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The document outlines the evolution of crop insurance in India, highlighting its historical challenges and various schemes introduced over the years, including the Pilot Crop Insurance Scheme and the Comprehensive Crop Insurance Scheme. It discusses different approaches to crop insurance, such as individual and homogeneous area approaches, and the transition to more comprehensive schemes aimed at stabilizing farmers' income. Additionally, it emphasizes the broader scope of agricultural insurance beyond crop insurance, covering various sectors like horticulture and livestock.

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tsandrasanal
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3 views

AI Mod 3 and 4 ppt

The document outlines the evolution of crop insurance in India, highlighting its historical challenges and various schemes introduced over the years, including the Pilot Crop Insurance Scheme and the Comprehensive Crop Insurance Scheme. It discusses different approaches to crop insurance, such as individual and homogeneous area approaches, and the transition to more comprehensive schemes aimed at stabilizing farmers' income. Additionally, it emphasizes the broader scope of agricultural insurance beyond crop insurance, covering various sectors like horticulture and livestock.

Uploaded by

tsandrasanal
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Evolution of Crop Insurance in

India
• For nearly a century, crop insurance in India
has been discussed as a crucial risk
management tool, but most efforts either
stayed on paper or failed because they
weren't well-planned and didn't cover enough
areas.
• Between 1912 and 1920, J S Chakravarthi from Mysore
State worked on using a rainfall index to compensate
for crop losses, even publishing a book on the topic in
1920. Despite his efforts and a grain insurance scheme
prepared by Mysore State in 1939, it was never put
into action.
• Attempts to organize crop insurance in Baroda State
didn't pan out, and compulsory crop insurance
introduced in Dewas Junior (now madhya pradesh) in
1943 was discontinued. In Punjab, 100 relief societies
were formed, while various proposed schemes in
Madras by Dr. B.V. Narayanswamy Naidu and Dr. B.
Natarajan never got off the ground.
• The Indian Council of Agricultural Research
(ICAR) suggested a crop insurance scheme for
selected crops and areas in Madras, Bombay,
and Madhya Pradesh, but it wasn't
implemented. After independence in 1947,
the Ministry of Food and Agriculture promised
to introduce crop and cattle insurance, leading
to a special study in 1947-48.
Approach to crop insurance
• The first aspect regarding the modalities of
crop insurance considered was whether the
same should be on an:
• Individual approach
• Homogenous area approach
Let us look at both briefly
• Individual approach
• This approach aims to fully compensate farmers for
their losses, with premiums based on their past
yields and losses. It requires reliable and accurate
data on individual farmers' crop yields over a long
period to set fair premiums.
• Homogenous area approach
• The 'homogenous area' approach is used when there
is no reliable data on individual farmers and to avoid
potential moral hazards. Instead of focusing on
individual farmers, it groups villages with similar crop
production and annual variability as the basic unit.
Model scheme of crop insurance
• In 1965, the government introduced a Crop Insurance Bill and
a model compulsory insurance scheme, asking states for their
opinions. The states rejected it due to high costs, so an expert
committee led by Dr. Dharam Narain examined the issue in
detail in 1970.
• The committee recommended against crop insurance due to
the high costs and suggested using the funds to improve
agricultural productivity instead. They believed it would be
cheaper and more effective to encourage farmers to save and
provide them with credit during crop failures. Given the
current conditions, they advised against introducing crop
insurance in the near future.
Crop insurance schemes
1. Experimental schemes
Starting in 1972-73, limited crop insurance
experiments began, with the Life Insurance
Corporation of India introducing a scheme for H-
4 cotton. The General Insurance Corporation of
India took over this scheme, later adding
groundnut, wheat, and potato, but it only
covered 3110 farmers and ended in 1978 with
claims far exceeding the premiums collected.
• However, these schemes were discontinued due to the
following reasons:
1. Collecting premiums and determining yields required
direct contact with individual farmers, needing a large setup
the insurance company couldn't afford with the premiums
charged.
2. The schemes were unsuitable for large-scale
implementation due to their reliance on controlled
cultivation conditions.
3. They didn't align with government extension projects,
missing out on productivity and loss minimization benefits.
4. The schemes operated in high-risk areas without proper
coordination, and reliance on fertilizer companies for field
services put the insurance company at a disadvantage.
Pilot Crop Insurance Scheme (PCIS)-1979

• Based on recommendations from agricultural economist Prof.


V.M. Dandekar, GIC introduced a "Pilot Crop Insurance" scheme
in 1979.
The important features of the scheme were:
The PCIS-1979, based on the Area Approach, covered cereals,
millets, oilseeds, cotton, potato, gram, and barley, but only loanee
farmers participated voluntarily.
Risk was split 2:1 between GIC and state governments, with
maximum coverage initially set at 100% of crop loans, later
increased to 150%.
Implemented in 13 states until 1984-85, it covered 6.27 lakh
farmers, collecting premiums totaling 196.95 lakhs against claims
amounting to 157.05 lakhs.
Comprehensive Crop Insurance Scheme (CCIS)
• Following the PCIS, the Comprehensive Crop
Insurance Scheme (CCIS) began on April 1,
1985, with the Government of India and
several states participating voluntarily.
• It linked to short-term crop credit and
operated on the "Homogeneous Area"
approach, involving 15 states and 2 union
territories until the kharif season of 1999.
• Main features of the scheme
The Comprehensive Crop Insurance Scheme (CCIS) covered
farmers who took crop loans from financial institutions for food
crops and oilseeds on a compulsory basis, with coverage up to
100% of the crop loan capped at Rs. 10,000 per farmer per
season.
Premium rates were set at 2% for cereals and millets and 1%
for pulses and oilseeds, with 50% of the premium subsidized
equally by the Central and State Governments for small and
marginal farmers.
The scheme operated on a 2:1 sharing basis for premiums and
claims between the Central and State Governments and was
optional for state participation, involving multiple agencies
such as the Government of India, state departments, banking
institutions, and the General Insurance Corporation (GIC).
Experimental Crop Insurance Scheme (ECIS)

• During the rabi season of 1997-98, the


Experimental Crop Insurance Scheme (ECIS) was
introduced in 14 districts across five states,
targeting only small and marginal farmers, both
loanee and non-loanee, with a 100% subsidy on
premiums.
• The scheme mirrored CCIS but with a higher
subsidy and a premium and claims sharing ratio of
4:1 between the Central and State Governments.
Farm Income Insurance Scheme (FIIS)
• The Farm Income Insurance Scheme (FIIS),
introduced on a pilot basis during the rabi
season of 2003-04, aimed to address income
risks faced by farmers by considering both
yield fluctuations and price risks.
• Unlike the National Agricultural Insurance
Scheme (NAIS), which focuses solely on yield
fluctuations, FIIS sought to stabilize farmers'
income by covering both yield and price risks.
Features
• The Farm Income Insurance Scheme (FIIS), piloted for rice and wheat, used
the 'homogeneous area' approach, with insurance units like village
panchayats or districts.
• It was mandatory for borrowing farmers but optional for non-borrowers, with
actuarial premium rates set at the district level and subsidized by the
Government of India—75% for small/marginal farmers and 50% for others.
• The scheme offered indemnity levels of 90% for low-risk and 80% for high-
risk areas, aiming to stabilize farmer income by compensating if actual
income (yield × market price) fell below guaranteed income (average yield ×
indemnity level × MSP).
• Market prices were determined using a weighted average of local prices with
caps to manage volatility, and government procurement at MSP was
suspended in pilot districts where FIIS was implemented, replacing the
National Agricultural Insurance Scheme (NAIS).
Types of agricultural insurance
• In India, there's a limited understanding of
agricultural insurance, often equated with
crop insurance for field crops.
• However, agricultural insurance actually
encompasses a broader range including
horticulture, plantations, livestock, poultry,
aquaculture, sericulture, and covers the entire
production cycle from post-harvest storage to
transportation to market.
Some of the agriculture insurance schemes
presently available in the country are:
• Crop insurance
• Horticulture / Plantation insurance
• Cattle insurance
• Sheep / Goat insurance
• Pig insurance
• Poultry insurance
• Sericulture insurance
• Apiculture insurance
• Fresh water fish insurance
• Aquaculture (shrimp/prawn) insurance
• Farmers’ package insurance Agricultural pump-set insurance
Organisations transacting agricultural
insurance in India
Traditionally, the following organisations were
transacting agricultural insurance in India:
• General Insurance Corporation of India
• National Insurance Company Limited
• New India Assurance Company Limited
• Oriental Insurance Company Limited
• United India Insurance Company Limited

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