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Crop Insurance in India 1. Indian Agriculture: Dependence on Rainfall Indian agriculture is heavily dependent on rainfall which largely occurs duringmonsoon season of about two and half months. The abnormal behaviour of monsoon maycause natural disasters such as scarcity conditions or drought, floods, cyclones, etc. Nearlytwo thirds of the cropped acreage is vulnerable to drought in different degrees. On an average12 million hectares of crop area is affected annually by these calamities severely impactingthe yields and total agricultural production (1).About two thirds of the cultivated area has no irrigation. Even large part of irrigatedarea does not get adequate water supply for intensive cropping (double cropping). In rainfedareas sowing of kharif crops commences with the onset of monsoons and the delay in theonset of monsoons delays sowing with its adverse impact on yield. Further the growth of crops and realization of output are determined by the quantum of rainfall and its distributionduring the monsoon season. Even sowing of rabi crops is determined by the soil moistureretained from the rains especially during the later part of the monsoon season. Rainfallpattern affects the irrigated crops also. Rainfall during flowering period washes the pollensadversely affecting the crop yield. Excess rainfall may adversely affect the yield realization.Heavy rains may submerge the growing crops in the early stages and may cause lodging inthe later stages of crop growth. In the catchments heavy rains may cause floods in the plains.The floods disrupt the sowing schedule and damage the standing crops resulting in reducedyield or even total loss of crops and farm income in addition to loss of property. Otherweather variables that affect yield include sunlight, temperature, wind, hails. In fact sincetime immemorial weather has been the major adversary that the farmers are not able tocontrol. It has been established that 50 per cent of the variations in crop yield is due tovariations in rainfall (2).In any climatic zone crop yield among the farms varies with the soil, topography,tillage operations and use of four complementary inputs, namely, seed, fertilizer, pesticidesand irrigation (soil moisture). Seed is the index of productivity which may be realized withthe proper tillage practices, irrigation and fertilizer use. Pesticides use avoids the loss in yieldbecause of pests and diseases. Not only quantum of these inputs but also their quality, andtimings and method of use affect the yield realization. These four dimensions of complementary inputs vary for the individual farms in a year and for a farm over the years. In
INDIA Research and Publications W.P. No. 2010-06-01 Page No. 4 other words given the soil and topography two sets of factors that effect yield on farms areclimatic and managerial. Managerial factors are in the control of farmers climatic factors arenot.The loss of crop yield affects the farmer and farming in more than one ways. Theirinputs including labour get lost. The low yield of major crops means reduced income anddifficulty in arranging the necessities of life as well as inputs for the next season. Therepayment of outstanding loans becomes irregular some times resulting in default. Thoughconversion of loans or their rescheduling helps the farmers for eligibility for fresh loans fromformal sources it may not solve their liquidity problems completely. In some cases thefarmers are compelled to divest and dispose off some assets created over past years. Sometimes, they have to resort to costly borrowing from informal sources.The capacity of agriculture to hedge itself from vagaries of nature is consideredcrucial for development and growth of the sector in particular and economy in general. Thenatural calamities can slow the pace and process of development by reducing the foodsupplies and raw materials in the short run. Successive failure of crops results in indebtednessof farmers with its adverse impact on farming and farm economy and consequently theeconomy in general. 2. Risk and Uncertainty in Agriculture Uncertainty refers to an event the outcome of which is not certain i.e. the outcomemay be one of the many possible outcomes. As such it can not be measured. But certainprobability may be attached to individual outcome. Risk on the other hand refers to theimpact of the uncertain outcome on the quantity or value of some economic variable. Thevalue of the economic variable may be on either side of the mean value. Repeated eventswould result different outcomes having a range of values. Thus risk refers to the variations invalue of an economic variable resulting from the influence of an uncertain event. Since thevariations in the value are measurable risk can be measured.Agricultural production is an outcome of biological activity which is highly sensitiveto changes in weather. Important weather variables such as temperature, humidity, rainfall,wind etc. influence the biological process directly or indirectly. For instance, low soilmoisture due to poor precipitation in the pre-sowing period adversely affects seedgermination resulting in reduced plant population. The poor precipitation during growthperiod results in stunted plant growth. Heavy rainfall during early growth period causes
In business risk is treated as a cost. All these result in partial loss in yield and sometimescomplete crop failure and hence reduced income to farmers. deviations in theweather variables from the normal adversely affect the crop yields and hence production andincome on individual farms. The cost of this risk management alternative is the cost of preventive pest control. For instance. They opt for assured though low income enterprises. These are discussed under the following heads. It. b. For instance.e. implies minimization of income loss either by reducingvariations in output or ensuring certain minimum price or guaranteeing certain level of income.Since. As if all this is not enough the sword of uncertain agricultural pricesalways hangs on the farmers’ fate. however.risk of loss in crop yield due to pest attack could be prevented by following preventive pestcontrol. therefore. a. can be reduced or minimized but at a certain cost. c. The ways devised to do so are referredto as risk management alternatives.Laggards always try to avoid risk. wind and cyclones damage the standing crops bylodging and uprooting especially the perennials (trees and shrubs). It is a process of appraising and reducing risk. As variations in weather are more a regular phenomenon cropyields are not stable.page5 submersion of plants. can be managed i. In other words. risk is associated with the activity it cannot be eliminated so long the activity is carriedout. Similarly hailstorms. Sharing Risk . As suchrisk (variations) may be measured in terms of standard deviation or coefficient of variationsfor yield. These variations in income are referred to as risk.Risk management. As a consequence farm incomes fluctuate violently fromyear to year. Preventing Risk Many a time some risks could be prevented by taking advance action. Once in the business one has to bear this cost. The variations in income dueto changes in yield are production risk and due to changes in price marketing risk. prices and income. Avoiding Risk Some of the production risks can simply be avoided. High humidity may causeoutbreak of pests and diseases.. eliminating morerisky enterprises would minimize risk but at the cost of decreased total production (returns).
As net returns fromcombination of different enterprises/crops would be less than the net returns from the mostpaying crop (pure) the difference between the two would be the cost of this alternative. The production risks are shared between thelandlord and the tenant in the ratio they share some inputs and the output. No. 6 d.P. Spreading Risk Risk may be spread over a number of enterprises with varying degree of risk and of course with varying level of net income. . diversified farming or even mixed cropping. Cropinsurance is another example of transferring production risk to another entity i. The cost of thisalternative to the landowner would be equal to the difference between the net income tenantearns less the cash rent he would have paid for rental lease. The idea isnot to put all eggs in one basket. f. Diversificationcould be in terms of mixed farming.e. The cost of this alternative is the difference invalue of output at post harvest/market price less the value realized at the agreed price. For instance. 2010-06-01 Page No. In case the crop prospects are reduced below certain minimum. It guarantees to pay an agreedprice for the produce to be realized in future. Important example of risk sharing is the share lease of land to tenants.This alternative of risk management is quite common in India. IIMA INDIA Research and Publications W. Transferring Risk Risk may be transferred from one entity to another. proportionateindemnity is paid for the expenditure incurred. It would ensure some income realization fromenterprises/crops even in the event of adverse weather conditions etc. e. insurancecompany. This is known as diversification.. marketing risk could be transferred to buyers by way of forward contract. The cost of this alternative is the premiumpaid by the farmer.
Crop insurance is a financial mechanism to minimize the impact of loss in farm income by factoring in a large number of uncertainties which affect the cropyields. It provides a good alternative both to farmers and government. The weather based crop insurance uses weather IIMA INDIA Research and Publications W. Need for Crop Insurance Crop insurance is one alternative to manage risk in yield loss by the farmers. As such it is a risk management alternative where production risk is transferred toanother party at a cost called premium. 2010-06-01 Page No. other weather variables (temperature.Taking Risk Taking risk could be one of the alternatives to manage risk where the managementcost is nil because no attempt is made to reduce risk. etc. namely. In both the .Rainfall insurance is a specific form of weather insurance. It is themechanism to reduce the impact of income loss on the farmer (family and farming). sunlight. therefore. Innovators and early adopters are the two categories of people who alwaysare willing to take risk. 3. can not be over emphasized as it is ahighly risky economic activity because of its dependence on weather conditions.P. In both the cases cultivators pass risk in yield toanother party for a premium. No. flood. As such weather insurance is notyield insurance while crop insurance is.The insurance need for agriculture. pestinfestation. There are two approaches to crop insurance. wind). individualapproach where yield loss on individual farms forms the basis for indemnity payment. They go for high return enterprises exposing themselves to high risk. andhomogeneous area approach where a homogeneous crop area is taken as a unit for assessmentof yield and payment of indemnity. Cropinsurance is a means of protecting farmers against the variations in yield resulting fromuncertainty of practically all natural factors beyond their control such as rainfall (drought orexcess rainfall). (1 & 3). hails. Farmers get on actuariallyfair insurance with swift payments at little administrative costs to the government (5). 7 parameters as proxy for crop yield in compensating the cultivators for deemed crop losses(4). The idea is to plan for maximum returnseven at high risk. To designand implement an appropriate insurance programme for agriculture is therefore very complexand challenging task.
weather.The claims are paid after the loss in yield is ascertained. A special study to work out modalities of crop insurancewas commissioned in 1947-48 following an assurance given by the Ministry of Food andAgriculture to introduce crop and cattle insurance in the country. The sum insured could be the totalexpenditure or a multiple of it or a proportion of expected income from crop(s) for whichpremium is paid. pests. humidity etc. Evolution of Crop Insurance in India The question of introduction of crop insurance in India was taken up for examinationsoon after independence in 1947.cases reliable and dependable yield data forpast 8-10 years are needed for fixing premium on actuarially sound basis. The individual approach seeks to indemnify the farmer tothe full extent of the losses and the premium to be paid by him is . Studiesof historical correlation of crop yield with weather parameters help us in developing weather Page8 thresholds (triggers) beyond which crop starts getting affected adversely. While crop insurance specifically indemnifies the cultivatoragainst shortfall in crop yield. In other words. Payout structuremay be developed using the weather triggers to compensate cultivators to the extent of lossesdeemed to have been suffered by them. weather insurance uses weather parameters as ‘proxy’for crop yields in compensating the cultivators for deemed crop losses due to reduction inyield. The first aspect regardingthe modalities of crop insurance considered was whether it should be on Individual Approach or Homogenous Area Approach. 4. 5. Weather based crop insurance isanother avenue for transferring production risk to the insurer. frost. Homogeneous areaapproach has the advantage of availability of data on yield variations. floods. Actual loss in yield or income is not ascertained foreligibility for claims. The indemnity (claims payable against the paid out of pocket expenses) ispayable on the basis of shortfall in average yield from the guaranteed yield (threshold yield).Crop insurance is a means to protecting the cultivators against financial loss on account of anticipated crop-loss arising out of practically all natural factors beyond their control such asnatural fire. diseases etc. weather insurance is based on the fact that weather conditionsaffect crop yield even when a cultivator has taken all the care to ensure good harvest. Crop Insurance Insurance is a technique where losses suffered by few are met from fundsaccumulated through small contributions made by many who are exposed to similar risk. It aims to mitigate the hardshipof the insured farmer against the likelihood of financial loss on account of anticipated croploss resulting from incidence of adverse conditions of weather parameters like rainfall.temperature.
No. However because of very high financial obligationsnone of the states accepted the scheme.determined with referenceto his own past yield and loss experience. IIMA INDIA Research and Publications W. The real challenge is to scale up the distribution and ensure fast . The homogenous area approach envisages that in the absence of reliable data of individual farmers and in view of the moral hazards involved in the individualapproach. In what followsis a brief on the past experience and availability of different products at present.Though.administrative. a homogenous area would form the basic unit. 9 Agricultural Price Commission set up in July 1970 for full examination of the economic. thesubject was considered in detail by an Expert Committee headed by the then Chairman. ad hoc and scattered scale started in 1972-73.In 1965. financial and actuarial implications of the subject. 2010-06-01 Page No. On receiving the responses of state governments. the Central Government introduced a Crop Insurance Bill and circulated amodel scheme of crop insurance on compulsory basis to constituent state governments fortheir views. Their experience is notall that discouraging. agricultural insurance is largely in the public domain some private effortsespecially in weather insurance have also been there for some time. Thestudy favoured homogenous area approach. As such it necessitates reliable and accurate data of crop yields of individual farmers for a sufficiently long period for fixation of premium onactuarially sound basis. By now we havethe experience of a number of products including some of weather insurance. irrespective of differential loss in individual yields. The bill provided for the Central Government framing a reinsurance scheme tocover indemnity obligations of the states. instead of an individual farmer. Various agro-climatically homogenous areas tobe treated as units and the individual farmers in those area units would pay the same rate of premium and receive the same benefits.P.The ministry circulated the scheme for adoption by the state governments but the states didnot accept. Different experiments oncrop insurance on a limited. Thehomogeneous area would comprise of villages that are homogenous from the point of view of crop production and whose annual variability of crop productivity would be similar.
general insurancebusiness was nationalized by an Act of Parliament.ii. wheat. suffers from moralhazards and adverse selection and are very costly as payment eligibility is determined by cropdamage assessment for each individual farmer. There is a feeling that it is not profitableproposition at all (12). The scheme was based on "Area Approach". In both developed anddeveloping countries such insurance schemes have incurred losses without offering aneffective product (11). 2010-06-01 Page No. Karnataka and West Bengal. Public crop insurance schemes are available to cultivators as means of reducing the cost associated with crop failure. 10 Crop Insurance Scheme was introduced by GIC in 1979. Nevertheless India isnot alone where public crop insurance has not been successful. V.54lakhs against claims of Rs. The important features of thescheme were:i. Dandekar. potato and gram and was implemented in the states of Gujarat. The schemecontinued till 1978-79. However. and the General Insurance Corporation of India (GIC) was set up. India. 6. has a publicly administered crop insurance scheme since 1972.M.All the variants of the scheme introduced from time to time had flaws. Based on the recommendations of Prof.2 Pilot Crop Insurance Scheme (PCIS) – 1979 In the background and experience of the aforesaid experimental schemes for cropinsurance. it covered only 3110 farmers for a premium of Rs. a Pilot IIMA INDIA Research and Publications W.1 First Ever-Individual Approach Scheme In 1972-73. Subsequently thescheme included groundnut.37. Later in 1972. .P. Dandekar. The Scheme was based on "Individual Approach". The new corporation took over the experimental scheme in respect of H-4 cotton in Gujarat. the General Insurance Department of Life Insurance Corporation of Indiaintroduced a Crop Insurance Scheme on H-4 cotton. 6.claimsettlement (10).4. thus. Tamilnadu. a study was commissioned by GIC and entrusted to eminent agriculturaleconomist. Maharashtra. Andhra Pradesh. Prof. The schemes. however. Past Experience in Crop Insurance6.88 lakhs indicating its non-viability and non-popularity. No.
The coverage was restricted to 100 per centof crop loan subject to a maximum of Rs. Tripura and West Bengal among the states and Andaman & NicobarIslands and Pondicherry among union territories. Bihar.Gujarat. Karnataka.10 thousand per farmer.27 lakh farmers for total premium of Rs.Jammu & Kashmir. The scheme was available to loanee farmers only and on voluntary basis. The states of Rajasthan. Himachal Pradesh. potato and gram.196. Kerala. It covered farmers availing crop loans from financial institutions for growing foodcrops and oilseeds on compulsory basis. Though thescheme was available to all states it was not mandatory.95 lakhs againstclaims of Rs.During this period it covered 6. A 50 per cent subsidy was provided for insurance charges payable by small andmarginal farmers by the State Government and the Government of India on 50:50basis.The scheme covered cereals. The main features of the scheme were: i. cotton.v. Uttar Pradesh. In all 15 states and 2 union territoriesimplemented the Scheme until Kharif 1999. which was laterincreased to 150 per cent.iv. The Scheme waslinked to short term crop credit and implemented on homogeneous area basis. Maharashtra. 6. .Meghalaya.iii.157. Manipur and Delhi had initially joined the scheme but subsequentlyopted out after few years. . The maximum sum insured was 100 per cent of the crop loan. Goa. Tamilnadu. The risk was shared between General Insurance Corporation of India and StateGovernments in the ratio of 2:1.05 lakhs. These were Andhra Pradesh. oilseeds.The PCIS launched in 1979 continued till 1984-85 and was implemented in 13 states. Madhya Pradesh. . millets. Assam.Orissa.3 Comprehensive Crop Insurance Scheme (CCIS) On the basis of experience gained from implementation of PCIS a ComprehensiveCrop Insurance Scheme (CCIS) was introduced with effect from 1st April 1985 by theGovernment of India with the active participation of State Governments.vi.
213 crores (9%) and Orissa Rs.65. A majority of claims were paid in the states of Gujarat Rs. iii. The scheme covered 454555 farmers.62. Theproject covered paddy and wheat crops and all farmers (loanee on compulsory and others on .438Total area covered (Hectares) 12. Thescheme was similar to CCIS except that it was meant for all small and marginal farmers with100 per cent subsidy in premium. Crores) 2303 6. Banking Institutions and General Insurance Corporation of India. involving Government of India.1086 crores (47%). Experimental Crop Insurance scheme wasintroduced from Rabi 1997-98 which was implemented in 14 districts of five states. The data clearly reflects on the non-viability of the scheme though it was becomingpopular.75. Crores) 404Total claim (Rs. v. The central and state governments shared the premium. The scheme was optional to state governments. StateGovernments.282Total sum-insured (Rs.70.subsidy and claims in 4:1 ratio.37. iv.The premium rates were 2 per cent for cereals and millets and 1 per cent for pulsesand oil seeds.181crores (8%). The suminsured was Rs. The scheme was discontinued after one season due toadministrative and financial difficulties. Small and marginal farmers were given a subsidy of 50 per cent of thepremium payable shared equally by the central and state governments. Table 1: Summary of Coverage till 1984-85 Total number of farmers covered 7.80 crores against premium of Rs.The summary of coverage particulars until Kharif 1999 since inception is given inTable 1.2.4 Experimental Crop Insurance Scheme (ECIS) While in operation attempts were made from time to time to modify the CCIS as demandedby the states.11 crores and claims paid Rs.5 Pilot Project on Farm Income Insurance Scheme Under the project comprehensive risk insurance was provided against loss in actualfarm income against the guaranteed income in a notified area arising out of adversefluctuations in yield due to one or more non-preventable perils and adverse fluctuations of market prices as measured against minimum support price (MSP) for the crops covered. During 1997 a scheme viz.482 crores (21%). The central and state governments shared the premium and claims in the ratio of 2:1.84crores. Maharashtra Rs. Crores) 24. The scheme was a multi-agency effort.949Total insurance charges (Rs. 6.Andhra Pradesh Rs.168.
6. The premium rates were actuarial for states andcrops (irrigated and un-irrigated separately) at 75 per cent subsidy for small and marginalfarmers and 50 per cent subsidy for others. Area approach was followed. maize. Thesum insured was guaranteed income per unit area arrived at using average yield of past 7years.There is high spatial and temporal variation in rainfall across West Rajasthan. Thepremium ranged from 5 to 8 per cent. Capping andcupping of 20 per cent of MSP was applied. Claims exceeding 100 per cent of premium lesscomponents of loading towards administration and marketing expenses were borne by theGovernment of India.P. The sum insured perhectare ranged from cost of cultivation to value of produce given in the Benefit Tableshowing claims at different levels of deficiency in weighted and actual rainfall indices. The averagerainfall ranges from 10mm in northwest part of Jaisalmer to 40mm along the western fringesof the Aravalli range. jowar. Claims assessment was based on rainfall indices forJune to October using appropriate weights and caps. No. 2010-06-01 Page No.5 per cent of gross premium for all farmerswas payable to banks as service charges. Variation in rainfall is as high as 39 per cent.IIMA INDIA Research and Publications W. In all 18 districts from 10 states for wheat and threedistricts from 3 states for paddy were selected in 2003-04. soybean and groundnut.6 Sookha Suraksha Kavack (Drought Risk Insurance) Sookha Suraksha Kavach was specially designed for Rajasthan to cover 23 districtsand popular and widely grown crops like guar. bajra. Aclaim trigger is basically a threshold deficiency percentage of the weighted actual rainfallindex as compared to normal rainfall . A commission of 5 per cent of gross premium in case of non-loaneefarmers was payable to the Rural Agents and 2. 12 voluntary basis) in selected states and districts which gave their consent for inclusion. The weighted actual rainfall index wascompared with weighted normal rainfall index to compute deficiency in rainfall index. current MSP and indemnity level.
13 Rabi Weather Insurance. .Potato Insurance. 2010-06-01 Page No.Rainfall Insurance Scheme for Coffee Growers (Coffee Insurance).Poppy Insurance. Weather Based Crop Insurance Scheme(WBCIS). abroad-based National Agricultural Insurance Scheme (NAIS) has been introduced in thecountry from Rabi 1999-2000 with the following objectives. IIMA INDIA Research and Publications W. Claims areautomated and directly credited to bank account. The deficiency greater than or equal to claimtrigger makes the participating farmers eligible for claims as per the Benefit Table. To provide insurance coverage and financial support to the farmers in the event of failure of any of the notified crop as a result of natural calamities. namely.Pulpwood Tree Insurance. Rubber InsuranceandMango Insurancefor plantation crops in specific geographic area. pests and diseases.1 National Agricultural Insurance Scheme Keeping in view the demands of States for improving scope and contents of CCIS.Wheat Insurance (Weather & Biomass).Bio-Fuel Tree / Plant Insurance. Wheat Insurance.a. Weather Based Crop Insurance Scheme. 7. These include National Agricultural InsuranceScheme. Products in the Market A number of crop insurance products are available to farmers in differentgeographical areas and for different purposes. No. 7.Grapes Insurance. Rainfallindices are prepared on the basis of data from specified rain gauge station.P.Varsha Bima (Rainfall Insurance) for seasonal and annual crops. The proposals are received up to 30 th June.index. The non-loanee insured are required tosubmit a proof of insurance.b. Varsha Bima 2005. Insurance products are also available for plantaioncrops in specific geographical areas such asUttarakhand Seb Bima Yojana (AppleInsurance).National Agricultural Insurance Scheme (NAIS). We present here a brief description of selected field crop related insurance products.Coconut Insurance.
Currently the scheme has been implemented in 23 states and two union territories. Area Coverage The scheme was available to all states and union territories on optional basis.To encourage the farmers to adopt progressive farming practices. This number was increased to 17 in Kharif 2000 and to 21 in Kharif 2002. Goa.c. particularly in disaster years. high value inputsand higher technology in Agriculture. Scope of the Schemea.However the states opting for the scheme were required to take up all the crops identified forcoverage in a given year and shall have to continue for a minimum period of three yearsbefore it may quit. Punjab. To help stabilize farm incomes.Manipur. Gujarat. Himachal Pradesh. Maharashtra and Orissa) and union territory of Pondicherry optedfor the scheme. .Some of the improvements incorporated in the new scheme are visible from thefollowing. For Rabi 1999 only eight states (Assam. and Arunachal Pradesh among states and Chandigarh. i.Kerala. Nagaland. Daman & Diu. Madhya Pradesh.Dadra & Nagar Haveli and Lakshadeep among union territories have not yet opted for thescheme.
Ragi. (d) drought.a.. maliciousdamage and other preventable risks shall be excluded.Korra. Black gram.IIMA INDIA Research and Publications W. millets and pulses): Wheat. inundation and landslide. Jowar. The crops to be covered next year will have to be spelt before the close of preceding year. dry spells. cyclone. At present 35 different Kharif and 30 different Rabi season crops are beinginsured under NAIS in the country. They must have a bank account and pay the requisite premium to get insurance coverage. RRBs. Red gram.P. hailstorm. 14 b. Crops Covered The scheme besides food and oilseed crops also covered annual commercial andhorticultural crops. d.b. Bajra. .and (e) pests / diseases etc. Green gram. Horse gram.e. (c) flood. (a) natural fire and lightening. Food crops (cereals. and commercialbanks). However. Maize. it is compulsory forloanee farmers availing crop loans from financial institutions (PACS. However losses arising out of war and nuclear risks. The crops in respect of which the past yield data based on Crop CuttingExperiments (CCEs) are available for past 10 years and the state government agreed toconduct requisite number of CCEs for estimating the average yield during the proposedseason are covered.tempest. Risks Covered The scheme provides comprehensive risk insurance against yield losses due to nonpreventable risks. hurricane. c. typhoon. Moth etc. No. Farmers covered All farmers including sharecroppers and tenant farmers growing notified crops innotified areas are eligible for coverage under the scheme. While all loanee farmers would automatically get compulsorily coverage underNAIS through PACS / bank branches extending crop loan for insured crops all non-loaneefarmers desirous of availing insurance coverage should contact the nearest bank branchbefore the stipulated time frame with a proposal for insurance. tornado etc. The crops covered in various states fall under thefollowing groups. paddy. 2010-06-01 Page No. i. Kodokutki. (b) storm.
landslide.Oilseeds: Groundnut. Pineapple. ii. defined areas (unit of insurance) for each notified crop for widespread calamities. Coriander. Jute. Caster etc.. Potato. apples. However mangoes. Annual commercial/horticultural crops: Sugarcane. Cotton.e.P. 15 e. Hobli. Circle. Isabgol. The individual farmers would intimate the crop loss with in 48hours to local revenue or agricultural department. IIMA INDIA Research and Publications W. Sesame. Taluka etc. 2010-06-01 Page No. Block. Fennel. cyclone and flood thescheme operates on the basis of individual approach. Ginger. The sum insured may extend tothe value of the threshold yield of the insured crop at the option of the insured farmer. However. each participating state was required to reach the level of GramPanchayat as the unit in a maximum period of three years. Sum Insured and Premium In case of loanee farmers the sum insured would be at least equal to the amount of crop loan advanced (scale of finance plus insurance charges). No. Chilly. The unit area of insurance maybe a Gram Panchayat. etc.In case of localized calamities such as hailstorm. The District Revenue administration wouldassist implementing agency in assessing the extent of loss. Soya bean.c. Tapioca. Mandal. Sunflower. grapes and oranges are not yetcovered. Unit of Insurance The scheme operates on the basis of area approach i. Both loanee and non-loanee farmers can obtainadditional coverage up to 150 per cent of value of average yield of the notified area bypayment of premium at . Safflower. Niger. as decided by thestate government. Phirka.Banana.Turmeric. Cumin. Fornon-loanee farmers the coverage at normal rates of premium is available up to the value of threshold yield (at MSP or market price). Onion. NAIS was to beimplemented in limited areas on experimental basis initially and extended in the light of operational experience gained. The assessment of loss isestimated through CCEs conducted by the state administration. To begin with. Fenugreek.
and allowance for enhanced scale of finance. medium risk and highrisk areas would be available for all crops (cereals.5% of SI or Actuarial rate whichever is less2. whichever is less2. However. The actuarial rates would be applied atDistrict / Region / State level at the option of the state / union territory. pulses andoilseeds would be made in a period of five years. Pure risk component would be higher for basic crops than for commercial andhorticultural crops. 90. Kharif & Rabi Annual Commercial/ Horticultural CropsActuarial ratesA subsidy of 50 per cent in premium is allowed in respect of small and marginalfarmers. 2010-06-01 Page No.5% of SI or Actuarial rate. multiplied by the level of indemnity.0% of SI or Actuarial rate whichever is less3. Three levelsof indemnity. andprofit margin.The threshold yield (TY) or guaranteed yield for a crop in an insurance unit is themoving average based on past three years average yield in case of Rice and Wheat and fiveyears average yield in case of other crops. millets. Over time these would be replaced by actuarial rates. reserve for unexpectedlosses. The rates currentlyfixed are given in Table 2. The premium subsidywill be .5% of SI or Actuarial rate whichever is less2.P. Kharif Bajra and OilseedsOther Crops (cereals.actuarial rates.other millets & pulses)3. administrative costs. Rabi WheatOther Crops (cereals. the insured farmers of unit area may opt for higher level of indemnity on payment of additional premium based on actuarial rates. In case of sharecropper / tenant farmer a proof showing cropsharing/tenancy arrangements would be needed to obtain the insurance cover.The premium payable is fixed for groups of crops on the basis of the nature of yieldvariations observed historically.V. to be shared equally by the Centre and State/Union Territory. Table 2: Premium Rates for Different CropsSeason Crops Premium Rate 1.other millets & pulses)1. pulses and oilseeds and annualcommercial and horticultural crops) based on coefficient of variation (C. The IIMA INDIA Research and Publications W.. millets.) in yield of past10 years' data. adverse selection and moral hazards. A non-loanee farmer would produce a proof of ownership of land. No. 16 actuarial rate may include pure risk premium. 80 and 60 per cent corresponding to low risk. Transition to the actuarial regime in case of cereals. viz.
ATechnical Advisory Committee (TAC) comprising of representatives from NSSO.5 acres) is marginal farmer and 1-2 hectares (5 acres) issmall farmer. Ministryof Agriculture (GOI) and Implementing Agency would be constituted to decide the samplesize of CCEs and all other technical matters. both for crop production estimates and crop insurance. Unit Area Minimum No. Mandal / Phirka/any other smaller unit arecomprising 8-10 villages103. iii. Taluka / Tehsil / Block 162. Gram Panchayat comprising 4-5 villages 8If the Actual Yield (AY) per hectare of the insured crop for the defined area on thebasis of requisite number of CCEs in the insured season falls short of the specified TY. IIMA INDIA IIMA INDIA Research and Publications W. 17 Table 3: Minimum Number of CCEs for Unit Areas Sr.phased out on a sunset basis in a period of three to five years. subject to review of thefinancial results and the response of the farmers at the end of the first year of theimplementation of the scheme. Indemnity and Claim Settlement The state government or union territory administration would plan and conduct therequisite number of Crop Cutting Experiments (CCEs) for all notified crops in the notifiedinsurance units in order to assess the crop yield and maintain a single series of CCEs andresultant yield estimates. CCEs wouldbe undertaken per unit area for each crop on a sliding scale as indicated in Table 3. 2010-06-01 Page No. Normally a cultivator with aland holding of up to 1 hectare (2. all theinsured farmers growing that .P. Estimation of Crop Yield. of CCEs Required1. No. The definition of small and marginal farmer would be asdefined in the land ceiling legislation of the concerned state. No.
The claim cheque along withclaim particulars is released to the individual Nodal Banks. Table 4: Seasonality Discipline for Kharif and RabiActivity Kharif Rabi Loaning period (loanee) April – September October – Next MarchCut-off date for receipt of declarations (loanee) November MayCut-off date for receipt of proposals (non-loanee) 31 st July 31 st DecemberCut-off date for receipt of yield data (for all) January – March July – SeptemberOnce the yield data is received from the state/UT as per the prescribed cut-off dates. cyclone andflood where settlement of claims would be on individual basis. landslide. if and where necessary. cyclone and flood.claims are worked out and settled by the implementing agency. Settlement of such claims would be on individual basis. 18 . the implementing agency would evolve a procedure to estimatesuch losses at individual farmer level in consultation with DAC / State / UT. in consultation with state / UT and the Government of India.crop in the defined area are deemed to have suffered shortfall inyield (SY). The A&O expenses would be shared equally by the IIMA INDIA Research and Publications W. No. credit the accounts of the individual farmers and display the particulars of beneficiaries on their notice board. The broad seasonality discipline to be followed is given in Tale 4. loss assessment and modifiedindemnity procedures would be formulated by the implementing agency in coordination withstate / UT. Indemnity shallbe calculated as per the following formula:Indemnity = (SY / TY)*[Sum Insured for the Farmer]where.in turn. In the context of localized phenomenon viz. SY = TY – AY for the defined areaIn case of occurrence of localized perils such as hailstorm. hailstorm. The scheme seeks to provide coverage against such contingency. It may bemodified. 2010-06-01 Page No.landslide.P. The Banks at the grass-root level.
20% in year 5 and 'zero' thereafter).Central Government and respective State Government on sunset basis (100% in year 1. claims beyond 100 per cent of premium would be borne by theGovernment. However. in consultation with Department of Agriculture and Co-operation. Management of the Scheme In respect of loanee farmers. iv. Food crops and Oilseeds: Till complete transition to actuarial regime in a period of fiveyears takes place. banks collect the premium along with the declarations and send it to IAwithin the prescribed time limits. 40% in year 4.The scheme is be implemented in accordance with the operational modalities asworked out by IA.e. 80%in year 2. claims up to 200 per centwould be met by the implementing and above this ceiling out of the Corpus Fund. in areas where IA has requisite infrastructure. claims up to 150 per cent of premium in the first three years and 200 . seasonal weather conditions. the banks play the same role as under CCIS. Revenue Department of the state governments would be actively involved insmooth implementation of the scheme. Periodic Appraisal Reports on the Scheme would beprepared by Ministry of Agriculture. Directorate of Economics and Statistics. claims up to 150 per cent of premiumwould be met by IA and claims beyond 150 per cent shall be paid out of Corpus Fundfor a period of three years. i.a. Annual Commercial and Horticultural crops: Implementing Agency would bear allnormal losses. all normal claims. After this period of three years. who would provide fortnightly reports of agricultural situation withdetails of area sown.b. the Government of India or Implementing Agency. Department of Co-operation. pest incidence. stage of crop failure (if any) etc. Thereafter. i. The selection of the banks would be on the basis of Service Area Approach of the RBI or at the option of the Banks (where Co-operative Banks have good network). the agricultural situation is closely monitored in the implementing state / UT.Risk is shared by Implementing Agency (IA) and the Government for different groupsof crops as explained below.e. The operation of the scheme would be reviewed annually. anon-loanee farmer has the option to pay premium along with declaration directly to IA withinthe time limits. TheDepartment of Agriculture.. 60% in year 3. Department of Agriculture and district administration set up a District Level MonitoringCommittee (DLMC). and modifications as maybe required would be introduced. Duringeach crop season. In respect of non-loanee farmers.Efforts would be made by IA to obtain appropriate reinsurance cover for the proposed NAISin the international Reinsurance market.
provide significant benefits not merely to the insured farmers. help in maintaining flow of agricultural credit. be a critical instrument of development in the field of crop production.b. A portion of Calamity Relief Fund (CRF)was used for contribution to the Corpus Fund. but. the period of three yearsstipulated for this purpose would be reviewed on the basis of the financial results afterthe first year of implementation and the period may be extended to five years if considered necessary. encourage farmers to adopt progressive farming practices and higher technology inAgriculture.c. to the entirecommunity directly and indirectly through spill-over and multiplier effects in terms of maintaining production and employment. No. However. Benefits Expected from the Scheme The scheme is expected to:a.d.The scheme has been administered by the Ministry of Agriculture and was initiallyimplemented by General Insurance Corporation of India and from Rabi 2003-04 byAgricultural Insurance Company of . ande. streamline loss assessment procedures and help in building up huge and accuratestatistical base for crop production.To meet catastrophic losses a Corpus Fund has been created with contributions from theCentral and State / UT government on 50:50 basis. The fund is managed by Implementing Agency(IA). v. 2010-06-01 Page No.IIMA INDIA Research and Publications W. taxes etc. The claimsbeyond 150 per cent of premium in the first three years and 200 per cent of premiumthereafter would be paid out of Corpus Fund. 19 per cent of premium thereafter subject to satisfactory claims experience. and netaccretion to economic growth. providingfinancial support to the farmers in the event of crop failure.P. generation of market fees.
The scheme had covered more than 110 million farmers and 11.India Limited on behalf of MOA. The Scheme coveredthe farmers. 3. The premium collected was Rs. sharecroppers and tenants growing notified crops in notified areas oncompulsory basis for loanees and voluntary basis for non-loanees. oilseeds.36673 million of . 6 & 7). cotton. sugarcane. NAIS is to cover foodcrops. The scheme is in operationsince then. It isavailable to all states opting for implementation for at least three years. However. potato and other commercial and horticultural crops.42million hectares of cropped area in 2008. so far the scheme has been adopted by 23 states and two unionterritories (1.
i. Rajasthan. Reference Unit Area Weather Based Crop Insurance Scheme (WBCIS) operates on the concept of areaapproach. a ‘Reference Unit Area (RUA)’ isdeemed to be a homogeneous unit of Insurance. No. Similarly non-loanee farmers came forward forselected crops only. un-seasonal rains etc. Maharashtra. Rs. Karnataka. Madhya Pradesh. Some of thestates where the scheme is piloted over the years are Andhra Pradesh. Chattisgarh.8 times the premium (3.Gujarat. Punjab.P.2955 million was the indemnity yet to be paid. Monitoring hasbeen the most difficult job for them. The subsidy is more than 8 per cent of the total premium while claimsare 2.98817 million was the indemnity paidand another Rs. As such it is not yield guaranteeinsurance.relative humidity. Bihar. 7. The average yield benefits the poor performers more than thegood performers. In provides payout against adverse rainfall incidence (bothdeficit and excess) during Kharif and adverse incidence in weather parameters like frost. UttarPradesh etc. They perceived a number of problems with the product (8 & 9). In all. on the basis of which current weatherdata and the claims would be . 7 & 12). heat. The RUA is notified before thecommencement of Kharif season by the State Government and all the insured cultivators of aparticular insured crop in that area are deemed at on par in the assessment of claims. Delay at various points in the implementation adds to the disappointment of the insured. Against this. For the insurers viability of the scheme is the major concern. WBCIS has been piloted in the country since Kharif 2003 season. That is. for the purposes of compensation. 20 which Rs.3055 million was subsidy.96 million farmerswere the beneficiaries. EachRUA is linked to a Reference Weather Station (RWS).2 Weather Based Crop Insurance Scheme Weather Based Crop Insurance Scheme (WBCIS) is a unique weather based insuranceproduct designed to provide insurance protection against losses in crop yield resulting fromadverse weather incidences. Thefixing of threshold yield on the basis of past performance ignores the future improvement andyield estimation process for average yield on the basis of crop cutting experiments are noteasy for them to comprehend. 27. during rabi season. Haryana. Not all the loanee farmers in the states were happywith the mandatory aspect of the scheme. 2010-06-01 Page No.IIMA INDIA Research and Publications W.
subject to the weather triggers defined in the ‘Payout Structure’ and theterms and conditions of the scheme. .processed. Adverse weather incidences during the season entitlethe insured a payout.
Pulses. Premium Payablea. Weather insurance payouts are assured with in 45 days from the end of insuranceperiod. Sum Insured The amount of insurance protection is broadly the cost of inputs expected to beincurred by the insured in raising the crop.0% or Actuarial Rate. whichever is less .Page21 For Rabi season the weather triggers are broadly fixed to capture the adverseincidence of weather parameters on yield. Insured cultivators are not required to make a claim. Sum insured is pre-declared per unit area by AICat the beginning of each crop season in consultation with the experts in state government.5% or Actuarial Rate. The claim settlement is automatic processbased on weather readings at the RWS. ii.No Crops Premium Payable by the Insured Cultivator 1 Wheat 1. In such case all the insured cultivators under a particularcrop are deemed to have suffered the same adverse deviation and become eligible for claimsubject to terms and conditions of the scheme. For the non-loanee the acreage figure is the expected area sown / planted underthe particular crop as declared in the insurance proposal form. Food Crops and Oil SeedsS. andit may be different for different crops in different RUA. Oilseeds2. The actual may be more or less than compared to what has been specified in theBenefit Table leading to crop losses. For traditional crops where payout is linked to yield estimates claim processing maytake more time. iii.Millets. Claims arise when there is a certain adversedeviation in actual weather parameter incidence in RUA as per the weather data measured atRWS. whichever is less2 Other Crops (other cereals. For a loanee the sum insured per crop is calculated by multiplyingper unit area value of inputs with crop specific acreage declared in the loan application formby the loanee cultivator for the purpose of maximum borrowing limit fixed for him by thelending bank. Sum insured is further distributedunder key weather parameters used in the insurance in proportion to the relative importanceof the weather parameters.In a given RUA the payout given per unit area is the same for all cultivators under the sameRWS.
Since the weather data decides the compensation the insured is willing to put extraeffort for getting better yield of crop.5% 25%.IIMA INDIA Research and Publications W. It provides transparent. fully objective. All farmers can buy WBCISd. 22 b. No PremiumSlab Subsidy and Premium 1 Up to 2% No Subsidy2 >2 .P.75% payable by farmer4 >8% 50%. subject to minimum net premium of 2% payable by farmer3 >5 . Advantages of WBCIS Weather based crop insurance scheme has many advantages which make it beneficialfor cultivators in their production risk management such as the following. Insured is not required to submit claim form or other documents as proof for lossg. efficient and direct payouts for adverseweather incidencesf. Background .8% & Max 6% payable byfarmer iv.3 Varsha Bima-2005i. subject to minimum net Premium of 4.8% 40%. It allows speedy settlement of claimsc. Annual Commercial or horticultural CropsS.a. 7. subject to minimum net premium of 3. 2010-06-01 Page No. Government provides subsidy in premium and hence premium payable is affordablee.b. Trigger events like adverse weather can be independently verified and measured. No.
ii. Although there is no way of controlling weather-factors. there is now a hope of mitigating the adverse financial effectsthat rainfall can have on the rural economy. etc.P. particularly rainfall. June to October for medium duration crops. Studies have established that rainfall variationsaccount for more than 50% of variability in crop yields. The coverage under Varsh Bima at thegrass-root level is made mostly through the existing network of Rural Finance Institutions(RFIs) as in NAIS. A cultivator can buy Varsha Bimaonly up to 15th June for sowing failure option and 30th June for other optionsProposal forms are available at all the loan disbursing outlets viz PACS. Coverage OptionsOptions . Varsha Bima is meant for cultivators for whom NationalAgricultural Insurance Scheme (NAIS) is voluntary.Varsha Bima is voluntary for all classes of cultivators who stand to lose financially uponadverse incidence of rainfall. Scope of the Scheme Varsha Bima covers anticipated shortfall in crop yield on account of deficit rainfall. Farmers Groups. The insurance operates during June toSeptember for short duration crops. Self Help Groups. Further.Nearly two thirds of Indian agriculture is heavily dependent on unpredictable anduncertain natural factors. 2010-06-01 Page No. 23 Sowing Failure option is from 15th June to 15th August. Actual rainfall is the monthly . these periods are state-specific. iii. and June toNovember for longer duration crops. branches of all Cooperative / Commercial / Regional Rural banks. particularly farm incomes through insurance. The network of formal and informal institutions working in the rural areas suchas NGOs. AIC also directly market / provide insurance subject to the availability of its network. In case of IIMA INDIA Research and Publications W. could also be utilized for delivery of Varsha Bima. No. The cultivators proposed for insurance under Varsha Bima are required to havea bank account at the nearest bank branch to facilitate their insurance transactions.I: Seasonal Rainfall Insurance Coverage is against negative deviation of 20 per cent and beyond in actual rainfallfrom normal rainfall for the entire season.
The sum insured per hectare is the maximum pay-out corresponding to themaximum potential loss. No.The claim pay-out is on a graded scale. corresponding to differentdegrees of rainfall deviation. The sum insured per hectare is the maximum pay-out correspondingto the maximum potential loss. The maximum pay-out of 100% of sum insured is available at deviations of 80%and above. The maximum pay- . The pay-out structure is designed in such a waythat the yield is correlated to various ranges of adverse deviation in rainfall. The index is constructed to maximizethe correlation. The indices vary from IMD station tostation and crop to crop. Options . corresponding to different degrees of rainfalldeviation. The sum insured per hectare is the maximuminput cost incurred by the cultivator till the end of the sowing period. The sum insuredper hectare is the maximum pay-out corresponding to the maximum potential loss. The claim pay-out shall be on a graded scale (in slabs).III: Sowing Failure Coverage is against adverse deviation in actual rainfall from normal rainfall beyond40 per cent between 15th June and 15th August. 24 Options . Options .II: Rainfall Distribution Index Coverage is against adverse deviation of 20 per cent and beyond in actual rainfallindex from normal rainfall index for the entire season.IV: Vegetative Phase Coverage is against adverse deviation in actual rainfall from normal rainfall beyond20 per cent between 1st August/16th August and 30th September/31st October to 30thNovember. The claimpay-out is on a graded scale (in slabs).cumulative rainfallfrom June to November for different crops. for weekly rainfall within the season. and is pre-specified. 2010-06-01 Page No. IIMA INDIA Research and Publications W.corresponding to different degrees of adverse deviation in actual rainfall index. The claim pay-out is on a graded scale.P. corresponding to different degrees of adversedeviation in actual rainfall.
Maharashtra and Rajsthan. Premium varies fromoption to option and crop to crop. be it Small /Marginal. Sum Insured and Claim Payment Sum Insured is pre-specified and normally is between cost of production and value of production. 25 . there is no necessity forsubmission of loss information or claims intimation by insured cultivator. MP.P. The premium rates have been optimized vis-a-vis benefits. Masoor. Potato. frost. iv. Normally claimsare paid on the basis of actual rainfall data within a month from end of indemnity period. Barley and Coriander are the major Rabiseason crops mostly in the states of UP.Wheat. 7. 2010-06-01 Page No. such as excess rainfall. which again is prespecified. In case of sowing failure option. Mustard.The procedure for working out claims is automated i. as early as a fortnight after the indemnityperiod. Owners or tenants/Sharecroppers can buy theweather insurance.Agriculture Insurance Company of India would compensate the insured. Trigger events like adverse weather events can be independently verified and measured.e. It allows for speedy settlement of indemnities. These crops areextremely vulnerable to weather factors.c. and fluctuation intemperature etc. it is the maximum input cost incurred by thecultivator till the end of the sowing period. No. All growers.The most important benefits of Weather Index Insurance are:a.4 Rabi Weather Insurance Weather Insurance (Rabi) is a mechanism for providing effective risk managementaid to those individuals and institutions likely to be impacted by adverse weather incidences. against thelikelihood of diminished crop output/ yield resulting from: Maximum Temperature (° C)above the trigger level and / or Deviation in Temperature Range from the normal above thetrigger value and / or Minimum Temperature (° C) below the trigger level and / or Minimum IIMA INDIA Research and Publications W.. Gram.out of 100 per cent of sum insured isavailable at deviations of 80 per cent and above.and starts from one per cent.b.
minimum temperature. It isinsurance against the likelihood of diminished wheat yield resulting from lower NDVI withinthe specified taluka preferably during February and/or high temperature consecutively forspecified number of days above specified levels in 1 st and / or 2 nd fortnight of March asmeasured at RWS. Maximum liability is linked to cost of cultivation and varies from crop to crop. The NDVI component of cover measured at peak vigourstage provides effective risk management aid to those wheat growers who are likely to beimpacted by poor growth of the crop arising out of non-preventable natural factors.Claims are automated.The insurance is linked to biomass triggers. are paid at a uniform rateto all the insured growers in the area (jurisdiction of reference weather station) growing theinsured crop with in 4-6 weeks after insurance period. . and accurate and allows for speedy settlementof indemnities even before the crop is ready for harvesting. the triggers specified and biomass andtemperature patterns of the specified area in the historical periods. The premium chargeable is statistically / actuarially calculated based on the geographical area. However the period isdifferent for different parameters and crops. the benefits payableto the insured will be the sum specified corresponding to trigger level and or the maximumtemperature of specified number of days as recorded at RWS is higher than the specifiedtrigger level during 1 st and / or 2 nd fortnight of March the benefit payable to insured shall bethe sum specified corresponding to trigger level. The insurance operates during the months of December to April.When the current NDVI falls short of the specified trigger level. 7. and settled on the basis of actual maximum temperature. Trigger events could be measured usinghigh technology standards based in satellite imagery from remote sensing technology whichcould be independently verified and measured.Temperature below 4° C resulting frost and / or Rainfall in excess of the trigger levels(calculated on daily/ weekly/ monthly basis) and / or Bright Sunshine Hour below the triggerlevel. rainfall and BSH received from the concerned agencies/ institutions asapplicable to each crop separately.5 Wheat Insurance Policy Wheat insurance policy is a unique technology based insurance product combiningcrop vigour / biomass (Normalized Difference Vegetative Index NDVI) and weather(temperature / raifall) parameters. Claims when become payable.
etc. No. excess rainfall.No. pest infestation.P. humidity etc. a national Indian insurance company piloted in 2003 a formal rainfallinsurance scheme for groundnut and castor in semi-arid tropical areas of India.)Parametric weather related risks like rainfall. are covered. Similarproducts adapted to the specifics of the local environment were also developed and sold innorthern India. Needs up to 25 years’ historical weatherdata3 High basis risk [differencebetween the yield of the Area(Block / Tehsil) and theindividual farmers]Basis risk with regard to weather could be high forrainfall and moderate for others like frost. 26 8. The insurancepolicy was developed with the technical assistance of Agricultural and Rural DevelopmentDepartment of the World Bank and was designed as insurance against deficit rainfall. National Agricultural Insurance Scheme (NAIS) Weather Based Crop Insurance Scheme(WBCIS) 1 Practically all risks covered(drought.heat (temperature). Private Participation ICICI Lombard. flood.However. 2010-06-01 Page No.humidity etc.IIMA INDIA Research and Publications W.hail. as it supports theclaims subsidyGovernment’s financial liabilities could bebudgeted up-front and close ended. frost. as it supportsthe premium subsidy 9. heat. Two insurance policies were designed for the two crops.4 Objectivity and transparency isrelatively lessObjectivity and transparency is relatively high5 Quality losses are beyondconsiderationQuality losses to some extent gets reflectedthrough weather index6 High loss assessment costs No loss assessment costs7 Delays in claims settlement Faster claims settlement8 Government’s financial liabilitiesare open ended. these parametric weather parametersappear to account for majority of crop losses2 Easy-to-design if historicalyield data up to 10 years’ isavailableTechnical challenges in designing weather indicesand also correlating weather indices with yieldlosses. The coverage of boththe . Comparison of NAIS and WBGISS.
No.The policy has additional payout for excess rain for those areas. In addition to IIMA INDIA Research and Publications W.com 4. India Development Gateway.www. Planning Commission. Government of India. Weather Based Crop Insurance Scheme (WBCIS). 2010-06-01 Page No.indg.www. Crop Insurance. If it rainsless than 1 st trigger level with in a given period there is a payout per mm of deficientaccumulated rain per acre insured. Varsha Bima . If the accumulated rainfall is below the 2 nd trigger levelthen there is a maximum lump sum payout of the insurance.2005.policies was for the prime crop season. References 1. In order to maximize thecorrelation between rainfall and crop production Kharif season is divided in to three differentphases each with its own trigger and payout: sowing.P. New Delhi2. the Kharif. The amount of the payout iscalibrated to the expected economic loss for the area (mandal).in/agricultutre 3. flowering and harvest.in/agriculture 5. Thetriggers are set in mm of accumulated rainfall as measured in local weather stations.www. . Government of India. Report of the Working Group on Risk Management inAgriculture for Eleventh Five Year Plan (2007-12). India Development Gateway. 27 deficit rainfall in some areas there is also a risk of excess rainfall towards the end of Kharif.indg.indiaagronet. phases andpayouts try to maximize the correlation between economic loss and rainfall events. The policy triggers.
org . 2003. Sinha. Country Profile. Venkatesh..cci. Piloting Weather Insurance Scheme in India.aicofindia. 2004. Government vs Weather: The True Story of Crop Insurance in India. Research Internship Papers 2001 . Agriculture Insurance Company of India.in 9. June 19. Crop Insurance in India – A Study. Weather Insurance in Semi-Arid India. Sidharath. SS and Ramesh Chand. Raju. Jennifer. Helene Bie et. 2005.www. Agriculture Insurance in India: Problems and Prospects. G.org11.Lilleor. World Bank. State-wise Progress of CCIS from Kharif ’85 to Kharif 19998. Centre for Civil Society.worldbank. Economic and Political Weekly . 8 . March 200812. March 23. Agriculture Insurance in India: Scope for Participation of PrivateInsurers. Al.www. NCAP Working Paper No. Mumbai7. Performance of NAIS. P 2605-261210.rff. Ifft.www.dk 6.web. Government of India. August 27.
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