Page 24 - Insurance Times April 2017 Special Issue on Newindia

the backbone of Indian economy. So the Govt. of India is and diseases etc. However, insurance was available for
dedicated to protect its farmer's community's interest selected "notified" crops only.
always. This will not only help in sustaining the livelihood of
our farmers, but also increase the yield of crops grown. But This scheme was open to all farmers but was made
there are several natural hindrances which infact, prevent compulsory for those farmers who had taken some kind of
growth of crops. These are droughts, irregular rainfall, farm loans. The farmers had to pay flat insurance premium
floods, etc. Further, these natural calamities result in the depending upon crop type and this premium was subsidized
poor yield of crops and as the crops gets damaged in by government. There were several problems in NAIS
midway and production becomes less. model.

Another concern is when there is an overproduction of the Firstly, this scheme operated on a so called "Area
crops which happens sometimes. Then the market demand Approach" which means that the states would notify the
falls and thus the farmers do not get very good prices for unit areas of insurance such as blocks, mandals, Tehsil etc.
their crops and they suffer great losses. This leads to greater The states would notify the areas on the basis of past yield
economic losses for farmers and in some cases even, data. Since yield data is crucial for crop insurance, success
farmers have commited suicide. So to provide financial of this scheme was dependent on the availability of the
support to the farmers of this country, the Govt. of India data. The reliable data was not available with most states.
has replaced the old crop insurance plan and it has drafted Secondly, the states needed to notify the unit areas on the
a new one for the welfare of our farmers. A big initiative basis of part yield data and Crop Cutting Experiments (CCEs)
which will change the destiny of Indian farmers in the near every year well in advance. Most states did not follow these
future. prerequisites.

Crop Insurance: An Overview The result was that Insurance companies started crying foul
because payable claims turned out to be several fold higher
New Crop Insurance is no doubt a Mega Initiative, because
than the premium charged and subsidy paid. It was
despite of implementing several crop insurance schemes in
India, farmers needs more protection from the govt. so that assumed that the states would share the premium subsidy
but somehow most states were reluctant to do so. The NAIS
their farming risk can be insulated from various uncertain
was latter modified and was called Modified NAIS or M-
risk that they may encounter in their farming profession.
NAIS. In this scheme, the area approach was done away
with and the premium would be calculated on actuarial
The govt. has realized that the reason for thousands of
basis.
farmers killing themselves every year is not just because of
climatic factors; it is also due to the lack of protection from
This implies that the higher risk crops would have higher
risks and helplessness, and the crop insurance, is not
premium. The number of crops under the scheme was
reaching them effectively, when they need it the most in
increased. Previously, only Agriculture Insurance Company
their life. Pradhan Mantri Fasal Bima Yojana is a mega step
in this direction, and will impact deeply the economic
condition of the farmers of India.

The fact is that , all the crop insurance models put in place
so far since 1970s have met with only limited success and
infact their effective implementation was lacking. In 1985,
a crop insurance scheme in India called Comprehensive Crop
Insurance scheme (CCIS) launched. In 1997, an
Experimental Crop Scheme was launched which lasted only
for a year. In 1999, National Agricultural Insurance Scheme
(NAIS)launched to protect the farmers against losses
suffered by them due to crop failures on account of natural
calamities like; floods, drought, hailstorms, cyclone, pests

24 The Insurance Times, April 2017

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