Make Efforts for Bringing the Premium Rates at a Reasonable Level – Radha Mohan Singh

BHOPAL: Union Agriculture Minister, Radha Mohan Singh today addressed the National Conference on Crop Insurance at Bhopal, Madhya Pradesh. Shri Singh on the occasion said that “the issues of rising premium rates under existing Crop Insurance Programme are being examined and we have to make efforts for bringing the premium rates at a reasonable level which could be affordable to the farmers”. Agriculture Minister full text is as follows:

“It gives me great pleasure to participate in the National Conference on Crop Insurance organized to discuss and plan the strategies for empowering farmers by augmented crop risk management through Crop insurance schemes.

Agriculture continues to be the mainstay of Indian economy. It contributes 16 percent of GDP, provides 52 percent of employment and sustains more than 60 percent of population, produces all the food & nutritional requirements of the nation, important raw materials for some major industries. Heavy dependence on weather conditions and its long production cycle, however, makes agriculture a risky economic activity. Despite Technological and economic advancements the condition of farmers continues to be unstable due to natural calamities and fluctuations in yield as well as price of agricultural produce.

Although farmers are adopting both traditional and improved technological & cultural practices to mitigate the risks in crop production due to uncertainty in the monsoon, crop insurance is considered an important mechanism to effectively address the risk to outputs and income resulting from various natural and manmade events, which are beyond the control of individual farmers. As you are aware Government had started “Comprehensive Crop Insurance Scheme’’ (CCIS) in 1985 in the country to provide protection to the loanee farmers against their yield losses due to natural calamities. The CCIS had limited scope of coverage and it was replaced with National Agricultural Insurance Scheme (NAIS) w.e.f. Rabi 1999-2000. NAIS was preceded by years of preparation, studies, planning, experiments and trials on a pilot basis. NAIS was conceptualized as a comprehensive tool to cover yield losses due to natural non-preventable risks and provided for greater coverage of farmers both loanees and non-loanees, all food & oilseed crops and annual horticultural/commercial crops and risk commitment went upto 150% of threshold yield. The premium structure was rationalized by bringing in actuarial premium rate in respect of annual horticultural & commercial crops; and above all scheme is required to operationalise ideally at smaller unit area of insurance upto village panchayat level. However, the scheme could not provide desirable results due to some constraints, mostly operational, faced in implementation of schemes which includes inadequate infra-structure to conduct requisite number of crop cutting experiments (CCEs), delay in settlement of admissible claims on account of late submission of yield data by the State, delay in release of State share towards its committed financial liabilities, phasing out of premium subsidy in respect of small & marginal farmers, larger unit areas of insurance, little interest shown by the financial institutions in ensuring all loanee farmers, lower level of indemnity, inadequate Guaranteed yield to compensate adequately, non-coverage of perennial horticultural/ commercial crops, non-coverage of risks of prevented sowing & post harvest losses etc. The Scheme could not translate into actuarial regime as conceptualized. Government both Centre and States faced difficulties in their budgeting due to open ended financial liabilities on account of premium subsidy, claims, administrative expenses, bank service charges, publicity expenses etc.

In the meantime, Government also experimented with Yield & Price risk insurance through single instrument namely FIIS, compensation based on Weather parameters under WBCIS, bringing competition by empanelment of private insurance companies, payment of compensation by using double triggers of both weather and yield, payment of localized base damages etc. though different schemes piloted during last 10-12 years.

Based on the evaluation of these pilots and experience gained through implementation of crop insurance schemes, views of stakeholders, States and appraisal agencies, various improvements had been incorporated and a restructured scheme in the name of ‘National Crop Insurance Programme’ (NCIP) was introduced from Rabi 2013-14. However, Stakeholders including State Government have different opinions about the achievements of crop insurance schemes implemented so far. It may be true, as single crop insurance instrument may not protect the farmers of all regions and areas and even all type of the crops. Accordingly, Government of India has started “National Crop Insurance Programmes (NCIP)” with different components to compensate farmers differently by using different methodology for computing crop losses to farmers. However, some of the States adopted the MNAIS in their States and some State has expressed few reservations about its implementation. Hence, State have been allowed to implement MNAIS or NAIS on their choice.

We in the Ministry have started discussion with States and all stakeholders on further improving upon the insurance product which would not only ensure the farmers against yield loss but also provide security for their income. There are various other issues being deliberated at present in implementation of various crop insurance schemes. The seminar would help us to get necessary inputs to evolve a product which is most acceptable to all stakeholders. I am confident that the deliberations which have taken place in the convention would be helpful in designing the crop insurance schemes which are able to effectively protect the interest of the farming community