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Crop
Insurance History: In our country crop production
has been subjected to the vagaries of the climate. Some of the other
problems that the Indian agriculture is constantly tackling with are the
large-scale damages that are caused as a result of the attack of pests
and diseases. It is in a scenario such as this in India that the issue
of crop insurance assumes a vital role in the stable growth of the
agricultural sector. Tracing the Crop Insurance History in India we see
that it was started with the introduction of the All-Risk Comprehensive
Crop Insurance Scheme (CCIS) that covered the major crops. This scheme
was introduced in 1985. In fact this period of introduction also
coincided with the introduction of the Seventh-Five-year plan. This
initial scheme was of course later substituted and replaced by the
National Agricultural Insurance Scheme. This substitution came into
effect from 1999. These Schemes that have been introduced throughout the
crop insurance history have been preceded by years of preparation,
studies, planning, experiments and trials on a pilot basis.
In the crop insurance history, the question of introducing a crop
insurance scheme was taken up for examination soon after the Indian
independence. The first aspect that was examined related to the
modalities of crop insurance. The issue under consideration was about
whether the crop insurance should be offered under an Individual
approach or on Homogenous area approach.
The Individual approach of the scheme indemnifies the farmer to the full
extent of the losses. Also the premium that is to be paid by him is
determined with reference to his own past yield and loss experience. The
Individual approach for these schemes necessitates reliable and accurate
data of crop yields of individual farmers for a sufficiently long
period, for fixation of premium on actuarially sound basis.
The Homogenous area approach on the other hand was aimed at envisaging a
homogeneous area from the point of view of crop production and
similarity of annual variability of crop production. The homogenous area
approach was found to be more favorable. This is because it would
facilitate the provision of a single unit treatment to various
agro-climatically homogenous areas and the individual farmers and allow
them to pay the same rate of premium and receive the same benefits,
irrespective of their individual fortunes.
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The Crop insurance schemes aim at providing
comprehensive risk insurance which cover the yield losses that
occur to the agricultural output of small and marginal farmers
due to non preventable risks. The crop insurance risks covered
under the non-preventable category are listed below:
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a. |
Natural Fire and Lightning |
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b. |
Storm, Hailstorm, Cyclone, Typhoon,
Tempest, Hurricane, Tornado etc. |
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c. |
Flood, Inundation and Landslide |
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d. |
Drought, Dry spells |
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e. |
Pests/ Diseases etc. |
The crops insurance risks does not cover any of
the losses that arise out of war and nuclear risks, malicious
damage and other risks which are preventable risks.
The sum insured under the crop insurance risks
covered usually extends to the value of the threshold yield of
the insured crop. This is usually subject to the option of the
insured farmers. Nevertheless, a farmer may also choose to
insure his crop beyond value of the threshold yield level up to
150% of average yield of the notified area on payment of premium
at commercial rates.
Apart from the risks covered in the crop insurance scheme, what
is important is the sum insured. In case
of Loanee farmers the sum insured would be at least equal to the
amount of crop loan advanced. Further, in the case of the Loanee
farmers, the insurance charges that will be levied will be
additional to the Scale of Finance for the purpose of obtaining
loan.
Apart from the above mentioned issues, the
matters of Crop Loan disbursement
procedures, which have been outlined by the RBI / NABARD are
binding. The insurance premium issues still stand at an
undecided state as the transition to the actuarial regime
in case of cereals, millets, pulses & oilseeds is expected to be
made in a period of five years. |
Crop
Insurance Schemes in India:
In order to provide a boost to the agriculture in India, a number of
experimental crop insurance schemes have been introduced in the country.
The first ones of the experimental crop insurance schemes has been a
Pilot Crop Insurance scheme. This was introduced by GIC from the
year1979.
Some of the important features of the scheme were that the scheme was
based on "Area Approach". This scheme covered crops such as Cereals,
Millets, Oilseeds, Cotton, Potato and Gram. The scheme was confined to
loanee farmers only and on voluntary basis. The risk was shared between
General Insurance Corporation of India and State Governments in the
ratio of 2:1. The maximum sum that could be insured under the scheme was
100% of the crop loan, which was later increased to 150%.
Under this scheme, 50% of the subsidy was provided for insurance charges
which was payable to the small / marginal farmers by the State
Government & the Government of India on 50:50 basis.
Among the earlier crop insurance schemes that were introduced was a
comprehensive Crop Insurance Scheme. The Government of India introduced
the Comprehensive Crop Insurance Scheme with effect from 1st April 1985.
This scheme was introduced with the active participation of State
Governments. The Scheme was optional for the State Governments.
This Scheme was linked to the short-term crop credit that was extended
to the farmers and was implemented using the Homogeneous Area approach.
The number of states that were covered under the scheme were 15 States
and the number of UTs that were included were 2. This Scheme was
implemented until Kharif 1999. Some of the important features of this
scheme allowed a cover to the farmers availing crop loans from Financial
Institutions for growing food crops & oilseeds on compulsory basis. The
coverage under this scheme was restricted to 100% of crop loan subject
to a maximum of Rs. 10,000/- per farmer. The premium rates for Cereals
and Millets were 2% and for Pulses and Oil seeds 5%.
The premium and risk claims were shared in a ratio of 2:1 by the central
and state Government. The Scheme was optional to State Governments.
Author M.Hemdev.
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