Professional Documents
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Crop Insurance in India
Crop Insurance in India
REFERENCE NOTE .
No. 17 /RN/Ref./ November /2014
For the use of Members of Parliament Not for Publication
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The reference material is for personal use of the Members in the discharge of their Parliamentary duties, and is not for publication.
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CROP INSURANCE IN INDIA
HISTORICAL BACKGROUND
i) First Individual Approach Scheme 1972-1978
Different forms of experiments on agricultural insurance on a limited, ad-hoc and
scattered scale were started from 1972-73 when the General Insurance Corporation
(GIC) of India introduced a Crop Insurance Scheme on H-4 cotton and later included
groundnut, wheat and potato. The Scheme was implemented in Andhra Pradesh,
Gujarat, Karnataka, Maharashtra, Tamil Nadu and West Bengal. It continued up to
1978-79 and covered only 3,110 farmers for a premium of Rs.4.54 lakh against claims
of Rs.37.88 lakh.
1
National Centre for Agricultural Economics and Policy Research (NCAEP), Policy Brief on ‘Problems and Progress in
Agricultural Insurance in India’ by S.S. Raju and Ramesh Chand, 2009, p.1-2
2
6.23 lakh farmers for a premium of Rs.195.01 lakh against claims of Rs.155.68 lakh
during the entire period.
iii) Comprehensive Crop Insurance Scheme (CCIS) 1985-99
The Comprehensive Crop Insurance Scheme (CCIS) launched in 1985 was the
first nation-wide Scheme. Previous Schemes were either experimental or Pilot Projects,
on a small scale and in a scattered manner. This scheme was linked to short-term credit
and was based on the ‘homogenous area approach’. The Central Government
introduced the CCIS during the year 1985-86. Till Kharif 1999, the Scheme was adopted
by 15 States and 2 Union Territories (UTs). Both, PCIS and CCIS were confined only to
farmers who had borrowed seasonal agricultural loans from financial institutions. The
main difference between PCIS and CCIS was that PCIS was on voluntary basis while
CCIS was compulsory for loanee farmers. The CCIS covered 763 lakh farmers for a
premium of Rs.404 crore against claims of Rs.2303 crore2.
A more comprehensive Scheme, ‘National Agricultural Insurance Scheme was
launched in 1999 with aim to cover all farmers irrespective of loanee or non-loanee.
2
Ibid.
3
India. Department of Agriculture & Cooperation, Annual Report, 2013-14, p.88
4
Rajya Sabha Unstarred Question No. 3214 dated 8.8.2014
3
The Scheme was optional for States/Union Territories (UTs) and it had been
implemented by the 25 States and 2 Union Territories in one or more seasons. Since
the inception of the Scheme 2084.78 lakh farmers for a premium of Rs.8,67,121 lakh
against the claim of Rs.25,37,558 lakh were covered until 2012-13. The total area
insured was Rs.3137.70 lakh hectares during the same period5 .
The State-wise details of coverage under National Agricultural Insurance
Scheme is available at Annexure-I.
5
op.cit. Annual Report, 2013-14, p.89
6
op.cit. Annual Report, 2013-14, p.90
7
India. Department of Agriculture & Cooperation, Report of the Committee to Review the Implementation of Crop
Insurance Schemes in India, , 2014, p.39-40
4
Scheme attractive, premium actually charged from farmers has been restricted at par
with NAIS8.
The WBCIS was implemented in 18 States and 469.38 lakh farmers were
covered for a premium of Rs.7,51,920 lakh against the claims of Rs. 52,860 lakh under
the Scheme from 2007-08 to 2012-13. The total area insured was 632.01 lakh hectares
during the same period9.
The State-wise details of coverage under Pilot Weather Based Crop Insurance
Scheme (WBCIS) is available at Annexure-II Table-B.
8
op.cit. Annual Report, 2013-14, p.92
9
op.cit. Report of the Committee to Review the Implementation of Crop Insurance Schemes in India, 2014, p.42 &
44
10
op.cit. Annual Report, 2013-14, p.93
5
11
Rajya Sabha Unstarred Question No. 1098 dated 18.7.2014
12
op.cit. Annual Report, 2013-14, p.87
13
op.cit. Report of the Committee to Review the Implementation of Crop Insurance Schemes in India, 2014, p.III
6
Reserve Bank of India (RBI) and National Bank for Agriculture and Rural
Development (NABARD) should effectively monitor the compliance of their
circulars regarding compulsory crop insurance for loanee farmers.
State Governments should insure the use of GPRS-enabled and camera fitted
mobile phones etc. while conducting crop cutting experiments.
CONCLUSION
The shift from a social crop insurance program with ad-hoc funding from the
Government of India to a market-based crop insurance program with actuarially sound
premium rates and product design is a major step forward. The improved product and
active involvement of private sector insurance markets are expected to lead to
significant benefits for farmers, including faster claims settlement, a more equitable
allocation of subsidies and lower basis risk. For the product to be pro-poor, small and
marginal farmers must purchase the MNAIS product voluntarily, and insurers and
government must experiment with cost-effective ways of increasing outreach16.
14
Ibid. p.VII-VIII
15
Ibid. p.IX-X
16
World Bank, Policy Research Working Paper on ‘ Improving Farmers Access to Agricultural Insurance in India’ by
Olivier Mahul, Niraj Verma and Daniel J. Clarke, 2012, p.18
7
17
op.cit. Report of the Committee to Review the Implementation of Crop Insurance Schemes in India, 2014, p. IX
Annexure-I
Source : India. Department of Agriculture & Cooperation, Report of the Committee to Review the Implementation of
Crop Insurance Schemes in India, 2014, p.40
Table - B
State-wise details of coverage under Weather Based Crop Insurance Scheme
(WBCIS) from Kharif 2007 to Kharif 2013
Source : India. Department of Agriculture & Cooperation, Report of the Committee to Review the Implementation of
Crop Insurance Schemes in India, , 2014, p.44
Annexure-III
Statewise details of coverage under Pilot Coconut Palm Insurance Scheme (CPIS)
till December 2013
(Rs. in lakh)
Sl. State No. of Area (Ha) Sum Total Claims Farmers
No. farmers Insured Premium Paid benefitted
1. Andhra 517 13.33 558.47 2.97 0.00 0
Pradesh
2. Goa 240 625.26 692.50 3.32 1.63 14
3. Karnataka 684 635.66 1,035.52 5.84 1.49 36
4. Kerala 40,330 17,188.20 16,505.84 92.25 193.27 4,338
5. Odisha 91 21.71 43.53 6.85 0.00 0
6. Maharashtra 5,963 3,802.78 3,575.18 25.15 8.24 174
7. Tamil Nadu 2,314 3,308.23 5,680.24 29.28 9.42 129
8. West Bengal 969 342.66 426.83 2.14 0.00 0
Total 51,108 25,937.83 28,518.12 167.79 214.05 4691
Source: India. Department of Agriculture & Cooperation, Annual Report, 2013-14, p.93