1. CROP INSURANCE
PROGRAMME OF GOI
Perspective of
MNAIS
- RAJENDRA KUMAR TIWARI
Joint Secretary, Department of Agri. & Coop.
Ministry of Agriculture, GOI

2. Risks affecting Agriculture production– A
Major Challenge
 Vagaries of weather
- rainfall
- temperature
- humidity
- wind
- cyclone
- hailstorm
 Pest & diseases
 Fire
 Quality of inputs
 Soil
 Market prices

3. Objectives of Crop Insurance
• To provide insurance coverage and financial support to
the farmers in the event of prevented sowing & failure
of any of the notified crop as a result of natural
calamities, pests & diseases.
• To encourage the farmers to adopt progressive farming
practices, high value in-puts and higher technology in
Agriculture.
• To help stabilize farm incomes, particularly in disaster
years.

4. HISTORICAL BACKGROUND OF CROP
INSURANCE IN INDIA
• LIC introduced first scheme based on individual approach
in 1972 for cotton in Gujarat,
 Continued up to 1978-79 and covered 3110 farmers
 premium of Rs. 4.54 lakhs and paid claims of Rs. 37.88 lakhs.
• In 1979 Pilot Crop Insurance Scheme (PCIS) was
introduced.
 homogenous area approach limited to loanee farmers.
 13 States implemented till 1984-85,covering 6.27 lakh farmers
 Premium of Rs. 196.95 lakhs and claims of Rs. 157.05 lakhs.
• From Kharif 1985, Comprehensive Crop Insurance
Scheme (CCIS) was introduced which continued till Kharif
1999.
 The claims ratio was 1 : 5.72.
 CCIS was criticized for limited coverage of farmers, crops and
risks.
• For covering farmer’s, yield and price, Farm Income
Insurance Scheme (FIIS) was also Piloted during Rabi
2003-04 and Kharif 2004 seasons in selected districts

5. Existing Crop Insurance Schemes
I. NAIS: yield based; non-actuarial premium
except horticultural crops / annual
commercial crops; underwriting of losses by
Central & State Govt. on 50:50 ratio
II. WBCIS: weather based ; actuarial premium
with premium subsidy shared equally by
Central & State Govt.
III. CPIS: plant based; actuarial premium
IV. MNAIS: yield based; actuarial premium with
premium subsidy shared equally by Central &
State Govt.

6. NATIONAL AGRICULTURAL
INSURANCE SCHEME (NAIS)
• For improving the scope and content of CCIS a broad
based NAIS was introduced from Rabi 1999-2000.
• NAIS provides for greater coverage of farmers, crops and
risk commitment.
• Premia-structure has been rationalized and the scheme is
required to operate at smaller unit area of insurance.
• Subsidy to Small and Marginal farmers.
• It is presently being implemented by 25 States & 2 Union
Territories
• In last 22 Crop Season:
 Farmers Covered : 17.01 crore ( Av. not more than 15% farmers)
 Premium Collected: Rs. 6213.41 crore
 Claims Paid : Rs. 20437.21 crore
 Claim ratio : 3.29
 Loss cost : 9.86%

7. State-wise farmers benefited under NAIS
(in lakhs)
90
80
70
60
50
40
30
20
10
0
Raj
UP
MP
Guj
Bihar
Cha ti
TN
Mah
Andh
Karn
WB
Jhar'
Oriss
Other
nd
sgarh
ra
a
s

8. Performance of NAIS during XIth Plan
Particulars 2007-08 2008-09 2009-10 2010-11
(Kharif only)
Claims 1724 3880 4936 Under
(Rs.in crore) process
Farmers 184 192 239 114
Covered
(in Lakh
Farmers 32 62 88 Under
Benefited process
(in Lakh)

9. Limitations of NAIS
• Large insurance unit area
• Delay in payment of claims due to late submission of
yield data & availability of Govt. funds
• Pre-sowing/ planting Risk is not covered
• Unattractive basis of calculation of threshold yield,
• Low indemnity level,
• Localised calamities are not covered
• Post Harvest Losses are not covered
• Different seasonality discipline for loanee & non-
loanee farmers
• Lack of competition

10. Main Recommendations of JG Report
• Actuarial premium regime with suitable subsidy
• Reduction in insurance unit area to Gram Panchayat
• Basis of calculation of threshold yield –best 5 of 7
years’ yield
• Higher indemnity levels of 80% & 90%
• Coverage of:
 Pre-sowing & post-harvest losses
 Perennial crops
 Personal accident
 Package insurance policies covering other assets of
farmers, including Animal Husbandry
• Private insurers to be encouraged,
• Exemption from Income Tax & Service Tax so that an
adequate Catastrophic Reserve Fund can be built

11. Recommendations of other Committees
• National Mission on Sustainable Agriculture (NMSA)
recommended for the following in respect to crop insurance
program:
 Improvements in the existing NAIS w.r.t. calculation of threshold
yield, reduction of insurance unit, on account payment of claims,
etc.
 Promotion of blended/mixed insurance scheme.
 Comprehensive insurance products to address all the needs of
different farming systems.
 Design of Insurance products using weather index.
 Weather Insurance products based on climate change.
• Prime Minister’s Council on Trade & Industry- Sub-Committee
on enhancing Agri Production & food Security has
recommended to Link Agriculture credit with crop insurance to
manage default risks

12. Major Modifications in NAIS
Sl. Parameters NAIS Modified NAIS
No.
1 Insurance Unit The defined area may Village Panchayat
be a Gram Panchayat, for major crops
Mandal, Hobli, Circle,
Phirka, Block, Taluka
etc declared by GOS
2 Threshold yield Moving average yield of Average yield of last
preceding 3 years for 7 years excluding upto
Rice & wheat and 5 2 years of declared
years for other crops natural calamities
3 Indemnity levels 60%, 80% & 90% 70, 80% and 90%
4 Pre- sowing/ Presently not covered Prevented/Failed
Planting Risk Sowing Risk to be
covered upto 25% of
SI

13. Major Modifications in NAIS …Cont.
Sl. Parameters NAIS Modified NAIS
No.
5 Post Harvest Presently not Post harvest losses on
Losses covered account of cyclones in
coastal areas to be covered
6 Early The claims are On account settlement of
Settlement settled based on the claims upto 25% of likely
final yield estimates total claims
submitted by GOS
7 Localized Presently not Individual assessment of
calamities covered claims in case of hailstorm
and landslide
8 Seasonality Different for loanee Uniform seasonality
Discipline and non-loanee discipline for loanee and
farmers non-loanee farmers
9 Implementing AIC Private insurance
Agency companies with adequate
infrastructure and
experience are also allowed

14. Subsidy & Net Premium for Farmers under MNAIS
Sl.N Actuarial Subsidy to Farmers Premium
o Premium (equally shared by payable by
(% of SI) Central and State farmers
Govt.)
1 Upto 2% NIL Upto 2%
2 >2-5% 40% subject to minimum 2-3%
net premium of 2% of SI
3 >5-10% 50% subject to minimum 3-5%
net premium of 3% of SI
4 >10-15% 60% subject to net 5-6%
premium of 5% of SI
5 >15% 75% subject to minimum =>6
net premium of 6% of SI

15. MNAIS- Present Status
• Implemented in 34 districts covering 22 States during
Rabi 2010-11 season
• The scheme would be on actuarial regime in which
insurance company will receive premium on
commercial basis and will be responsible for all claims
• GOI & State Govts. will provide premium subsidy upto
a max. of 75% at different slabs of actuarial premium to
make the scheme affordable for farmers
• The coverage in Pilot MNAIS is expected to 25% of
total farmers of 50 districts.

16. Area Yield Index and Weather
Index: Advantage and Challenges
Area Yield Index Weather Based Index
All peril covers Single or sometimes multiple
(drought, excess rainfall, flood, perils cover-
pest & diseases)- resulted rainfall – (excess & deficit),
yield temperature, relative humidity
Easy to design Technical challenges in index
design (peril, crop, farming
practices, agro-meteorological
zone etc.)
Low start-up costs High start-up costs
High loss assessment costs Lower loss assessment costs
(CCEs)
Slow claims settlement Faster claims settlement

17. Major Challenges in implementation of MNAIS
 Assessment of crop yield at Gram Panchayat level –
 Strengthening of Crop Cutting Experiments (CCEs) to increase their accuracy,
reliability and timeliness;
 Standardization of procedures and manuals (sample size, numbers, process
etc.),
 proper manpower allocation/outsourcing, capacity building/ training of field
staffs,
 supervision and monitoring of process,
 real time reporting of CCEs -through SMS, internet etc.,
 computerization of yield data/reporting of CCEs result etc.
 Alternative method for yield/loss assessment –
 Use of remote sensing technology
 Normalized Differential Vegetative Index
 MoU was signed between DST and AIC for launching a Pilot project
on Remote sensing technology in Bihar, Karnataka, Rajsthan & UP
 No progress could be achieved due to transfer of concerned experts
of DST
 Methodology for yield assessment of multi-picking crops (horticultural &
Commercial)

18. Major Challenges in implementation of
MNAIS ...cont
 Adequate Automatic Weather Stations (AWSs) – for on-
account payment
 Existing -2000 AWSs (based on uniform distribution),
 Required- 8000 AWSs
• Fiscal Management- shifting of liability from financing post
losses to pre-loses financing i.e. advance subsidy in premium
• Product Designing-
 risk classification (basis risk, Threshold Yield, Indemnity level),
 appropriate weighting/calculation of basis risk (risk rating),
 multi-optional products for the farmers based on their need/choice
(pre-sowing, planting, post-harvest losses)
• Benchmarking/registration before providing government
support
• Rationalization & Standardization of premium rates
• Development of new products – for uncovered crops/areas

19. Major Challenges in implementation of
MNAIS …cont
• Evaluation & Monitoring for proper
implementation and further planning &
Policy decision Grievance redressal
mechanism
• Publicity & awareness,
• Coordination amongst all stakeholders
• Clerical mistake

20. THANKS