Welcome to Modern Agriculture!
Introduction: Hello farmers, today we are here with the details of agri insurance or crop insurance schemes in India. Agriculture remains the main sector of the Indian economy. Agricultural insurance is also called Crop insurance. Crop insurance is the main component of the agriculture sector, especially in a country such as India, where the majority of farmers are small and marginal with low savings that reduce their capability to weather agricultural risks.
The agriculture sector is demographically the most important and broadest economic sector in India. Even a marginal dip in the agricultural production has trickled down the result on the whole economy. The variation in production is directly affected by several unfavorable conditions such as pest attacks, variations in weather conditions such as rainfall, temperature, humidity, etc. Therefore, the need of the hour is to secure the yield and yield-based losses.
Agricultural insurance in India is by which farmers can stabilize farm income and investment against the disastrous result of losses due to natural hazards or low market prices. Crop insurance not only stabilizes the farm income but also helps the farmers to start production after a bad agricultural year. It cushions the shock of crop losses by providing farmers with the least amount of protection. It spreads the crop losses over space and time and helps farmers create more investments in agriculture.
Agricultural insurance, in general, has not been so successful across the globe in different countries. Policymakers have unrolled various avatars of agricultural insurance at different times. Considering the unique nature of Indian agriculture and the inequitable socio-economic status of Indian farmers, crop insurance has remained a failed attempt in general.
The objectives of Agricultural insurance are given below;
Every year, in one part of India or the other food crops, are mainly affected by natural calamities. Crop yield instability is the normal form and agriculture continues still to be which the farmer’s fortunes are exposed, is practically the same as before. Good and bad years, wet weather and drought or floods and frost, low yields and bumper crops are to be expected in mixed succession.
The advantages of crop insurance are given below;
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National Agricultural Insurance Scheme (NAIS) and the Modified National Agriculture Insurance Scheme (MNAIS) cover cereals, millets, pulses, oilseeds, Annual Commercial or Annual Horticultural crops. The crops are selected for Agriculture insurance if the past yield data for ten years are obtainable, and the State government agrees to conduct a requisite number of yield estimation surveys to estimate the yields for the proposed season. However, almost any crop can be covered under Weather Based Crop Insurance Scheme (WBCIS) for which a broad correlation can be established between weather parameters and anticipated loss in crop yield.
There are two major categories of Agricultural insurance;
Single peril coverage offers protection from single hazards and multiple-peril protects from several hazards.
Types of Crop insurance will be given below;
Multiple Peril Crop Insurance – Provides financial coverage to manage risks arising from weather-related losses, such as a flood, and drought, etc.
Actual Production History – Covers losses due to wind, hail, insects and also includes coverage for lower yield and compensates for the difference between the estimate and the real
Crop Revenue Coverage – This is based not only on the crop yield but on the total revenue produced from this yield. In case of a drop in crop price, the difference is covered by this kind of crop insurance.
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Following are the stages of the crop loss are covered under crop insurance;
Localized calamities – It covers localized calamities and risks such as hailstorm, landslide affecting isolated farms in the notified area.
Sowing, Planting, and Germination risk – Any problem in planting and sowing because of deficit rainfall or adverse seasonal conditions.
Standing crop loss – Comprehensive risk insurance to cover yield losses because of non-preventable risks, for example, dry spells, flood, hailstorm, cyclone, typhoon.
Post-harvest losses – It covers losses for up to a maximum period of 2 weeks from harvesting.
The Crop insurance scheme provides comprehensive risk insurance for yield losses due to;
Natural Fire and Lightening, Storm, Hailstorm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood, Inundation and Landslide, Drought, Dry spells, Pests, and Diseases, etc. in Area-Yield Index insurance Schemes and Weather indices under Weather Index-based crop insurance Scheme.
The Scheme was introduced during Rabi 1999-2000 season replacing Comprehensive Crop Insurance Scheme or CCIS. The Scheme was to protect the farmers against the losses suffered by them due to crop failure on account of natural calamities such as drought, flood, hailstorm, cyclone, fire, pest, and diseases, etc., to indemnify the losses and restore their creditworthiness for the ensuing season.
The objectives of the MNAIS scheme are as under;
WBCIS aims to mitigate the hardship of the insured farmers against the likelihood of financial loss on account of anticipated crop loss resulting from the incidence of adverse conditions of weather parameters like rainfall, temperature, frost, humidity, etc.
Weather-based Crop Insurance Scheme (WBCIS) is a unique Weather-based Insurance Product designed to give insurance protection against losses in crop yield resulting from adverse weather incidences. It provides payout against adverse rainfall during Kharif and adverse incidence in weather parameters such as frost, heat, relative humidity, and un-seasonal rainfall, etc.
Indian agriculture is extremely vulnerable to climate change and largely dependent on the monsoon. Drought, unseasonal rains, cyclones, hailstorms, floods, and climate extremes have brought huge losses to the farmers. Crop insurance is a reasonable result in the losses arising out of these events. The Pradhan Mantri Fasal Bima Yojana provides monetary compensation to losses arising out of climate risks and due to pests and diseases.
Coverage of Farmers – The PMFBY scheme covers loanee farmers (those who have taken a loan), non-loanee farmers (voluntarily), tenant farmers, and sharecroppers.
Coverage of Crops – Every state has major crops for the Rabi and Kharif seasons. The premium rates differ across seasons.
Area-based Insurance Unit – This unit operates on an area approach. Thus, all farmers in a particular area should pay the same premium and have the same claim payments. The area unit approach reduces the risk of moral hazard and adverse selection.
Coverage of Risks – It aims to prevent sowing or planting risks, loss to standing crop, post-harvest losses and localized calamities. The sum insured is approximately equal to the cost of cultivation per hectare, multiplied by the area of the notified crop proposed by the farmer for insurance.
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