Professional Documents
Culture Documents
national situation.
• Risk Measurement
has remained traditionally the most important economic activity in our country. Though
its share in the economy has declined over the years from 46% of the GDP at factor cost
and constant prices in 1970-71 to about 20% of GDP in 2004-05 (Handbook of Statistics
on the Indian Economy 2004-05) due to faster growth of the industrial and services
sectors, it still retains an important position in the Indian economy. Farming is the
principal means of livelihood for about 65 per cent of India’s population (National
1951 % 2001 %
361mi 1027milli
Indian Population llion NA on NA
299mi 742milli
Rural Population llion 83 on 72
70mi 128milli
Cultivator llion 50 on 32
27mi 107milli
Agricultural Labour llion 20 on 27
43mi 167milli
Other Workers llion 30 on 41
140mi 402milli
Total Working Population llion 100 on 100
So, the vast involvement signifies that, there is a need to increase yields to the
activities. In such a context it can be noted that, apart from Government expenditure,
agricultural growth is determined by many other variables in India like population, public
and total investment, credit, electricity, fertilizer use, rainfall, use of engineering products
Y= α. Pβ .I gy. R δ. F λ
Or
Where,
P = agricultural price
Ig = government’s investment
R = rainfall
F = consumption of fertilizer
α = technological change
From the function it can be said that the most crucial factors affecting agricultural
agricultural price, rainfall and technological change. Any little change of any of the
above parameters can change the agricultural output .So, the most obvious type of risk in
agriculture is variation in output caused by variation of any of the above. Generally six
a) Production risk
b) Price risk
c) Casualty risk
d) Technological risk
Production risks are caused by variations in weather and by diseases, insects and
other biological pests, windstorms, hail, drought, flood etc. Production risks in crops are
concentrated particularly in those areas where weather is unstable. Livestock risks also
include production risk. Death losses due to different diseases of livestock and adverse
Like natural hazards, price fluctuations also a cause of risk to farmers. The effect
of product price fluctuation on farmers may be severe .The farmers are particularly
vulnerable to fluctuation in farm input and product prices. Property losses due to fire,
flood, windstorms etc., are the sources of risk to farmers. Another type of risk arises from
the development and adoption of new techniques or methods of production. New crop
varieties, chemicals, feed combination, model of machine and the like are continuously
being developed by researchers. The rapidity of technological change can also contribute
to uncertainty. The course of action followed by farms, people and agencies with whom
the farmer does business causes uncertainty or risk. If the farmer acquires part of his
capital by renting, the possible future action of the landlord creates uncertainty. The
landlord may decide to increase rent, rent to a relative or sell the farm .If such things
should occur; they might reduce the earning capacity of farmer and here by curtail risk
bearing ability.
No one knows what the future health of family members will be, i.e., when a
serious illness may occur or when death will take family members who are important to
the farm’s operation. Risk arising from family health is of major importance in the
business of farm.
To over come all these problems agricultural sector needs the help of insurance to
risks. There is a growing realization on the part of all concerned that farmers and agro-
industries need as much protection as other occupation and industries. Three factors are
responsible for this change in agro-sector. Experiences of the great wars of this century
have brought home to most countries the great importance of agriculture. Agriculture
provides the base of all material and economic development of a people. Secondly
mechanization in agriculture has increases risk. Thirdly the growing social consciousness
of the need for securing a protection for all against accidental loss of life or property
agriculture an extremely risky activity. But dealing with it systematically, is very difficult
for farmers. One reason for the difficulty is confusion and difference of opinion about
Risk analysis in agro sectors has become increasingly popular in recent years. But
accounting for risk in the analysis of farming system is much harder than pretending it
doesn’t exist.
Agricultural sector remains a high risk prone area. Risk in agriculture has been and
continuous to be one of the major challenges to scientists and policy makers. Risk
analysis has also been avoided in the past because so many analysts were afraid to tackle
the evaluation of risky choices when too work out the required probability distribution
objectively.
P* = P (X ≤ X*)
bad.
P* and X*.
Newbery and Stiglitz have found it convenient to reflect risk using the co-efficient
of variation of X, CV=SD/E.
But the difficulty of measuring agro-risk is that the exact cause of loss is often
Firstly, to avoid those types of risks which are avoidable. But it is very difficult and it
has limited application. A farmer cannot change his farming place as per choice. Rather it
Secondly, the more important way of meeting risk is to prevent it .The prevention of
risks in agriculture means the reduction of uncertainties through improved techniques and
can help the farmers to get rid of more gambles with the blind force of nature.
Thirdly, a farmer can insures him either through accumulation of funds or by operating
The subject on uncertainty may without bearing the risk either individually or in a
group, therefore it to others who specialize in uncertainty bearing. Such transfer may
usually be affected through insurance, by which the subject of risk, in exchange for a
small known sum, transfers the entire or a major part of the risk to a third party. This is a
The primary function of insurance is thus the elimination of the uncertain risk of
loss for the individual. The first essential condition for insurance is that the risk must be
uncertain. In fact, the basic content of risk is uncertainty. Under insurance, risk remains
uncertain and unpredictable, but the uncertainty is reduced and the risks become fairly
predictable when they are considered in the aggregate. The incidence of loss is broad
based through insurance so that the shock of even the heaviest impact of loss upon an
It accumulates reserve from the contributions of the insured person, called premium, in
normal period which is utilized in relieving any unusual loss burden occurring at an
unfavorable situation.
The premium is the price that one pays for security against a risk which is
is the best social device which aims at reducing the uncertainty of loss through
Timely agro-advisory service and efficient risk mitigation mechanism can provide
stable income to the farmers. To provide timely agro-advisory efforts are going on to
agricultural expert advice to each and every farm in a timely manner at the farmers’
doorstep without asking a question by farmers. The advice is provided once in a week
AGRICULTURAL AGRICULTURAL
EXPERTS INFORMATION
SYSTEM
INTERNET
COORDINATOR COORDINATOR
COORDINATOR
FARMERS FARMERS
FARMERS
Insurance provides cover against the risk of loss of produce or assets or health of
the borrower and his family members. Thus, availability of insurance products goes a
long way in creating a sense of security amongst the farmers. The insurance facilities
available in India at present to the farmers may broadly be divided into following
categories:
was introduced from the Rabi season in 1999-2000 by expanding the scope and content
of the earlier CCIS. It is primarily based on area approach and covers all farmers,
compulsory for farmers borrowing from the banking system and - on voluntary basis in
23 states and two Union Territories. NAIS envisages area approach for wide-spread
calamities and individual approach for localized calamities such as hailstorm, landslide
and flash floods (the latter is to be on an experimental basis). Each participating state/UT
was to bring down the unit of insurance to village panchayat. However, due to financial
and infrastructural constraints, this could not be possible till Kharif 2006. The sum
insured for the borrowing farmers is the amount of loan availed. This can be increased up
to value of guaranteed yield and further up to 150 per cent of the average yield. For non-
borrowing farmers, the sum insured is value of guaranteed yield, which can be extended
up to 150 per cent of the average yield. Premium rates vary between 1.5% and 3.5%
depending on the type of crop insured. The premium in case of small and marginal
farmers is subsidized by 10 per cent, which is shared equally by the Central and the
State/UT governments. Three levels of indemnity for low-risk, medium-risk and high-risk
areas are available for different crops. Further, the scheme envisages sharing of risk by
the Central and State/ UT governments as per pre-defined formula. The scheme for Rabi
season of 2005-06 covered about 18 million farmers (source: AICIL) and thus, has
become the largest crop insurance programme in the world. AICIL has, as on December
(a) The scheme enabled the farmers to take risks in changing cropping patterns.
(b) Due to the compensation available under the scheme, farmers could repay their bank
(c) As very few non-borrowing farmers insure their crops, most of such farmers do not
(e) The method of assessment of crop yield by the insurance companies i.e. average of
last three years' yield was considered inadequate, resulting in farmers getting less amount
of compensation.
(f) Despite the service charges given to the banks by the AICI and other insurance
companies, bankers have not been active in selling the product to non-borrowing farmers
(g) The scheme does not cover a substantial number of farmers (only about 150 lakh
The Government of India had set up a Working Group to examine various aspects
related to crop insurance. The Working Group in its report has suggested several
(a) Insurance unit should be reduced to the level of village panchayat for major crops. To
counter scope for possible interference and manipulation in the conduct of crop cutting
experiments (CCEs), certain checks and balances have been suggested. The costs of
CCEs are shared by the Government of India and State in equal proportion. States can use
(b) Guaranteed yield should be based on average of the best five out of the preceding
(c) Indemnity levels should be 90% for low risk areas/crops and 80% for others.
(d) Settlement of insurance claim must be made mandatorily be done before the start of
The report of the Working Group is under the consideration of the Government of India.
Apart from implementing NAIS, the AICI has introduced the following other insurance
schemes.
Apart from the above scheme, which protects farmers against only yield
fluctuations, the AICIL has introduced Farm Income Insurance Scheme (FIIS) during
Farm income insurance scheme has been formulated to provide income protection to the
farmers by integrating the mechanism of insuring production as well as market risk. The
scheme also aims at sustainable production in the agricultural sector. This scheme has
been designed to take care of variability in both yield and market price. The objective of
FIIS is to provide financial support to farmers in the event of loss in income from adverse
incidence of crop yield (on account of natural calamities, pests and diseases) and market
price fluctuations. The Scheme also aims to encourage farmers to adopt prudent and
progressive farming practices, enhance food and livelihood securities of the farming
community and stabilize farm incomes; particularly in disaster years. A premium subsidy
of 75% is proposed to be given in case of small farmers and marginal farmers and 50%
for other farmers. The scheme has been implemented in 21 districts of 13 states in Rabi
2003-04.Asper information available, more than 27,329 farmers and risk commitment of
the Indian context because weather, particularly rainfall, has an overriding influence on
deviation in crop output due to the deviations in weather conditions. This estimate is
thereafter linked with the financial losses suffered by farmers and indemnities payable.
The ICICI-Lombard General Insurance Company Ltd. is the first insurance company to
introduce a rainfall insurance based on ‘composite rainfall index’ in 2003 in some parts
of Andhra Pradesh. The rainfall index insurance and other weather-based insurance
schemes have been extended to several crops and areas beginning with Kharif 2004
season. Similarly, IFFCO-Tokyo General Insurance Company has come up with their
rainfall insurance called “Baarish Bima” since 2004. The AICIL also launched “Varsha
Bima” in 2004 with different options viz. seasonal rainfall insurance, sowing failure
insurance, rainfall distribution insurance and catastrophe option for the farming
community. Varsha Bima has been fine-tuned and extended to 150 locations in 15 states
during Kharif 2006. At present it covers about 12% of farmers and about 10% of area of
cultivation.
(a) Asset insurance is provided in India by the General Insurance Companies in both
public and private sectors. Asset insurance concentrates on insuring the productive assets
of the farmers like livestock, stock of grains in warehouses (Khalihan) or otherwise, fish
in ponds, animal carts, failed wells, dwelling units, pump sets, etc.(Kisan Package Policy
(b) Cattle & Livestock Insurance policies are offered by General (non-Life) Insurance
Companies (viz. National Insurance Companies Ltd., New India Assurance Company
Ltd., Oriental Insurance Company Ltd., United India Insurance Co. Ltd.) covering all
indigenous/cross breed/ exotic animals in the prescribed age groups, duly fixing the value
and certifying the health of the proposed animal by a qualified veterinary doctor. Animal
insurance. The risks covered are Death due to accidents including fire, lightning, flood
and cyclone or disease contracted during the currency of the policy period and permanent
total disability of the cattle due to total incapacity to conceive or yield milk to be covered
(c) Poultry Insurance policies are offered by insurance companies covering layer birds
and hatchery birds in a poultry farm in the age group of 1 day old to 72 weeks and
broilers in the age group of 1 day to 8 weeks. Ducks and Quails are also insured under
the policy. Poultry farmers/financing bank are eligible to insure the birds. Policy
provides indemnity against death of birds due to fire, lightning, flood, cyclone, strike,
riot, civil commotion, terrorism, earthquake and disease contracted or occurred during the
policy period (a few specified diseases are, however, excluded and can be covered
subject to vaccination).
(d) Agricultural Pump Set Insurance policies are offered by insurance companies
covering all kinds of pump sets like centrifugal, jet and submersible (both electrical and
manufacturers of pump sets can insure under Pump Set Package Policy. The risks
covered are -
• Flood.
Life insurance is provided in India by the life insurance companies (both private
and public sectors) and Health insurance is provided by the general insurance
companies. During 1993-94, rural share of LIC accounted 45.30% in no. of policies and
40% in sum assured. Life insurance primarily endeavors to compensate a farmer for
possible loss of life, while health insurance is primarily targeted towards the medical
expenses of the farmer and/or his dependents. Personal accident cover is another popular
insurance option. In some cases of health insurance, as in the case of Universal Health
Insurance Scheme of the Oriental Insurance Company Ltd., Central Government provides
premium subsidy. Payment of service tax by these agencies has also been exempted.
Govt. of West Bengal has introduced a scheme for insuring the farmers below the
poverty level. No premium is to be paid by the farmers. It will subsidized by the Govt.
The amount of insurance is Rs. 20,000 (twenty thousand only). The premium to be paid is
Rs. 100 per annum. Agricultural Department will pay the premium in favour of the
farmer. At present it is the very scheme to be introduced for the Districts- Murshidabad,
Bardwan, Kochbihar and Hooghly. The facility will be available to the farmers whose
weather and large-scale damages due to attack of pests and diseases, crop insurance
assumes a vital role in the stable growth of the sector. The idea of crop insurance
emerged in India during the early part of the twentieth century. Yet it was not operated in
a big way till recent years. It is still evolving in terms of scope, spread and structure. J.S.
Chakravarti proposed a rain insurance scheme for the Mysore State and for India as a
whole with view to insuring farmers against drought. His scheme was based on the area
approach. He published a number of papers on the subject since 1915 in the Mysore
Scheme suited to Indian Conditions”. There were also attempts prior to independence by
princely states like Dewas, Baroda, Madras etc to introduce crop insurance.
1947. The subject as discussed in 1947 by the Central Legislature and the
then Minister of Food and Agriculture, Dr. Rajendra Prasad gave an
assurance that the government would examine the possibility of crop and
1970 the draft Bill and the Model Scheme were referred to an Expert
Committee headed by Dr. Dharm Narain. Thus for over two decades the
governments for their views. The bill provided for the Central Government
However, none of the States was in favour of the scheme because of very
started from 1972-73. The first crop insurance program was on H-4 cotton in Gujarat. All
covered 3110 farmers for a premium of Rs. 4, 54,000 and paid claims of Rs. 3.79
millions. It was realized that programs based on the individual farm approach would not
major crops was introduced in 1985, coinciding with the introduction of the
on a pilot basis.
Evolution
assurance given in this regard by the Ministry of Food and Agriculture in the
special study was commissioned in 1947-48. The first aspect regarding the
seeks to indemnify the farmer to the full extent of the losses and the
data of individual farmers and in view of the moral hazards involved in the
homogenous from the point of view of crop production and whose annual
variability of crop production would be similar, would form the basic unit,
individual farmers in such cases pay the same rate of premium and receive
started from 1972-73. In 1972-73, the General Insurance Department of Life Insurance
Corporation of India introduced a Crop Insurance Scheme on H-4 cotton. Later in 1972,
general insurance business was nationalized and, by an Act of Parliament, the General
Insurance Corporation of India (GIC) was set up. The new Corporation took over the
experimental scheme in respect of H-4 cotton. This Scheme was based on “Individual
Approach" and later included Groundnut, Wheat and Potato and implemented in the
states of Gujarat, Maharashtra, TamilNadu, Andhra Pradesh, Karnataka and West Bengal.
It continued up to 1978-79 and covered only 3110 farmers for a premium of Rs. 4.54
collected from different books, journals, websites and Government publication. The
The methodology used in this term paper was planned on the basis of three points
Secondary data collected from different books, journals, websites and Government
publication.
C. Furnishing The Report:- The report is prepared step by step to reach the
Block-1
National Agricultural Insurance Scheme (NAIS) (Rashtriya
A) Objectives:
The Crops in the following broad groups in respect of which i) the past yield
number of years, and ii) requisite number of CCEs are conducted for
b. Oilseeds
The Scheme extends to all States and Union Territories. The States / UTs
opting for the Scheme would be required to take up all the crops identified
Exit clause: The States / Union Territories once opting for the Scheme will
(i) On a compulsory basis: All farmers growing notified crops and availing
(ii) On a voluntary basis: All other farmers growing notified crops (i.e.,
Tornado etc.
The Sum Insured (SI) may extend to the value of the Threshold Yield (TY)
of the insured crop at the option of the insured farmers. However, a farmer
may also insure his crop beyond value of Threshold Yield level upto 150%
commercial rates.
In case of Loanee farmers the Sum Insured would be at least equal to the
D) PREMIUM RATES:
S.No. Season Crops Premium rate
1. Kharif Bajra & Oilseeds 3.5% of SI or Actuarial rate,
whichever is less
Other crops (cereals, other millets 2.5% of SI or Actuarial rate,
& pulses) whichever is less
2. Rabi Wheat 1.5% of SI or Actuarial rate,
whichever is less
Other crops (other cereals, 2.0% of SI or Actuarial rate,
millets, pulses & oilseeds) whichever is less
3. Kharif & Annual Commercial / Annual Actuarial rates
Rabi Horticultural crops
Transition to the actuarial regime in case of cereals, millets, pulses & oilseeds would be
made in a period of five years. The actuarial rates shall be applied at District / Region /
E) PREMIUM SUBSIDY:
50% subsidy in premium is allowed in respect of Small & Marginal farmers, to be shared
equally by the Government of India and State/UT Govt. The premium subsidy will be
phased out on a sunset basis in a period of three to five years, subject to review of the
financial results and the response of the farmers at the end of the first year of the
acres).
F) SHARING OF RISK:
Risk will be shared by Implementing Agency (IA) and the Government in the following
proportion:
• Food crops & Oilseeds: Till complete transition to actuarial regime in a period of
five years takes place, claims beyond 100% of premium will be borne by the
will be met by IA and claims beyond 150% shall be paid out of Corpus Fund for a
period of three years. After this period of three years, claims up to 200% will be
bear all normal losses, i.e. claims up to 150% of premium in the first three years
claims beyond 150% of premium in the first three years and 200% of premium
thereafter shall be paid out of Corpus Fund. However, the period of three years
stipulated for this purpose will be reviewed on the basis of the financial results
after the first year of implementation and the period will be extended to five years
if considered necessary.
To meet catastrophic losses, a Corpus Fund shall be created with contributions from the
Government of India and State Govt. / UT on 50:50 bases. A portion of Calamity Relief
The Scheme would operate on the basis of 'Area Approach' i.e., Defined Areas for each
notified crop for widespread calamities and on an individual basis for localised calamities
such as hailstorm, landslide, cyclone and flood. The Defined Area (i.e., unit area of
insurance) may be a Gram Panchayat, Mandal, Hobli, Circle, Phirka, Block, Taluka etc.
to be decided by the State/UT Govt. However, each participating State /UT Govt. will be
required to reach the level of Gram Panchayat as the unit in a maximum period of three
years.
implemented in limited areas on experimental basis initially and shall be extended in the
light of operational experience gained. The District Revenue administration will assist
a. The broad seasonality discipline followed for Loanee farmers will be as under:
b. The broad cut-off dates for receipt of proposals in respect of Non-loanee farmers will
be as under :
The State/UT Govt. will plan and conduct the requisite number of Crop Cutting
Experiments CCEs for all notified crops in the notified insurance units in order to assess
the crop yield. The State / UT Govt. will maintain single series of Crop Cutting
Experiments (CCEs) and resultant Yield estimates, both for Crop Production estimates
Ministry of Agriculture (G.O.I.) and IA shall be constituted to decide the sample size of
Three levels of Indemnity, viz., 90%, 80% & 60% corresponding to Low Risk, Medium
Risk & High Risk areas shall be available for all crops (cereals, millets, pulses & oilseeds
(C.V.) in yield of past 10 years' data. However, the insured farmers of unit area may opt
for higher level of indemnity on payment of additional premium based on actuarial rates.
The Threshold yield (TY) or Guaranteed yield for a crop in an Insurance Unit shall be the
moving average based on past three years Average Yield in case of Rice & Wheat and
five years Average Yield in case of other crops, multiplied by the level of indemnity.
basis of requisite number of Crop Cutting Experiments (CCEs)] in the insured season,
falls short of the specified 'Threshold Yield' (TY), all the insured farmers growing that
crop in the defined area are deemed to have suffered shortfall in their yield. The Scheme
(Shortfall in Yield = 'Threshold Yield - Actual Yield' for the Defined Area).
perils, such as hailstorm, landslide, cyclone and flood where settlement of claims will be
The loss assessment of localized risks on individual basis will be experimented in limited
areas initially and shall be extended in the light of operational experience gained. The
prescribed cut-off dates, claims will be worked out and settled by IA.
The claim cheques along with claim particulars will be released to the
individual Nodal Banks. The Banks at the grass-root level, in turn, shall
credit the accounts of the individual farmers and display the particulars of
The A&O expenses would be shared equally by the Central Government &
respective State Government on sunset basis [100% in 1st year, 80% in 2nd
year, 60% in 3rd year, 40% in 4th year, 20% in 5th year and 'zero'
thereafter].
O) CORPUS FUND:
To meet catastrophic losses, a Corpus Fund shall be created with
P) REINSURANCE COVER:
REVIEW:
In respect of Loanee farmers, the Banks shall play the same role as under
CCIS.
with the Declarations and send it to IA within the prescribed time limits.
of RBI or at the option of the Banks (where Co-operative Banks have good
During each crop season, the agricultural situation will be closely monitored
implementation of NAIS. Until such time as the new set up is created, the
farmers, but, to the entire community directly and indirectly through spill-
In terms of the number of farmers covered, it is the largest crop insurance program in the
world. It’s covering more than 35 different crops during Kharif and over 30 crops during
Rabi season. Since inception (till Rabi 2005-06) the scheme covered 78.96 million
farmers growing crops in 128.99 million hectares with a sum insured of Rs. 755.81
billions, earning a premium of Rs. 23.27 billions. The claims finalized for the period were
Rs. 72.18 billions. The details of season-wise coverage till Rabi 2005-06 are as follows:
For the purpose of the Scheme, the Scheduled Institutions engaged in disbursing SAO
loans as per the relevant guidelines of NABARD / RBI will be reckoned as Financial
Institutions.
Each scheduled Commercial bank shall with concurrence of IA fix Nodal points which
would deal with IA on behalf of branches in the division / district / state. The Nodal
points for Commercial banks will be minimum one level above the Branch office. The
Nodal points for Cooperative banks will be DCC Banks and those for RRBs, their Head
Office.
Nodal points would be designated for implementation and these banks would attend to
1. On receipt of the communication on notification of crops and areas from the State
Govt. / UT, the Nodal banks will communicate the same to the branch offices
2. The FIs would advance additional loan to Loanee farmers to meet requirement of
insurance Declarations to the Office of IA, in the prescribed format, along with
Insurance charges payable on all crop loans coming under the purview of the
other farmers.
4. The Apex FIs shall issue appropriate instructions to Nodal banks as well as crop
5. For insurable crop loans disbursed under Kissan Credit Card (KCC), the FIs shall
To guide the farmers in filing the proposal forms and collecting the required documents.
Following the guidelines while disbursing crop loans and ensuring proper end-use of loan
disbursed.
forwarding the same to the branch along with the premium amount.
Maintaining the records of proposal forms, other relevant documents, statements for the
insured is on the basis of amount of loan disbursed and within one month time
from cut-off date for receipt of proposals, where sum insured is on any other
basis.
branches/PACS with all particulars within seven days and these branches/PACS
will in turn credit the Accounts of beneficiary farmers within seven days. The list
of beneficiary farmers with claim amount will be displayed by the branch / PACS.
4. The IA will be provided with all the norms / guidelines relating to SAO crop loan
5. In case a farmer is deprived of any benefit under the Scheme due to errors /
6. If the farmer is adopting mixed cropping, the sum insured of a crop should be on
Unit Area-wise yield data of immediate past 10 years for all crops notified under
the Scheme.
smaller defined areas for various crops, keeping in mind that smaller areas will be
more homogeneous and would be more reflective of all crop losses, including
4. The State Government shall issue the requisite Notification and communicate to
all participating FIs during every crop season. The Notification of the State
as per the scale and dates fixed by MOA, the Government of India.
8. The final Yield data in the standard format for all Unit Areas for notified
crops for the crop season will be furnished to IA within the stipulated date.
9. In case, the State /UT administration fail to furnish yield data based on
requisite number of CCEs or fail to furnish yield data within the stipulated
date, responsibility of such claims, if any arising out of such data will
2. The IA shall open separate Accounts to deal with Corpus Fund and also premiums
1. As the Scheme is compulsory for all Loanee farmers availing SAO loans for
notified crops, it is mandatory for all Loanee farmers to insist on coverage of all
eligible loans (as per the Scheme provisions) under the Scheme.
Government / UT admn.
The important duties in case of Non-loanee farmers are as follows:
o The farmer desiring coverage should have an Account in the branch of the
designated bank.
o The farmer must approach the designated branch / PACS and submit the
possession of cultivable land (copy of the pass book, 7/12 / land extract or land revenue
The objective of FII scheme is to provide financial support to farmers in the event
of loss in income from adverse incidence of crop yield (on account of natural calamities,
pests and diseases) and market price fluctuations. The Scheme also aims to encourage
farmers to adopt prudent and progressive farming practices, enhance food and livelihood
securities of the farming community and stabilize farm incomes; particularly in disaster
years. A premium subsidy of 75% is proposed to be given in case of small farmers and
marginal farmers and 50% for other farmers. The scheme has been implemented in 21
farmers and risk commitment of about Rs.22crore are covered so far, under the scheme.
Background
variations account for more than 50% of variability in crop yields. Its known
that yields are variable, however, it’s now being realized that the weather,
now a hope of mitigating the adverse financial effects that rainfall can have
Scope
Varsha Bima covers anticipated shortfall in crop yield on account of
deficit rainfall. Varsha Bima is voluntary for all classes of cultivators who
insurance under the scheme. Initially Varsha Bima is meant for cultivators
Period of Insurance
crops; June to October for medium duration crops; and June to November
for longer duration crops. Further, these periods are state-specific. In case of
Proposal forms are available at all the loan disbursing outlets viz
under Varsha Bima at the grass-root level shall be made mostly through the
Self Help Groups (SHGs), Farmers’ Groups could also be utilized for
Varsha Bima is required to have a Bank Account at the RFI Branch, which
A cultivator can buy Varsha Bima only up to 15th June for ‘sowing
Coverage Options
Rainfall” (in mm) from “Normal Rainfall” (in mm) for the entire season.
(with June to September or October for short & medium duration crops).
The pay-out structure is designed in such a way that the yield is correlated to
various ranges of adverse deviation in rainfall. The sum insured per hectare
Rainfall Index” from “Normal Rainfall Index” for the entire season. The
the season. The indices vary from IMD station to station and crop to crop.
The sum insured per hectare is the maximum pay-out corresponding to the
maximum potential loss. The claim pay-out shall be on a graded scale (in
Rainfall Index.
from “Normal Rainfall” (in mm) beyond 40% between 15th June and 15th
August. The sum insured per hectare is the maximum input cost incurred by
the cultivator till the end of the sowing period, and is pre-specified. The
Sum Insured
the maximum input cost incurred by the cultivator till the end of the sowing
Premium
Premium may vary from option to option and crop to crop. The
premium rates have been optimized vis-à-vis benefits, and starts from 1%.
The procedure for working out Claims is automated i.e., there shall be
insured cultivator. Normally Claims are paid on the basis of Actual Rainfall
ponds, animal carts, failed wells, dwelling units, pump sets, etc.(Kisan
LIC has taken several steps to procure business in rural areas. As a first step
45.30% in no. of policies and 40% in sum assured. LIC has launched a
number of policies which cater the insurance needs o flow income groups.
From the annual reports of LIC, Rural business can be depicted by following
table:
insurance:
(These fixed costs are likely to be prohibitive for private insurers seeking to
methodology for measuring crop yields is not trivial, since yields depend on
the seed type used, amount of fertilizer and other inputs applied to the crop
and other factors. This subjectivity also introduces the potential for
crops.
consumption. Basis risk arises from several sources: (i) the relationship
between measured rainfall and crop yields varies with soil type, slope of the
plot, temperature and other factors (e.g. rainfall at night is more likely to
soak into the soil rather than evaporating); (ii) Rainfall measured at the local
(iii) Crop yields at the plot level are affected by non-weather factors like
pests and disease that are not closely correlated with rainfall.
West Bengal agriculture has occupied around 3 percent of India's
productive land. More than 8 percent of India's foods are being generated by
the agricultural sector of West Bengal. Small and marginal farmers rule over
the West Bengal agriculture and cultivate more than 68 percent of the total
area.
earn livelihood especially in the rural sectors. This has been enabled by
various schemes of the Green Revolution and the land reforms. West Bengal
engaged in farming and other agricultural activities. The principal food crop
Bengal include maize, pulses, oil seeds, wheat, barley, potatoes, and
vegetables. The most vital cash crop of West Bengal is Tea and it is also
exported every year. Darjeeling tea is most well-known all over India. West
India. The soil and heavy rainfall witnessed by India are absolutely perfect
for jute cultivation. The two other crops that are cultivated highly in the
department of West Bengal decided to increase the fecundity of various crops cultivated
over there by using superior quality seeds, fertilizers, various plant protection schemes as
also decided to distribute extra and vested land area to the actual agricultural laborers
with the help of land reforms. This will act an added advantage to the productivity of the
There has been a significant rise in the cropping of West Bengal from 131 percent
to 162 percent during the last 2 decades. West Bengal agriculture has been sustaining its
consistency in attaining a track record in food grains production. The state also ranks first
in producing rice among all other states in India. The agriculture in West Bengal also
witnessed a remarkable rise from 0.24 million tones to 0.55 million tones in the last
decade in its production of oil seeds. West Bengal agriculture also ranks second in potato
India. Apart from these food crops, West Bengal agriculture produces more than 60
West Bengal agriculture has been flourishing heavily and it has become one of the
most essential parts in West Bengal's economy as it has been fueling it with its high
classify the state in different region on the basis of vulnerability. In the following figure a
composite vulnerability appears to reflect the relative vulnerability across West Bengal in
qualitative terms. Broadly, the southeastern parts of the region are observed to be of
higher risk. The simple approach illustrated in this exercise can be readily adapted to
risk in terms of rupees at a Block or Panchayet level, covering the entire state.
BLOCK LEVEL STUDY ON AGRO INSURANCE IN
WEST BENGAL
In West Bengal, under Barrackpore subdivision, the block ‘Barrackpore-1’ is a block
which one has been selected for my study. It is nearer to Naihati, the place of birth of Sri
Bankim Chandra Chatterjee. In West Bengal more farmers are not so much familiar with
Barrackpore Block-1:
To understand the farmer’s perception about the agro-insurance, I have conducted
-Banks 30.00
To know about the farmer’s financial situation I have visited rural & semi urban
SL.No. Subjects
1 Source of Irrigation
(a) Heavy-Deep Tube well 31 nos.
(b) Medium-Deep Tubewell+Shallow 902 nos
(c) River lift Irrigation 1 no
2 Total no. of Shallow
(a) Govt.sponsored ---
(b) Private 902 nos
(c) Others 2 nos
3 Net Irrigated Area 2,879 hac
4 Total Irrigated Area 6,850 nos
5 Percentage of Irrigation 60%
6 Irrigation through Surface Water 40%
7 Irrigation through Ground Water 60%
Block Information
A. General Informations:
Barrackpore-1
(1) Geographical Area 7,622.07 hec
(2) No. of Gram Panchayet 7 no
(3) No. of Mouza 40 no
B. Land Use
(1) Net Area under cultivation 5,365 hec
(2) Area under orchard (Fruits) 215 hec
(3) Area under Orchard (Bamboo) 53 hec
(4) Current Fallow Land 385 hec
(5) Area sown more than once 3,780 hec
(6) Gross cropped area 8,773 hec
(7) Non-Argil/Home stead land 2,625.07 hec
(8) Cropping Intensity 186%
C. Irrigation
(1) Deep Tube wells 31 nos=930 hec
(2) River lift Irrigation 1 nos=40 hec
(3) Shallow Tube wells 902 nos=1,804 hec
(4) Irrigation through Surface Water 10.43% & Ground water=38.67%
(5) Other Sources
Tanks -----
Canals 1 no=65 hec
Beels 1 no.=40 hec
(6) Net Irrigated Area 2,879 hec
(7) Gross Irrigated Area 6,850 hec
(8) Percentage of Area Irrigated 60%
E. Fertilizers Status
(1) Organic carbon 0.6%(M)
(2) Average P2O5 84(M)
(3) Average K2O 265(M)
(4) PH 6.9(N)
(5) E.C. 0.7(N)
Aman
1 Paddy 500 mt 881 mt --- --- --- --- ---
Bhadui
2 Veg. 285 mt 400 mt --- --- 166 hec 360 hec ---
Winter
3 Veg. 1,140 mt 750 mt 72 hec 437 hec --- 223 hec 224 hec
Winter
4 Chili 9 mt --- --- --- --- --- ---
Oil Seed
5 14 mt --- --- --- --- --- ---
Kalai
6 13 mt 16 mt --- --- --- 32 hec ---
Papaya
7 10 hec 26 hec --- 20 hec --- 26 hec ---
Banana
8 19 hec 44 hec --- 38 hec --- 26 hec ---
Aus Paddy
9 --- 179 mt --- --- --- 112 hec ---
Bhadui
10 Chili --- 9 mt --- --- --- --- ---
Boro
2,009
11 Paddy --- --- --- --- --- ---
hec
Potato
12 --- --- 38 hec --- --- --- 38 hec
Lentil
(Rabi
13 --- --- 31 hec --- --- --- 54 hec
pulses)
Onion
14 --- --- 21 hec --- --- --- 31 hec
Mango
15 --- --- --- 115 hec --- --- ---
Aman+Aus
16 seed --- --- --- --- 141 hec --- ---
• Source: Office of Agricultural Development Officer, Barrackpore Block-1,
office.
facilitate the activities and to capture the untapped rural insurance sectors .This type of
steps of insurance companies in the country is a great strength and it will help to convert
the agriculture into agro-business. But yet to day, insurance companies are not so far
designed to tap the untapped area throughout the country especially in west Bengal.
Public sector insurance companies looked at agro insurance as liability, not as business.
“In just two years of its existence, the National Agricultural Insurance Company
of India has achieved many a milestone .They has set up the R&D department at HO to
design farmer friendly and affordable insurance products.” “The AIC product of NAIS
was implemented in 23 states and2 union territories, insuring 30crops during the Kharif
season and 25 crops during the Rabi season. Almost 18 million farmers were insured
during 2004-2005……This is going to benefit six crore farmer by the year 2011-12” (The
less still a far cry in India. State Governments and the agencies who are participating in
various agricultural insurance schemes have to educate the farmers on the scheme
features, to guide them in filling the proposal forms and collecting the required
documents” (ibid.pg.1196).
In West Bengal, farmers are also not so aware of agro-insurance. And for that
they are also presently facing the problem of agricultural loss. Govt. of West Bengal has
taken different measures to improve the situation of farmers out of which application of
agro- insurance is an important one. But in West Bengal, farmers are to be informed more
about the agro-insurance. They need help from Govt.Organisations and Non-Govt.
Organizations to know more about insurance and its impact on their livelihood.
Basic result of agro-insurance information collection is not satisfactory from my
part. Basically the farmers of Barrackpore Block-1 do not participate in the awareness
programmes of these agro insurances though it is very frequently found that crops of
huge quantity are damaged in those fields where they cultivate these crops. Actually they
are not informed about the matter due to lack of marketing effort from the part of the
farmers have been taken and it is found that the maximum farmers are not aware of the
prevailing agro-insurance facilities in the rural market though they really need it.
Sl. No. Name of the Books Authors
Crop Insurance in India – Scope for Vyas., V.S. and Singh Surjit
9. Improvement, EPW, Vol. XLI, No. 4 & 5,
(2006)
November 4-10