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GROWTH OF NAIS: A STUDY OF CROP INSURANCE IN INDIA

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 EISSN 2277-4955

GROWTH OF NAIS: A STUDY OF CROP INSURANCE IN INDIA

Dr. Shrikrishna S. Mahajan,

Department of Commerce & Management, Shivaji University, Kolhapur, ssmahajan_suk@rediffmail.com

Prof. Amol H. Bobade,

D.A.V. Velankar College of Commerce, Solapur, bobadeamol@rediffmail.com

ABSTRACT
Indian agriculture dependent on monsoon which is always flexible. It leads to operating risk in cultivation of
different crops. Natural calamities may affect on the yield from agriculture sector. To cover the risk which may
occur in future, there is need to some provision and crop insurance is only mechanism available to safeguard
against production risk in agriculture. For fulfilling this need thep Government of India has made experiments &
efforts by introducing various schemes of crop insurance. Since the year 1999-2000, National Agricultural
Insurance Scheme has been launched by National Agricultural Insurance Scheme Corporation of India. This
research paper has made attempt to study the growth and development of National Agricultural Insurance Scheme
and to examine the important features and performance of NAIS.

Key words: Crop Insurance, Agriculture, NAIS, India.

INTRODUCTION: (1985-1999), Experimental Crop Insurance Scheme

Agriculture played vital role in economic
development of India. At present 70 per cent
population of the country dependent on agriculture
but Indian agriculture dependent on monsoon which
is always flexible. It leads to operating risk in
cultivation of different crops. Natural calamities may
affect on the yield from agriculture sector. To cover
the risk which may occur in future, there is need to
some provision and crop insurance is only
mechanism available to safeguard against production
risk in agriculture. For fulfilling this need the
Government of India has made experiments and
efforts by introducing various schemes of crop
insurance such as First individual approach scheme
(1972-1978), Pilot Crop Insurance Scheme (1979-
1984), Comprehensive Crop Insurance Scheme
(1997-1998), Pilot Scheme on Seed Crop Insurance
And National Agricultural Insurance Scheme (1999-
2000 onwards).
THE STATEMENT OF THE PROBLEM:
The Government of India has introduced the
innovative schemes on crop insurance but these
schemes are failed to meet the expected results due to
the low policy implications, unawareness of farmers,
unsatisfied performance of implementing agencies as
well as limited State and central Government.
National Agriculture insurance scheme has been
introduced by Government of India from Rabi season
1999-2000. But it also failed to influence the farmers
as well as work effectively. According to Jennifer Ifft
in her paper entitled ‘Government v/s Weather the

BAUDDHIK VOLUME-3, NO.-1, JAN-APRIL-2012 1


True Story of Crop Insurance in India’
Comprehensive Crop Insurance Scheme has been
replaced National Agricultural Insurance Scheme.
The NAIS is considered to be an improvement over
the CCIS but it has simply replaced one flawed
scheme by another slightly less flawed one. It is the
need of the moment to evaluate the performance of
National Agricultural Crop Insurance Scheme. Hence
in this paper an attempt has been made to focus on
the analysis of performance of National Agricultural
Insurance Scheme in India.
THE SIGNIFICANCE OF THE STUDY:
The present study is significant for potential
beneficiaries from those villages which have not
much awareness of crop insurance scheme. It will
also helpful to small and marginal farmers to protect
their interest in crop against natural calamities and
getting benefits under this scheme. It will also assist
the insurers, bankers & policy makers for policy
prescription & policy intervention.
OBJECTIVES OF THE STUDY:
1. To study the growth and development of
National Agricultural Insurance Scheme.
2. To examine the important features, trend
and performance of National Agricultural
Insurance Scheme.
3. To suggest the possible remedies to make
this scheme more effective.
SCOPE AND LIMITATIONS OF THE STUDY:-
The present study confined to coverage of National
Agricultural Insurance Scheme in India from Rabi
1999-2000 to Rabi 2008-2009. The topical scope of
this study is limited to growth & performance of
BAUDDHIK VOLUME-3, NO.-1, JAN-APRIL-2012
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National Agricultural Insurance Scheme. This study
is depending mainly on secondary data.
METHODOLOGY:
The case study method has been used in this paper.
The paper has made an attempt to analyse the growth
& performance of National Agricultural Insurance
Scheme of 19 seasons from Rabi 1999-2000 to 2008-
2009. It is mainly dependent on secondary data but
supplemented by the discussion with some officials
of banks, insurance companies, academicians & some
farmers.
REVIEW OF LITERATURE:
The crop insurance should link with credit on a
compulsory basis. Dandekar (1976) found that the
crop insurance scheme offered insurance against a
chance occurrence. The chance phenomenon
underlying a crop insurance scheme is the
fluctuations in the output of from one year to another
or from one crop season to another. According to
Shivrami Reddy & Narasaiah (1998), crop insurance
is needful to the farmers & it provides financial
support to the farmers in the event of crop failure &
make them credit worthy for the next crop season.
They described the operation of Comprehensive Crop
Insurance Scheme in Andhra Pradesh. The national
Agricultural Insurance Scheme introduced since
Kharif 2000, it appears very slow in taking roots in
the southern states. (The Insurance Times, 2001). G.
Venketesh (2008) stated that, in USA, crop insurance
is clearly identified as risk management option and
Multiple Peril Crop Insurance (MPCI) policies are
available for most insured crops. According to R. K.
Ray (1987), the level of education of among the
farmers and their awareness is important to make
crop insurance effective. Insurance should be limited
2

to crop yield and not directly cover the income from
such yield. The insurance should be limited to a few
major crops and to selected areas but with sufficient
spread of risk and then gradually extended to other
crops and areas. Insurance should cover all major
natural hazards. The crop insurance scheme shall be
made viable by spreading the risk horizontally by
enrolling all the farmers in a locality in the scheme.
The scheme should attractive; credit linked, and
should have support facilities like a reinsurance
package (Manojkumar K., Shreekumar B.,
Ajitkumar. G. S., 2003). S. S. Raju & Ramesh Chand
(2008) opined that agriculture production and farm
income in India involves several risks. Crop
insurance is the only mechanism available to
safeguard against production risk. If the crop
insurance program is to be made an important tool in
agricultural risk management, the present level of
coverage will have to be improved at least by 3-4
folds.
The above review of literature reveals that there was
need of the present study in changing scenario of
agriculture insurance.
EVOLUTION OF AGRICULTURAL
INSURANCE IN INDIA:-
The question of introduction of a crop insurance
scheme was taken up for examination soon after the
independence in 1947. An assurance given in this
regards by the Ministry of Food & Agriculture in the
central legislature to introduce crop and cattle
insurance in the country, a special study was
commissioned in 1947-48. In 1965, the government
introduced a crop insurance bill and circulated a
model scheme of crop insurance on compulsory basis
to constituent state government for their views.
BAUDDHIK VOLUME-3, NO.-1, JAN-APRIL-2012
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However, none of the states was in favor of the
scheme because of very high financial obligations.
The first ever crop insurance scheme by an insurance
company was introduced in the country in 1972 by
the General Insurance Department of Life Insurance
Corporation of India on an experimental basis. The
scheme covered H-4 Cotton in selected centers in
Gujrat state. It continued up to 1978-79 and covered
only 3110 farmers for a premium of Rs.4.54 lakh
against claims of Rs.37.88 lakh. The General
Insurance Corporation of India introduced Pilot Crop
Insurance Scheme in 1979. The scheme was
implemented in 12 states till 1984-85 and covered
6.23 lakh farmers for a premium of Rs. 195.01 lakh
against claims of Rs.155.68 lakh in the entire period.
A crop insurance scheme linking institutional credit
(crop loan based on area approach) was suggested by
Prof. Dandekar in 1976 and this scheme called as
Comprehensive Crop Insurance Scheme, which was
implemented from Kharif 1999 and it covered 763
lakh farmers for a premium of rupees 404 crore
against claims of Rs.2303 crore. During 1997
Experimental Crop Insurance Scheme was introduced
in 14 districts of 5 states. The scheme covered 4.78
lakh farmers for a sum insured of Rs. 1.72 crore and
the claims paid were Rs. 39.78 crore against a
premium of Rs. 2.86 crore.
NATIONAL AGRICULTURAL INSURANCE
SCHEME:
The government of India in co-ordination with
General Insurance Corporation of India (GIC) had
introduced scheme called the National Agricultural
Insurance Scheme which commenced from Rabi
season 1999-2000. Agricultural Insurance Company
of India Ltd. (AICIL) which was incorporated in
3
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December 2002 and started operating from April b) Scheme is available both borrower and non-
2003 took over the implementation of the NAIS. borrower farmers.
Salient Features of the NAIS: c) The scheme is operating area approach for
a) Crops are covered under scheme are; all widespread calamities and individual
food grains, oilseeds, & annual approach for localized calamities such as
horticultural/commercial crops which are hailstorm, landslide, cyclone, flood etc.
sugarcane, potato, cotton, ginger, onion, d) The premium rates applicable on the sum
turmeric, chilies, coriander, cumin, jute, insured are:
tapioca, banana, & pineapple etc.
Season Crops Premium Rates
1) Kharif Bajara & Oilseeds 3.5% of sum insured or actuarial rate whichever is less.
Other Kharif crops 2.5% of sum insured or actuarial rate whichever is less.
2) Rabi wheat 1.5% of sum insured or actuarial rate whichever is less.
Other Rabi crops 2% of sum insured or actuarial rate whichever is less.
3)Khaif + Rabi Annual Commercial/ Actuarial rate.
Horticultural crops

e) Small and marginal farmers entitled to phased out and at present only 10 per cent
subsidy of 50 percent of premium charged to subsidy is available to small and marginal
be shared equally between central farmers.
Government and State Government. The f) Indemnity shall be calculated as per the
subsidy on premium has gradually been following formula:

Shortfall in yield X sum insured for the farmers

Threshold Yield
Shortfall in yield = Threshold yield – Actual yield for the defined area

ANALYSIS & INTERPRETATION: Scheme of 19 seasons from Rabi 1999-2000 to 2008-

The paper has made an attempt to analyze the growth 2009. It has also studied the growth and development
& performance of National Agricultural Insurance of NIAS.

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Table 1
Season-wise Growth NAIS from Rabi 1999-2000 to Rabi 2008-2009

Sun
Assure Premiu
Farmers Area d m Claims
Covered Covered (Figur (Figur (Figur
(Figures in (Figures es in es in es in
Season Lakh) % in Lakh) % Crore) % Crore) % Crore) %
Rabi
1999-2000 5.8 7.8 356 5 7.7

2000-01 20.9 260.34 31.1 298.72 1603 350.28 28 460.00 59.5 672.73

2001-02 19.6 -6.22 31.5 1.29 1498 -6.55 30 7.14 64.65 8.66

2002-03 23.3 18.88 40.4 28.25 1838 22.70 39 30.00 188.5 191.57

2003-04 44.2 89.70 64.7 60.15 3049 65.89 64 64.10 497 163.66

2004-05 35.3 -20.14 53.4 -17.47 3774 23.78 76 18.75 160.6 -67.69

2005-06 40.5 14.73 72.2 35.21 5070 34.34 105 38.16 338.4 110.71

2006-07 49.8 22.96 76.32 5.71 6542 29.03 143 36.19 516 52.48

2007-08 50.44 1.29 73.88 -3.20 7467 14.14 159 11.19 809.5 56.88

2008-09 61.7 22.32 88.65 19.99 11013 47.49 290 82.39 1237.5 52.87

Kharif

2000 84.1 132.2 6309 207 1222.5

2001 87 3.45 128.9 -2.50 7502 18.90 262 26.57 493.5 -59.63

2002 97.7 12.30 155.3 20.48 9432 25.73 325 24.05 1824.3 269.67

2003 79.7 -18.42 123.6 -20.41 8114 -13.97 283 -12.92 652.7 -64.22

2004 126.9 59.22 242.7 96.36 13170 62.31 459 62.19 1038.2 59.06

2005 126.7 -0.16 205.3 -15.41 13518 2.64 450 -1.96 1060 2.10

2006 129.3 2.05 196.73 -4.17 14759 9.18 467 3.78 1774.9 67.44

2007 134 3.63 207.55 5.50 17008 15.24 524 12.21 913.4 -48.54

2008 129.84 -3.10 176.93 -14.75 15658 -7.94 512 -2.29 2371.6 159.65

Kharf +
Rabi

1999-2000 5.8 7.8 356 5 7.7

2289.3 16549.
2000-01 105 1710.34 163.3 1993.59 8506 3 235 4600.00 1282 35

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2001-02 106.6 1.52 160.4 -1.78 9000 5.81 292 24.26 558.15 -56.46

2002-03 120 12.57 195.7 22.01 11270 25.22 364 24.66 2012.8 260.62

2003-04 123.9 3.25 188.3 -3.78 11163 -0.95 347 -4.67 1149.7 -42.88

2004-05 162.2 30.91 296.1 57.25 16944 51.79 535 54.18 1198.8 4.27

2005-06 167.1 3.02 277.5 -6.28 18588 9.70 555 3.74 1398.4 16.65

2006-07 179.12 7.19 273.05 -1.60 21301 14.60 610 9.91 2290.9 63.82

2007-08 184.43 2.96 281.43 3.07 24475 14.90 683 11.97 1722.9 -24.79

2008-09 191.54 3.86 265.58 -5.63 26671 8.97 802 17.42 3609.1 109.48

CGR 41.87% 37.73% 60.71% 88.4% 69.78%

(Source: Based on the data collected from AIC.)

Note: Annual growth has been analyzed in percentage.

Table 1 shows the percentage growth of Rabi and
Kharif season of National Agricultural Insurance
scheme implemented in India since Rabi 1999-2000
to 2008-2009. At initial stage only 9 states/ UT’s
were participated in this scheme and covered only 5.8
lakh farmers for a premium of Rs.5 crore against
claims of Rs.7.7 crore. After Rabi 1999-2000 the
coverage under NAIS increased widely but we
compare the figures in Rabi seasons against Kharif, it
shows coverage under Kharif season has been higher
than Rabi. Reason behind it that, in Kharif season
farmers go for insurance during 1st April to 30th
June. In states like Maharashtra or Andra Pradesh it
is a period of low rainfall hence there is need to
protect their crops so farmers opted for crop
insurance in Kharif season. The figures show that
there is not satisfactory growth of NAIS after 2005-
06. Because at initial stage this scheme is on
compulsory basis for non-loaner farmers now it made
optional for both non-loaner and loaner farmers.
During the period from 1999-2000 to 2008-09 NAIS
covered 1345.69 lakh farmers for a premium of
Rs.4428 crore against claims of Rs.15230.5 crore.
Average compound growth of farmers covered in
entire period is 41.87%. Growth of area covered is
37.74%. Average growth of farmers benefited is
58.12% and average compound growth of claims
admitted is 69.78 per cent. In Rabi 1999-2000 only 9
states were participated in NAIS. But since 2005-06,
the scheme is being implemented in 26 states which
is shown in Table 2. It also reveals that 1345.69
farmers were insured in 26 states under this scheme,
out of this, Maharashtra stood first with 19.03 per
cent and Andaman & Nikobar Island last with only 1
thousand farmers. Madhya Pradesh 20.26 was spotted
first rank in area covered and Maharashtra19.03 per
cent, Andra Pradesh 15.96 per cent, Rajasthan 10.17
per cent and Utter Pradesh 11.19 per cent. These six
states accounted 76.61 per cent area out of 2109.16
lakh hectare. The claims of Rs. 15230.5 crore were
admitted out of which, Andhra Pradesh contributes
17.07 %, Maharashtra 9.73 %, Gujarat 19.97 %,
Karnataka 9.23 % & Tamil Nadu 7.69 %. Thus these
five states accounted for 56 per cent of total claims
admitted. According to table Maharashtra, Andra

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Pradesh, Gujarat, Utter Pradesh, Karnataka, and NAIS as compare to other states.
Rajasthan are dominating by implementation of

Table 2

State-wise Performance of NAIS from Rabi 1999-2000 to Rabi 2008-2009

Farme Farmers
rs Area Sun Benefit
Cover Cover Assure Premiu Claim ed
ed ed d m s
(Figur (Figur (Figur (Figure (Figur (Figure
es in es in es in s in es in s in
State Lakhs) % Lakhs) % Crore) % Crore) % Crore) % Crore) %
Andhra
Pradesh 189.2 15.96 297.4 14.10 29294 19.76 833.4 18.69 2600.4 17.07 39.6 10.98

Assam 1.4 0.12 1 0.05 155 0.10 40 0.90 5 0.03 0.2 0.06

A& N Islands 0.01 0.00 0.01 0.00 1.6 0.00 0.03 0.00 0.006 0.00 0.0006 0.00

Bihar 37.3 3.15 45.3 2.15 6227.4 4.20 141 3.16 1045.8 6.87 12.7 3.52

Chhatisgarh 57.6 4.86 119.4 5.66 4225.8 2.85 109.3 2.45 242.8 1.59 12.3 3.41

Goa 0.06 0.01 0.1 0.00 2.3 0.00 0.04 0.00 0.02 0.00 0.007 0.00

Gujarat 92 7.76 217.4 10.31 18501.9 12.48 767.7 17.22 3041.1 19.97 31.3 8.68

Harayana 5.3 0.45 6 0.28 537.3 0.36 14.7 0.33 31.9 0.21 1.1 0.30

HimachalPrad
esh 1.7 0.14 1.3 0.06 122.6 0.08 2.6 0.06 10.5 0.07 0.8 0.22

Jammu
&Kashmir 0.2 0.02 0.3 0.01 18.9 0.01 0.4 0.01 0.1 0.00 0.01 0.00

Jharkhand 37.5 3.16 17.3 0.82 1160.3 0.78 29.2 0.65 165.4 1.09 9.1 2.52

Karnataka 91.8 7.74 155.1 7.35 10377.9 7.00 330.8 7.42 1406.1 9.23 38.5 10.67
Kerala 3.2 0.27 2.7 0.13 436.3 0.29 9.2 0.21 21.9 0.14 0.7 0.19

Madhya
Pradesh 1.6 0.13 427.2 20.26 16963.2 11.44 501.9 11.26 876.4 5.75 33.6 9.31

Maharashtra 225.6 19.03 211.2 10.01 12478 8.42 475.5 10.66 1481.7 9.73 72.5 20.09

Meghalaya 0.2 0.02 0.2 0.01 23 0.02 1.3 0.03 0.3 0.00 0.01 0.00

Orrisa 91 7.68 93 4.41 9257 6.24 230.7 5.17 489.4 3.21 16.4 4.55
Puducherry 0.2 0.02 0.4 0.02 50 0.03 1 0.02 2.3 0.02 0.05 0.01

Rajastan 120.5 10.17 258.8 12.27 12760.6 8.61 353.4 7.93 1171.1 7.69 30.1 8.34

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Sikkim 0.01 0.00 0.01 0.00 2 0.00 0.02 0.00 0.01 0.00 0.0009 0.00

Tamil Nadu 23.9 2.02 34.4 1.63 4686.7 3.16 104 2.33 1111.7 7.30 11.4 3.16

Tripura 0.2 0.02 0.09 0.00 19.2 0.01 0.6 0.01 0.6 0.00 0.03 0.01

Utter Pradesh 132.6 11.19 182.4 8.65 14698.7 9.91 299.4 6.72 687.8 4.52 32 8.87

Utterkhand 1.4 0.12 1.6 0.08 264 0.18 0.5 0.01 19.8 0.13 0.5 0.14

West Bengal 70.9 5.98 36.3 1.72 6014.8 4.06 211.9 4.75 818.4 5.37 17.9 4.96

100.0 100.0 100.0 100.0 100.0 100.0

Total 1345.7 0 2109.2 0 148274 0 4428 0 15230.5 0 361.4 0

(Source: Based on the data collected from AIC.)

Note: Annual growth has been analyzed in percentage.

Table 3 indicates the claim premium ratio of NAIS are more than 3.5 times of premium received. Hence
from Rabi 1999-2000 to 2008-2009. Total claims there is huge loss in this scheme, even without
admitted under this scheme for above period considering the administrative cost. In 2000-01 &
amounted to rupees 151230.45 crore. And premium 2002-03 the ratio are 5.46 & 5.53, it means the claims
paid under this scheme amounted to rupees 4428 were more than 5 times of premium received for
crore. The claims premium ratio of total claims and above period.
premium is 3.44. It clearly indicates that claims paid
Table 3
Claims Premium ratio of NAIS From Rabi1999-2000 to 2008-2009
Year Claims Premium Claims/
premium
1999-2000 7.7 5 1.54
2000-01 1282 235 5.46
2001-02 558.15 292 1.91
2002-03 2012.8 364 5.53
2003-04 1149.7 347 3.31
2004-05 1198.8 535 2.24
2005-06 1398.4 555 2.52
2006-07 2290.9 610 3.76
2007-08 1722.9 683 2.52
2008-09 3609.1 802 4.50
Total 15230.45 4428 3.44
Source: Based on the data collected from AIC.

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Table 4
Percentage of claims reported to sum assured under NAIS From Rabi1999-2000 to 2008-2009

Year Claims Sum Assured Claims/

Sum Assured (%)

1999-2000 7.70 356 2.16

2000-01 1282.00 8506 15.07

2001-02 558.15 9000 6.20

2002-03 2012.80 11270 17.86

2003-04 1149.70 11163 10.30

2004-05 1198.80 16944 7.08

2005-06 1398.40 18588 7.52

2006-07 2290.90 21301 10.75

2007-08 1722.90 24475 7.04

2008-09 3609.10 26671 13.53

Total 15230.45 148278 10.27

Source: Based on the data collected from AIC.

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This percentage ranges from 2.16 per cent to 17.86

Table 4 shows the percentage of claims against sum
assured under NAIS from Rabi 1999-2000 to 2008-
2009. Total sum insured are Rs.148278 crore out of
it, claims admitted of Rs.15230.45 crore, 10.27 per
cent claims have been admitted against sum assured.
per cent. But if calculate the premium / sum assured
percentage which is 939croer (premium)/ 148278
crore (sum assured)* 100 = 0.63 per cent. This
indicates a loss of 9.63 per cent of the assured value
of output.

Table 5
Percentage of subsidy to premium under NAIS From Rabi1999-2000 to 2008-2009

Year Subsidy Premium Subsidy/ Premium

%

1999-2000 1.70 5 34.00

2000-01 55.60 235 23.66

2001-02 55.40 292 18.97

2002-03 51.60 364 14.18

2003-04 30.60 347 8.82

2004-05 24.20 535 4.52

2005-06 25.60 555 4.61

2006-07 34.60 610 5.67

2007-08 41.40 683 6.06

2008-09 103.04 802 12.85

Total
423.74 4428 9.57
Source: Based on the data collected from AIC.

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Table 5 reveals the percentage of subsidy to premium 4.52 per cent to 34 percent. Percentage of subsidy
under NAIS from Rabi 1999-2000 to 2008-2009. The decreasing every year except in 2008-09. It means
percentage of subsidy against premium ranges from every year the benefit of subsidy is reduced.
Source: Based on the data collected from
AIC.
Table 6
Percentage of Farmers benefited to farmers Table 6 shows the percentage of farmers benefited
covered under NAIS From Rabi1999-2000 to against farmers covered under NAIS from Rabi 1999-
2008-2009 2000 to 2008-2009. The percentage of farmers
Year Farmers Farmers Farmers benefited against farmers covered ranges from 10.34
Covered Benefited Benefited/Farmers per cent to 43.58 per cent. It indicates good numbers
Covered (%) of farmers are benefited under NAIS. In 2002-03,
43.58 per cent farmers are benefited which is highest
1999- percentage of above period.
2000 5.80 0.60 10.34

2000- FINDINGS:

01 105.00 41.70 39.71 1. Farmers face the problem of droughts, pests,

diseases, and other natural calamities when
2001-
they require to manage the risk where
02 106.60 22.00 20.64
agriculture insurance is a catalytic tool.
2002- 2. The adversity of weather is the important
03 120.00 52.30 43.58 enemy of farmers in India, weather

2003- conditions are not in hand of the farmers,

04 123.90 38.15 30.79 and they can’t control them. Hence crop
insurance is a risk management tool that
2004-
farmers can use in today’s agricultural
05 162.20 34.60 21.33
world.
2005- 3. Since 1972, government of India tries to
06 167.10 36.50 21.84 protect their farmers by implementing
various schemes of crop insurance. Hence
2006-
farmers have been option of crop insurance
07 179.12 45.25 25.26
scheme but every crop insurance scheme has
2007-
been flawed.
08 184.43 31.70 17.19
4. Commercial banks are not performing their
2008- designed roles because of which the entire
09 191.54 58.60 30.59 process of crop insurance is suffering. Banks
Total 1345.69 361.40 are not prompt to collect, compile & submit
26.86

BAUDDHIK VOLUME-3, NO.-1, JAN-APRIL-2012 11


the premium amount to lead banks on
scheduled time, which caused delay in
compiling list of insured farmers.
5. Monthly, co-ordination meetings of
government of department are not being
held properly which is mandatory at district
level.
6. Co-operative banks are performing well as
comparison with RRB’s and commercial
banks. Inter-department co-ordination is
very poor; this scheme is multi-departmental
approach which needs a strong co-ordination
amongst various departments.
7. They need to compliment on each other
work & if there is lack of co-ordination
between the entire processes gets hampered.
(M. K. Singh, Coordinator, Economic
Justice Campaign).
8. The commercial banks and co-operative
banks played vital role for implementing the
NAIS especially loanee farmers & the
distributing the amount of indemnity to the
affected farmers.
9. The lack of enthusiasm on the part of the
banks to conduct the business in fact they
are paid service charges.
10. The Bankers was direct beneficiaries of crop
insurance in case of loanee farmers because
indemnity payment of loanee farmer’s was
directly credited to farmer’s loan account or
bank account.
11. Even after the 10 rears of launching the
program there is lack of awareness of
farmers about scheme. Only loanee farmers
and Kisan Credit Card holders covered by
default but non-loanee farmers are not much
aware about scheme, and now NAIS is
BAUDDHIK VOLUME-3, NO.-1, JAN-APRIL-2012
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optional for both loanee and non-loanee
farmers.
12. Bankers and agricultural officers failed to
convince the farmers for crop insurance.
13. The deficit between premium paid and
insurance claims amounted to Rs.10802.5
crore from Rabi 1999-2000 to Rabi 2008-09.
14. Only 5 out of 26 states have earned premium
higher than claim, which is also negligible.
15. The premium rates of NAIS are varying
from 1.5 to 3.5 from crop to crop. Premium
rates era higher than CCIS and other
previous scheme but this premium are not
still enough to cover claims.
16. Many farmers are unaware of crop
insurance due to illiteracy. Hence there is
need of counseling camps at local level to
increase awareness of farmers. They need to
acquire the detail knowledge about crop
insurance scheme.
17. Crop insurance in India is a multi-agency
program which includes the state
government, central government, National
Bank for Agricultural and Rural
Development (NABARD), General
Insurance Corporation (GIC), cooperative
banks, commercial banks have a crucial role
in development of crop insurance program.
18. The main problem is that all crop are not
covered under NAIS are subjected to Crop
Cutting Experiments, other is that delay in
the timely availability of data as many
departments and layers of administration are
involved. There is lag between crop cutting
experiments and release of official figures.
SUGGESTIONS:
12

1. There is need of an agent at local level for
helping the farmers for claims assessment
and receiving the indemnity payment.
2. Gram Panchayat should be
accountable for admitting claim of insurance
and disbursement of claims to farmers. It
can act as an authorized institution to
presenting the scheme. It also declared
disaster and assess losses.
3. Farmers should pay indemnity as early as
possible like within 2 to 3 month from loss.
Hence they can make preparation for their
next crop season. Hence there is need to
proper co-ordination between bankers and
implementing agency.
4. There is need of interaction between all of
the agencies involved in this scheme.
5. NAIS should seek to have a alternative way
of assessing yield. If the damage done to the
crop is extensive, dependable procedure for
concurrent monitoring and payment have to
be sought. Interviews with experts /
knowledgeable person may help in assessing
the damage to a crop at difference points.
Other indicator can also be used and more
than one agency could be needed to involve
in this process.
6. There is also need to look in to the unit of
indemnity payment. Under NAIS indemnity
is calculated as the difference between the
area yield and the threshold yield multiplied
by the liability. This is an acceptable
procedure. The main thing is
determination of area. Presently the yield
estimation is determined at Mandal/ Block
level. NAIS was expected to move towards
Panchyat/village level within three years
BAUDDHIK VOLUME-3, NO.-1, JAN-APRIL-2012
EISSN 2277-4955
from commencement, yet NAIS failed to
move.
made CONCLUSION:
Since 1972 so many schemes of crop insurance have
been launched in the country but they failed to
influence the farmers and share the risk of farmers.
Now days some farmers are committing suicide due
to lack of risk management. And they are selecting
the option of suicide rather than crop insurance.
Hence there is need of serious concern of this
problem of sharing the risk of farmers and protecting
their crops against adverse weather and natural
calamities. On this background, NAIS has been
introduced since Rabi 1999-2000. There are so many
expectations from NAIS but it also failed to meet
farmer’s expectations.
Government of India constituted a joint group to
overcome shortcomings of NAIS. The group made
in-depth study and made important recommendation
like reduction in the unit area of insurance to gram
Panchayat for major crops, improving the basis of
calculation of threshold yield, higher indemnity level
of 80 per cent and 90 per cent coverage of pre-
sowing / planting risk and post-harvest losses.
Personal accident insurance cover and package
insurance policy etc. based on the recommendation of
joint group and views/comments of various stake-
holders, proposal of Modified National Agricultural
Insurance Scheme (MNAIS) was prepared and sent to
the Planning Commission. Planning Commission was
that decided that the MNAIS will be implemented on
non-plan side. But all these recommendations are
remain on the paper and once again government
failed to improve crop insurance program.
13
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AIC started operation from 2003 took over the 3. Jennifer Ifft(2001), “Government V/S
implementation of NAIS has performed creditability Weather: The True Story of Crop Insurance
in this area. It had also shown dynamism with in India”, Centre for Civil Society,
experimenting with new methods and approaches. Internship Paper no. 10.
However several improvements are needed both at 4. Lunawat, M.L. (1998), “Risk Management
the organizational and the functioning level. Two in Agricultural Insurance”, The Insurance
main important things are needed one is that proper Times, Vol. No. XVIII no. 8, August, 1998,
coordination between at all stakeholders at state pp-3-8.
level, there is need to active state level advisory 5. Manojkumar B. & Ajitkumar G. S. (2003),
body? Another important thing is that the presence of “Crop Insurance Scheme: A Case Study of
AIC at district level. The person recruiting at district Banana Farmers in Wayanand District”,
level should be carefully selected and properly Discussion Paper no. 54, Kerala Researh
trained who can play an important role for Program on Local Level development,
coordinating at district level. Centre for Development Studies,
Thiruananthpuram.
NAIS is showing deficit on the ground that the 6. Raju, S.S. & Chand, Ramesh (2007),
premium received is always less than claims under “Progress and Problems in Agricultural
NAIS. The premium rates are needed to cover pure Insurance”, Economic and Political Weekly,
risk, administrative cost and reasonable returns. May 26.
Private sector insurer may also involve in crop 7. Raju, S.S. & Chand, Ramesh (2008),
insurance to broad coverage of farmers as well as “Agricultural Insurance in India Problems
improving viability in crop insurance. Insurance and Prospects”, National Centre for
product at village level should be simple in design Agricultural and Policy Research, New
presenting so farmers easily understand. Through Delhi, March.
SHGs of farmers this scheme may be made cost 8. Raju, S.S. & Chand, Ramesh (2008), “A
effective at grass-root level. Hence proper knowledge Study of the Performance of National
and implementation of crop insurance scheme can Agricultural Insurance Scheme and
increase the food grain production in India and can Suggestions to make it more effective”,
reduce the risk of crop losses. Agricultural Economics Research Review,
Volume-21, January- June, pp. 11-19.
REFERENCES:- 9. Ray, P.K.(1981), “Crop insurance in India:
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India”, Economic and Political Weekly, India, Dept. of Economics, Sardar patel
June 26. University, Gujrat.
2. Directorate of Economics and Statistics 10. Reddy, Sivaram (1998), Dr. P.V. Narasaih,
Department, Government of Karnataka, “Comprehensive Crop Insurance Scheme
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the Insurance Times, Vol. No. XVIII no. 7,

July, 1998, pp- 3-6.
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Insurance in India Scope for Improvement”,
Economic and Political Weekly, November

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