Crop Insurance in India

By : Neha Dhyani

Updated : Jun 3, 2022, 8:52

Farmers in India have been victims of systemic neglect and live a minority life. Crop failure due to adverse climatic conditions and natural calamities puts farmers in a difficult situation leading to extreme hopelessness and suicide. Currently, two Crop Insurance in India is operational, i.e. the Restricted Weather-Based Crop Insurance Scheme and the Pradhan Mantri Fasal Bima Yojana.

The Government of India launched the Pradhan Mantri Fasal Bima Yojana' in Kharif in 2016 and replaced previous schemes such as the National Agriculture Insurance Scheme (NAIS) and Modified National Agriculture Insurance Scheme (MNAIS).

PMFBY has poor state support, delayed claim settlement, an unfeasible subsidy model, and an unbalanced benefit pattern.

Various Crop Insurance Schemes in India

Pilot Crop Insurance Scheme

For the first time after independence, the Individual Indemnity-Based Experimental Crop Insurance Scheme was introduced on H-4 cotton in Gujarat by the General Insurance Corporation of India. The insurance scheme covered very few farmers, i.e., 3110, for a premium of 4.54 lakh against a claim of 37.78 lakh from 1972 to 1978.

Comprehensive Crop Insurance Scheme

In 1979, the Pilot Crop Insurance Scheme (PCIS) was introduced, continuing until 1984. A total of 6.91 lakh hectares were insured from 1979 to 1984.

National Agriculture Insurance Scheme

In 1985, the Comprehensive Crop Insurance Scheme (CCIS) scheme replaced the first countrywide crop insurance scheme implemented in India. This scheme insured over 763 lakh farmers for a premium of INR 402.81 crore. A total of 59.78 lakh farmers benefited.

Weather-Based Crop Insurance Scheme

In rabi 1999, the National Agriculture Insurance Scheme (NAIS) replaced the Comprehensive Crop Insurance Scheme. A total of INR 56,453.77 crore of claims were made during the period. This scheme benefited around 781.02 lakh farmers.

Modified National Agriculture Insurance Scheme

In 2007-2008, the Weather-Based Crop Insurance Scheme (WBCIS) was introduced; it included a weather index, which covered losses on unexpected weather, i.e., excess or deficit rainfall and high or low temperatures. This insurance scheme covered several farmers for a gross premium of INR 12,161.4 crore, claims amounted to INR 9665.47 crore. This scheme benefited around 511.04 lakh farmers.

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Restructured Weather-Based Crop Insurance Scheme

In 2010, the Modified National Agriculture Insurance Scheme (MNAIS) was introduced and replaced the NAIS, even though several states continued the NAIS scheme and MNAIS through rabi 2015-2016. An amount of INR 4935.77 crore gross premiums were collected, with claims amounting to INR 5578.42 crore and around 99.26 lakh farmers benefited from this scheme.

Pradhan Mantri Fasal Bima Yojana

The Weather-Based Crop Insurance Scheme was renamed the Restructured Weather-Based Crop Insurance Scheme (RWBCIS) on 18 February 2016 to provide monetary support to farmers against crop loss to natural calamities, which resultantly benefited over 47.05 lakh farmers during 2016-17 to 2018-19

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State-Wise performance of the PMFBY

Pradhan Mantri Fasal Bima Yojana (PMFBY) was introduced in 2016 by the government with new features and was allocated an initial amount of INR 5500 crore in the 2016-2017 union budget.

The agriculture insurance coverage under PMFBY is still low regarding the number of insured farmers, areas, claims paid, and benefited farmers. The data showed a decrease in the number of farmers insured from 572.50 lakh in 2016-2017 to 481.58 lakh in 2017-2018, i.e. a decrease of 14.87 per cent.

The number of benefitted farmers also fell from 289.44 lakh farmers in 2016-2017 to 102.26 lakh in 2017-2018, i.e. a steep decline of 64.66 per cent in 2017-2018. The beneficiary and claim premium ratios were lower under the PMFBY from 2016 to 2017 to 2018-2019.

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FAQ on Crop Insurance in India

Q.1. What is a Crop Insurance in India?

Ans. A Crop Insurance in India is a type of protection policy that covers agricultural producers against unexpected loss of projected crop yields or profits from product sales at the market.

Q.2. Who is known as the father of Crop Insurance in India?

Ans. Professor V. M. Dandekar is commonly referred to as the Father of Crop Insurance in India.

Q.3. Who is the regulator of Crop Insurance in India?

Ans. Agriculture Insurance Company of India (AIC), which is under the administrative control of the Government of India's Ministry of Finance, and the operational supervision of the Government of India's Ministry of Agriculture, is the governing body/regulator of the Crop Insurance in India.

Q.4. Who introduced the first Crop Insurance Schemes in India?

Ans. For the first time after independence, the Individual Indemnity-Based Experimental Crop Insurance Scheme in India was introduced on H-4 cotton in Gujarat by the General Insurance Corporation of India.