujarat government to re-introduce the Farm Income Insurance Scheme (FIIS) will reform agricultural insurance and prevent farm-level distress.

National Agriculture Insurance Scheme (NAIS)

The Government of India (GOI) experimented with a comprehensive crop insurance scheme (CCIS) which was failed. The Government then introduced in 1999-2000, a new scheme titled National Agricultural Insurance Scheme or Rashtriya Krishi Bima Yojana. NAIS envisages coverage for all food crops (pulses and cereals), oilseeds, horticultural and commercial crops. It covers both loanees and non-loanees farmers, under the scheme.

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The premium rates vary from 1.5% to 3.5% of sum assured for food crops. In the case of horticultural and commercial crops, the premium rates are charged. Small and marginal farmers are entitled to have a subsidy of 50 percent of the premium charged- the subsidy is shared equally between the Government of India and the States. The subsidy is to be phased out for a period of 5 years.

NAIS operates on the basis of:

  1. Area approach-defined for each notified crop for widespread calamities.
  2. On individual basis-for localized calamities such as landslides, cyclones, hailstorms and floods.

Under this scheme, each state is required to reach Gram Panchayat as the unit of insurance in a maximum period of three years. Agriculture insurance corporation of India (AICI) is implementing this scheme.

Pradhan Mantri Fasal Bima Yojana (PMFBY)

The NDA Government had introduced Pradhan Mantri Fasal Bima Yojana (Agriculture Insurance) in cabinet on January 2016 which was later launched by The prime minister of India on 18 February 2016.  The Pradhan Mantri Fasal Bima Yojana tries to improve all the shortcoming in previous insurance models used so far. This scheme is dedicated to bringing in more than 50% of the farmers under its wing within the next 2–3 years. Around 25% of the claims will be sent directly to the farmer’s bank account. Also there won’t be any cap on the reduction in the insured sum. The Pradhan Mantri Fasal Bima Yojana will be applicable from june 2016.

The Pradhan Mantri Fasal Bima Yojana covers kharif as well as rabbi seasonal crops. It also covers Annual commercial and Horticulture crops.

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It envisages of the different uniform premium for different crops.

Seasonal cropsPremium
Kharif2% of the sum insurance
Rabbi1.5% of the sum insurance
Annual commercial5% of the sum insurance
Horticulture5% of the sum insurance

The government of India has proposed that there will only be one insurance company for the whole state. Mostly the private, as well as the national agricultural insurance companies, will be approached to implement it.

This insurance scheme covers pre-harvest as well as post-harvest losses.

unlike the previous ones, It also covers local calamities too, such as

  1. Landslide,
  2. Hailstorm,
  3. Inundation, etc. (Inundation was not covered by the previous schemes).

Read More:⇒ Pradhan Mantri Fasal Bima Yojana | Agricultural / Crop Insurance


We hope this Agriculture Insurance In India will help many to get benefits & help farmer to raise their self.

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Pratik Nichit

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