RISK
MANAGEMENT IN AGRICULTURE -A REVIEW OF THE CROP INSURANCE SCHEMES
K G Krishnamurthy*
Abstract:
The agriculture faces a multitude of risks including price risks, financial
risks, institutional risks, personal risks etc., and the weather is highly
contributing for variability of production creating a production risk to peasants. Years to come the magnitude of the risks
will be more and more. The Insurance measures taken by the State are not
co-efficient to the modern risks. These measures have proved to be failed
making a path for new insurance schemes. One of the reasons for failure may be
that all the NAIS, MNAIS or WBCIS is more of a policy frame work and does not
have a specific law in operation. Since crop insurance is totally different
from other kind of insurances it requires a separate mode and procedures having
a legislative framework after about a long 40 years of experience. In this
paper an attempt is made to focus on crop insurance policy and its
contribution to production risk management in protecting the interest of the
peasants.
Key words: Agricultural Insurance, risk management in agriculture, MNAIS,
NAIS, Crop insurance, farmers’ rights
RISK MANAGEMENT IN AGRICULTURE – A
REVIEW OF CROP INSURANCE SCHEMES
K G Krishnamurthy B.A.L.,LL.M*
“I have sometimes thought that it might be
well
to establish an office of insurance for farms against the damage that may occur
to
them by storms, blight, insects etc. A small sum paid by a number of farms
would
repair
such losses and prevent much distress”.
-
Benjamin Franklin
(on eve of loss of crops in France due to severe storm of 24th October
1788)
1. Introduction:
The performance
of agriculture is vital[1]
for the peasants including the economy of the India. About 70 per cent
population of the country dependent on agriculture and agriculture is dependent
on monsoon which is always flexible causing operating risk in cultivation.
Among the multitude of risks like,
price risks, financial risks, institutional risks, personal risks, etc. the production risk is most important for farmers
as it is more succumb to ‘the gamble of monsoon’[2]
and nature’s vagaries. These risks are managed by farmers by taking
measures to avoid, prevent or transfer it, or by resorting to diversification
or mixed farming. Though these measures help in reducing the risk the farmers
are not spared of the risk.
The biological
process in agriculture[3]
is, either directly or indirectly, influenced by weather variables resulting in
partial or total loss in yield reducing income of farmers. The Planning
Commission has viewed ‘Agriculture, particularly prone to systemic and
co-variant risk’[4].
Thus the farmers’ fate always hangs on the risk[5].
To manage and mitigate the risks as an alternative measure agricultural
insurance mechanism available to safeguard farmers against production risk and
protect investments.
In this study,
it is attempted to analyze crop insurance policy and its contribution to risk
management and protecting the interest of the farmers.
2. Crop insurance-Definition:
According to Romiro Itarrioz, the
conventional definition is ‘the equitable
transfer of a risk of loss from one entity to another in exchange for a premium
or a guaranteed and quantifiable small loss to prevent a large and possibly
devastating losses[6]. Crop insurance is
an insurance arrangement aiming at mitigating the financial losses suffered by
the farmers due to the damage and destruction of their crops as a result of
various production risks. In other words, it may be termed as a means to
protecting the cultivators against financial loss on account of anticipated
crop loss arising out of natural factors beyond human control like fire,
weather, floods, droughts, pests, diseases, etc. In short, it may be described
as a risk management measure for agricultural production and a social security[7] measure to provide a ‘safety-net’[8] to
the farmers.
Crop insurance
is one of the specie of the Agricultural Insurance which includes others like
livestock, forestry, aquaculture, greenhouses, etc.
Crop Insurance may be
classified into several categories depending upon the focus 0f insurance: (i)
Single peril or Multi-peril Crop Insurance; (ii) Individual farm based or area
based Crop Insurance; (iii) Specific crop or all crops based Crop Insurance;
(iv) Voluntary or Compulsory Crop Insurance.
3.
Crop Insurance-a historical touch:
The crop
insurance was adopted in European countries on the basis of the theoretical
foundations in the writings of JHG Von Just (1780); Paul Mayet(1888); Adolf
Buchenburger(1896) and Karl Kantsky(1899) floating Hail Insurance for the first time in
Germany(1791) and later it was spread over other European and American
countries[9].
In India
pioneering work of Mr. Chakravarthi titled ‘Agricultural Insurance-A Practical
Scheme’, published in 1920 proposed a rain insurance scheme for the Mysore
State to protect the farmers against vagaries of monsoon[10].
The Government of India, since 1948 initiated measures to float and implement
various crop insurance schemes. The attempt of the Punjab State to introduce
all-risk compulsory insurance resulted in formulation of Model scheme by the Central
Government in 1965. Making it a concrete step at national level, the Government
introduced a draft Crop Insurance Bill in 1970 providing a model scheme of crop
insurance with an intention to help the states to adopt crop insurance. But the
expert committee chaired by Dharam Narain negated it as not advisable to go for
any type of crop insurance in India, not even on pilot basis[11].
However, in
1972-73 General Insurance department of Life Insurance Corporation introduced a
first ever crop insurance scheme (Program
based on ‘individual’ approach (1972-1978), covering the H-4 Cotton, in
Gujarat on an experimental basis and after nationalization of insurance sector,
General Insurance Corporation introduced few other schemes covering various
crops.
In
1976, General Insurance Corporation consulted Dr. V M Dandekar to study crop
insurance scheme. The committee headed by Dr. V M Dandekar has revisited the
views of the Dharam Narain committee and recommended introduction of crop
insurance[12].
On the basis of recommendations a Pilot Crop Insurance Scheme (PCIS), on
homogeneous area approach, was adopted during 1979-80 (Pilot Crop Insurance Scheme – PCIS (1979-1984). Later in 1985, a
Comprehensive Crop Insurance Scheme (CCIS, 1985-1999) was introduced. Based on the demands of States for
modification, Experimental Crop Insurance Scheme (ECIS) was introduced in
1997-98 with the intention to cover only small and marginal farmers with 100%
subsidy in premium. In and from 1999-2000, the National Agricultural Insurance
Scheme(NAIS) was introduced, replacing the CCIS, covering all farmers
irrespective of size of holding and all food grains , oilseeds, commercial and
horticultural crops for which past yield data are available.
A
Pilot Scheme on Seed Crop Insurance (PSSCI) was also introduced in Kharif 2000
season in 11 States to provide financial security & income stability to the
Seed Growers in the event of failure of seed crop. The objective was to provide
stability to the infrastructure established by the State owned Seed Corporations
and State Farms and to give a boost to the modern seed industry[13].
The Farm Income
Insurance Scheme (FIIS) was started on a pilot basis during 2003-04 to provide
income protection to the farmers by integrating the mechanism of insuring yield
as well as market risks. This scheme ensured the farmers’ income by providing
minimum guaranteed income. But this scheme covered only rice and wheat crops[14].
Another scheme
called Varsha Bima Yojana (Rainfall Insurance) is being implemented by some
insurance companies like ICICI- Lombard, IFFCO-Tokio, AIC on Pilot basis.
In September,
2010 the Government of India has issued directions[15]
switching over to Modified National Agricultural Insurance Scheme (MNAIS) on
pilot basis to make it “more farmers’ friendly” crop insurance scheme, which is
in one sense answered the call of Dr.Kalam, former President of India. He
called for innovative research by the NIA (National Insurance Academy) to
promote agri-business and ensure that banks and insurance companies empower
farmers with finance and cover their risks[16].
4. Crop Insurance Policy
Crop Insurance
is a domestic support measure[17]
in favour of agricultural producers. Indian Crop insurance is a
Government-funded insurance scheme, falling within the ‘Green Box’[18],
directed to protect the production risk of the farmers. It is aimed to protect
the farmers from natural calamities and ensure their credit eligibility for the
next season. The urge to stabilize the farm income, helping the farmers to
initiate production activity after the disastrous effects and even assisting
them to make more investments in agriculture are underlined in the policy. It is a form of risk management used to
hedge against a contingent loss[19].
After
experimentations of the Comprehensive Insurance Scheme (CIS)(scrapped in 1997),
experimental crop insurance scheme (discontinued in 1997-98 itself), Farm
Income Insurance Scheme (FIIS)(withdrawn in 2004), and National Agricultural
Insurance Scheme (NAIS), the Government has introduced, in 2010, two new
schemes titled “Modified National Agricultural Insurance Scheme” (MNAIS)
(retaining NAIS) and Weather Based Crop
Insurance Scheme (WBCIS) (on a pilot basis).
4.1 National Agricultural Insurance
Scheme or Rashtriya Krishi Bima Yojona:
NAIS is
presently being implemented in 24 States and 2 Union Territories except in
States of Punjab & Arunachal Pradesh. Nagaland has given consent to
implement the scheme and Rajasthan has decided to implement WBCIS in place of
NAIS[20].
, offering insurance coverage under the threshold yield of estimated 10 years
and particularly applying regular actuary rates for Annual Commercial and Horticultural Crops (ACH).
4.1.1 Objectives:
The
major objectives of the NAIS are: i) to provide insurance coverage and
financial support to the farmers in the event of failure of any of the notified
crop in the notified areas as a result of natural calamities, pests and
diseases; ii) to encourage the farmers to adopt progressive farming practices,
high value in-puts and higher technology in agriculture and iii) to stabilize
farm incomes, particularly in disaster years.
4.1.2 Operating Modality:
The NAIS scheme is operating on the basis of
Area approach- defined areas for each notified crop for widespread calamities
and individual basis- for localized calamities such as hailstorms, landslides,
cyclones and floods.
4.2 Some of the features of the NAIS are:
4.2.1 Coverage of the Scheme/Program:
The
NAIS envisages coverage of all the food crops (cereals, millets and pulses),
oilseeds and annual commercial/horticultural crops, in respect of which past
yield data is available for three years[21]. The
premium rates[22]
range between 1.5% and 3.5% per cent (of sum insured) for food and oilseed
crops and in the case of commercial / horticultural crops actuarial rates are
being charged[23].
Under the scheme, at present, 10% subsidy in premium is available to small
& marginal farmers[24].
The
scheme extends to all States and Union Territories[25]and
is available to all the farmers – loanee and non-loanee, irrespective of their
size of holding (including sharecroppers, tenant farmers growing the notified
crops in the notified areas). Loanee farmers are covered on compulsory basis in
a notified area for notified crops whereas for non-loanee farmers scheme is
voluntary[26].
4.2.2
Indemnity
and claims:
Three
levels of Indemnity, viz., 90%, 80% & 60% corresponding to Low Risk, Medium
Risk & High Risk areas is available for all crops (cereals, millets, pulses
& oilseeds and annual commercial / annual horticultural crops) based on
Coefficient of Variation (C.V) in yield of past 10 years’ data. However, the
insured farmers of unit area may opt for higher level of indemnity on payment
of additional premium based on actuarial rates[27].
The
Threshold yield (TY) or Guaranteed yield for a crop in a Insurance Unit shall
be the moving average based on past three years average yield in case of Rice
& Wheat and five years average yield in case of Other crops, multiplied by
the level of indemnity[28].
If
the actual average yield of the insured crop for the defined area (on the basis
of requisite number of Crop Cutting Experiments[29]
in the insured season, falls short of specified Threshold Yield, all the
insured farmers growing that crop in the defined area are deemed to have
suffered shortfall in yield and the scheme provides coverage against such
contingency[30].
The indemnity claims are worked out by the Implementing Agency[31]
i.e. Agriculture Insurance Company (AIC) of India Ltd.[32],
on the basis of yield data, based on requisite number of Crop Cutting
Experiments, furnished by the implementing State. The claims are released to
banks and the banks, in turn, are required to credit the amount in the account
of the beneficiary farmers and display the particulars of beneficiaries on
their notice board[33].
The
Financial liabilities towards claims beyond 100% of premium in case of Food
Crops & Oilseeds and 150% of premium in case of annual horticultural /
commercial crops along with 10% premium subsidy to small and marginal farmers,
Bank Service charges and 20% of A&O Expenses are borne by the Government
and are shared on 50:50 basis by the Central Government and the respective
State Government[34].
4.2.3
Risks
Covered & Exclusions:
Comprehensive
risk insurance is provided to cover
yield losses due to non preventable risks, viz.: (i) Natural Fire and
Lightning; (ii) Storm, Hailstorm, Cyclone, Typhoon, Tempest, Hurricane, Tornado
etc.; (iii) Flood, Inundation and Landslide; (iv) Drought, Dry spells; (v)
Pests/ Diseases etc.[35]
Losses arising out of war & nuclear risks, malicious damage & other
preventable risks are excluded[36].
4.2.4
Sum
Insured / Limit Of Coverage:
The
Sum Insured (SI) may extend to the value of the threshold yield of the insured
crop, or may also insure his crop beyond value of threshold yield level up to
150% of average yield of notified area on payment of premium at commercial
rates, at the option of the insured farmers[37].
In case of Loanee farmers the Sum Insured would be at least equal to the amount
of crop loan advanced.
4.2.5
Area
Approach and Unit of Insurance:
It
is a yield guarantee scheme operating on “area approach” basis i.e., Defined
Areas for each notified crop for widespread calamities and on an individual
basis for localized calamities such as hailstorm, landslide, cyclone and flood.
The Defined Area (i.e., unit area of insurance) may be a Gram Panchayat,
Mandal, Hobli, Circle, Phirka, Block, Taluka etc. to be decided by the State/UT
Govt[38].
Individual
based assessment in case of localised calamities, to begin with, would be
implemented in limited areas on experimental basis, initially and shall be
extended in the light of operational experience gained. The District Revenue
administration will assist Implementing Agency in assessing the extent of loss[39].
4.2.6
Seasonality Discipline:
The broad seasonality discipline for Loanee
farmers is for loaning period of April to September, cut-off date for receipt
of declarations is November and the cut-off date for receipt of yield data is
January / March. For loaning period of October to next March cut-off date for
receipt of declarations is May and the cut-off date for receipt of yield data
is July / September. The broad cut-off dates for receipt of proposals in
respect of Non-loanee farmers are i) for
Kharif season : 31st July and ii) for Rabi season : 31st December[40].
Under
MNAIS the seasonality discipline has been modified[41]
as, for loanee farmers, the loaning period is April to June/July for Kharif and
October to December for Rabi season; cut-off date for receipt of Declarations
31st July and 31st January, respectively for Kharif and
Rabi. For non-loanee farmers, cut-off date for receipt of proposals for Kharif
is 15th June/15th July and for Rabi is 31st
December; cut-off date for receipt of declarations is same as in the case
loanee farmers. And yield data shall be submitted with in one month from final
harvest.
4.2.7
Indemnity
in Case of Localised Risks:
Loss
assessment and modified indemnity procedures in case of occurrence of localized
perils, such as hailstorm, landslide, cyclone and Flood for settlement of
claims is on individual basis[42].
Under MNAIS the localized calamities are limited to hailstorm and landslide and
the experience of crop loss due to localized perils shall be informed within 48
hours of occurrence[43].
The District Revenue administration and Agricultural department will assist IA
in assessing the extent of loss. An advantage under the MNAIS is that a portion
of the amount as against the sum insured will be paid immediately.
4.3
Modified
National Agricultural Insurance Scheme (MNAIS)
This Scheme aims
at supporting sustainable production in agriculture sector, thereby ensuring
food security, crop diversification and enhancing growth and competitiveness of
agriculture sector besides protecting farmers from production risks.
Over
a decade of implementation of NAIS, certain shortcomings, like in the calculation of
guaranteed yield / income, low indemnity level, delay in settlement of
insurance claims, poor coverage of non-loanee farmers, slow inclusion of new
crops within the Scheme, high premium rates for commercial crops like cotton,
withdrawal of subsidy in premium meant for small and marginal farmers on sunset
basis in 3 to 5 years, dispute between Centre and States in sharing premium
subsidy, large size of unit area for insurance, non-coverage of perennial
horticultural crops, medicinal crops, agricultural allied activities namely
aquaculture, animal husbandry and poultry, etc. within the ambit of the Scheme,
absence of adequate redressal mechanism, delayed/tardy claim disbursals and low
penetration of the scheme into muffusil/remote areas[44] are
observed and the Government has failed to take any step to resolve the
persisting lacunae in the NAIS. Accordingly, a Joint Group was constituted
under the
Chairmanship
of Additional Secretary in the Department of Agriculture & Cooperation to
study the improvements required in the existing crop insurance schemes and to
develop broad parameters of an appropriate and farmer friendly crop insurance
scheme. The Group made in-depth study of the issues mentioned above of Crop
Insurance and risk mitigation Programmes and submitted its report on 20.12.2004
and recommended for improving NAIS,
covering Personal Accident & Package Insurance Policy, encouraging private
sector insurers & weather insurance products etc.
Based on the
recommendations of the Joint Group and views / comments of various
stake-holders, proposal on Modified National Agricultural Insurance Scheme
(MNAIS) has been prepared and approved by Government of India for
Implementation on pilot basis.
4.3.1 Some features of MNAIS:
The
salient features of MNAIS are:
(i)
actuarial premium with subsidy in premium ranging - 40% to 75% to all Farmers[45];
(ii) only upfront premium subsidy is shared by the Central and State
Governments on 50 : 50 basis and all claims liability would be on the insurance
companies[46];
(iii) unit area of insurance reduced to Village/village panchayat level for
major crops[47];
(iv) Covering pre-sowing[48]
and post-harvest risk[49];
(v) on account payment up to 25% advance of likely claims as immediate relief[50]
for providing immediate relief to farmers in case of severe calamities; (vi)
more proficient basis for calculation of threshold yield[51];
(vii) minimum indemnity level of 70% instead of 60%[52] ;
(viii) scheme is available to all the farmers – loanee and non-loanee
irrespective of their size of holding[53];
(ix) loanee farmers are covered on compulsory basis in a notified area for
notified crops whereas for non-loanee farmers scheme is voluntary as in NAIS[54];
(x) uniform seasonality disciplines both for loanee & non-loanee farmers[55];
and (xi) Individual farm level assessment of losses in case of localized
calamities, like hailstorm and landslide.
MNAIS pilot has been approved for three
seasons starting from Rabi 2010-11 seasons and it is quite likely that the
pilot may gradually replace NAIS over next two to three years. The recently the
Central Government has proposed to replace the NAIS and continue the MNAIS or
to introduce an integrated scheme called National Farmer Security Cover
Programme.
4.3.2 Expectations from the States
under MNAIS:
From
the readings of the operational guidelines of MNAIS the expectations from the
States are:
i)Creation
of infrastructure for moving to village Panchayat (VP) as Unit Area of
Insurance in respect of major crops (even the NAIS requires this move); ii)
Arrangement for identifying and training additional manpower required for
moving to GP level & for conducting additional CCEs; iii) Arrangement for
making available CCE data in time; iv) Maintenance of Single Series of yield
data; v) Strengthening & upgrading weather stations infrastructure for
implementing weather based insurance products; vi) Taking up location specific
innovative crop insurance experiments; vii) Providing adequate provision in
state budgets for settlement of claims in time; viii) Display of list of all
insured farmers and also the list of benefited farmers together with claim
amount soon after settlement of claims at Village Panchayat office. If these
expectations are proven to be satisfied by the proposal of the Government the
MNAIS will be continued replacing the NAIS.
4.4 Weather
Based Crop Insurance Scheme (WBCIS)
With the objective to overcome the
shortcomings regarding calculation of guaranteed yield / income delay in
settlement of claims, etc. under NAIS, a Pilot Weather Based Crop Insurance
Scheme (WBCIS) was announced in the Union Budget for 2007-08[56]
and has been approved for implementation in States on pilot basis with
allocation of `100 crore[57]initially.
WBCIS is intended to provide insurance protection to the farmers against
adverse weather incidence, such as deficit and excess rainfall, high or low
temperature, humidity, etc. which are deemed to affect adversely the crop
production. It uses weather parameters as proxy for crop yield in compensating
the cultivators for deemed crop losses and is based on actuarial rates of
premium but to make the scheme attractive, premium actually charged from
farmers have been restricted to be at par with NAIS. The difference between
actuarial rates and premium actually paid by farmers are borne by the
Government (both Centre and State concerned on 50:50 basis). Besides, a cap on
premium payable by farmers for annual commercial/horticultural crops has also been
provided. The scheme is available to all the farmers – loanee and
non-loanee-irrespective of their size of holding. As under NAIS, the loanee
farmers are covered on compulsory basis in a notified area for notified crops
whereas for non-loanee farmers scheme is voluntary. Further, to provide
competitive service to the farmers, private insurance companies, i.e.
ICICI-Lombard & IFFCO-TOKIO have been involved for implementation besides
Agriculture Insurance Company of India (AIC).
In
implementation of the Scheme a Draft Guidelines
has been issued, to State Governments, by The Department of Agriculture &
Cooperation Ministry of Agriculture, Government of India for setting up Automatic
Weather Stations (AWSs) and Automatic Rain Gauge (ARGs) & their accreditation,
standardization, validation and quality management of weather data. The
existing weather and rain gauge stations are upgraded and installed with AWS
and ARG for collection of data. They are managed by the Meteorological
Department. If adequate and accurate information is provided, the farmers are
able to manage the risks and achieve the benefits in stabilizing the farm
income as expected under the Scheme.
4.5 Implementing Authority
Agriculture
Insurance Company of India Limited (AIC)[58]
was incorporated under the Indian Companies Act 1956 on 20th December, 2002 to
deliver the agricultural insurance schemes. Commencing the business from 1st
April, 2003, AIC has completed a golden decade of performance. The Insurance
Regulatory and Development Authority (IRDA)[59]
is authorized to make regulations regarding registration and recognition of
Insurance companies[60]
and obligations[61]
of insurers. And National Bank for Agriculture and Rural Development (NABARD)
is actively involved through its concerned Regional Offices and DDMs in
successful launching and marketing of the scheme.
The AIC is
taking new initiatives[62]
to implement and administer the schemes in a better and cost effective manner.
To mention some of them are: a) Remote Sensing-Based Information and Insurance
for Crops in Emerging Economies (RIICE) uses Synthetic Aperture Radar
technology (SAR) and crop modeling tools to gather data related to rice yield
and design effective risk management solutions to support index-based crop
insurance products i.e.,WBCIS. The project, as per AIC, is being implemented
during the current year (2012-13) in two or three districts of Tamil Nadu. b)
TOPS (Terrestrial Observation and Prediction System) technology, developed by
National Aeronautics and Space Administration (NASA) scientists, integrates
surface weather, satellite data with empirical/mechanistic models to monitor
and predict crop growth profiles, crop stress and yields. In order to generate
village level historical weather data of past 15 years as well as future three
years, AIC has commissioned a pilot in Maharashtra wherein the daily data will
be generated for over 30,000 villages. This data is expected to assist AIC in
fine-tuning the WBCIS products, as also in minimizing the basic risk. c) Crop Yield Audit System in substitution or
supplementation of CCE (Crop Cutting Experiments) is being implemented using
cellular phones to collect crop yield data. The project is expected to
(i) create and implement centralized data management system to accept incoming
data for all the States; (ii) develop formal data monitoring, auditing, and
cleaning techniques; and (iii) provide data to insurance providers and
Government in a standard format as appropriate. d) ANNAPOORNA an IT technology
enabled Change Management initiative being adopted. By this the farmers of the
country will be enabled to voice their grievances (if any) directly to the AIC
from their own place, through the online facility provided in our Portal. The
AIC is planning to further empower the farmers by enabling them to take
“anytime-anywhere” online crop insurance coverage, by operationalizing the
Online Window in its portal.
5.
Constitutionality and validity of Agricultural Insurance:
In the recent
years the agriculture has been commercialized putting aside the traditional
form. New and improved agricultural technologies are being adopted which
requires more finance to make investment. The majority of farmers are reluctant
to enter into additional commitments to adopt new technology since they are not
sure of the production results. With the security of insurance, the farmer
might be more willing to take a chance with efficient technology as his risks
are now shared. Thus the insurance schemes floated by the government have aimed
at fulfilling the directive of the Constitution that the state to take step to
organize agriculture on modern and scientific lines[63].
It is a duty conferred on the Government to guarantee a social security to
farmers because Article 21 of the Constitution has a wider dimension and crop
insurance undeniably is within the purview of the Right to life and
liberty. By extending the insurance
policy to farmers the government strived to guarantee the right to life,
securing the adequate means of livelihood and right to work[64],
to live with human dignity[65],
freedom of occupation[66]
and also the property right[67].
Further the implementation of the schemes has secured the socio-economic and
rural development and national food security.
The Scheme, no doubt[68]
, benefits the farmer indemnifying him against the crop loss. The amount of
loan will be recovered from the insurance amount thereby a double purpose is
served: the poor cultivator is indemnified against loss and the financial
institutions which are Co-operative Banks are indemnified against loss by the
General Insurance Corporation. This is a social security measure meant for the
benefit of rural population and benefits only those who taken loans from the
financial institutions… Such a Scheme cannot be said to be in any manner, unreasonable
or arbitrary[69]
and is not unconstitutional. Now the scheme is extended to both loanee and
non-loanee farmers with or without certain concessions depending upon the crops
grown.
Further more, in matters of
policy the Court will not interfere[70].
The crop insurance scheme is a policy decision of the executive with the
objectives to–(1) provide insurance coverage and financial support to the
farmers in the event of failure of any of the notified crop as a result of
natural calamities, pests and diseases; (2) encourage the farmers to adopt
progressive farming practices, high value inputs and higher technology in
Agriculture; (3) help to stabilize farm incomes, particularly in disaster
years. This policy is for betterment of the peasants at large and the Courts,
usually, will not interfere with it.
The Agricultural
Insurance Schemes which are introduced so far are more of a policy frame work amounting to Executive orders within the
purview of Article 73 and 162 of the Constitution. In recent days the executive
orders have become an important weapon in the hands of the executive. But they
should not cross the limit of executive powers. The Supreme Court has said “It is open to the State to issue executive
orders even if there is no legislation in support thereof provided the State
could legislate on the subject in respect of which action is taken”[71]
and it should ‘not operate to the prejudice of any citizen’[72].
Chief Justice Malik[73]
was of opinion that in a written Constitution like ours the executive power may
be such as is given to the executive or is implied, ancillary or inherent. It
must include all powers that may be needed to carry into effect the aims and
objects of the Constitution. In Kedari and Ors. vs State Of Karnataka[74] the Karnataka High Court has observed that
the ‘Government of India has exercised its executive power under Article
73 in the absence of law enacted by the Parliament on the insurance of
Agricultural Crops’. So the government of India exercised the legislative
discretion in the matter. In the modern
transformation era the exercise of legislative power is more desirable than the
direct exercise of executive power that to in the field of social security
matters. The agricultural insurance is also one of such measure and requires a
specific legislation.
However a dichotomy arises within the Lists of
Schedule VII of the Constitution of India. The subject matter of ‘insurance’[75]
is within the legislative jurisdiction of Union Government and the
‘agriculture’[76]
‘agricultural loans’[77]is
within the legislative ambit of State Governments. The policy programs of the
Union and the States may entail in conflict as crop insurance is directly and
imminently connected with agriculture. The risk to be insurable two basic requirements
viz., managing the adverse effects of “asymmetric information” and
overcoming the implications of “systemic risks”, have to be fulfilled
making it is different from other insurances. Thus the application of the
provisions of the Insurance Act 1938 to agricultural insurance may be obtrude.
Thus raises the question, as observed in Kedari’s case, for justification of
formulation of scheme by the Union of India in exercise of its executive power
under Article 73 of the Constitution of India in the absence of law enacted by
the Parliament in exercise of Its Legislative power from relevant Entry No.47
of List-1 with regard to compulsory insurance coverage of agricultural crops.
This may be remedied by separating the
‘agricultural insurance’ from ‘insurance’ in Entry 47 of List I, and/or
be included in List II of the Seventh Schedule providing exclusive jurisdiction
to the State to make suitable legislation on the subject and the Union
Government would make a National Model Law[78]
to guide the States for maintaining a
uniform law .
6.
Risk management through Insurance:
Crop insurance is a risk management
alternative where production risk is transferred to
another party at
a cost called premium. It is the mechanism to reduce the impact of income loss
on the farmer. It aims to mitigate the hardship of the insured farmer against
the likelihood of financial loss on account of anticipated crop loss resulting
from natural vagaries. It strengthens the security of the farmers along with
the devised traditional measures to limit the agricultural risks.
6.1
crop insurance –an affirmative action:
Since time
immemorial farmers have devised traditional measures to limit the agricultural
risks: crop rotation and diversification, inter-cropping, use of low yield but
hardy varieties, tillage systems, share tenancy, contractual inter-linking,
development of non-farm sources of income such as handicrafts and handlooms,
etc. These measures have been continuously adopted by farmers themselves to
manage the risks and strengthening their security. Fluctuations
in rainfall, flood and attack of pests and diseases greatly contributing in
increase of uncertainty in crop yield. Therefore,
farmers in general and small farmers in particular are more vulnerable
to production risks[79]
and economic stress. Among
the farmers, the small farmers who form 83 per cent of the numbers [80] are the most vulnerable to risks. Though various
programs[81]
introduced to mitigate the risks, they are subject to loss in income due to
agricultural shocks and to recoup the peasants are relying on additional or
other allied activities[82].
On the other hand, the Planning Commission has said ‘uncertainty of crop
production in the newly developing countries like India could be removed by
technical measures and by improvements in social and institutional set-up’[83].
Such one measure is insurance instruments covering production, right from
pre-sowing to post-harvest operations. The crop insurance is a mode of risk
pooling which involves combining the risks faced by
a large number of individuals who contribute through premium to a common fund,
which is used to cover the losses incurred, by any individual in the pool. In
order to insure the risk two basic requirements to be satisfied viz., managing
the adverse effects of “asymmetric information” and overcoming the implications
of “systemic risks”. Though it seems to be complicated or problematic in
settling the claims it is advantageous to peasants as there is no provision for
filing claim application and the claims shall be settled by the insurer on its
own on the basis of Crop Cutting Experiments.
As an affirmative action the crop
insurance has been subsidized by the central and state government, managed by
the Agriculture Insurance Company of India Limited (AIC) and other four general
Insurance companies along with NABARD and delivered through banking and other
rural financial institutions, usually tied to crop loans. Insurance policies so far have provided crop yield
insurance, farm income insurance, weather index insurance and the
recently introduced Varsha Bima Yojana (rainfall insurance, a specific product
of weather based crop insurance) as a substitute for or compliment to crop
insurance on pilot basis. The IRDA has contributed for these initiatives with a
motivation to cover the rural and social sectors.
In Kedari and Ors. vs State Of Karnataka[84] the High Court has corroborated the crop insurance
scheme and said ‘having regard to the plight of the
farmers of the country in the event of natural calamities on account of which
various commercial crops and agricultural crops are destroyed and thousands of
families are put to great hardship and there have been innumerable suicidal
death of farmers on account of failure of crops and not clearing the loans
raised by them either from the Banks or private persons, therefore to protect
the agriculturists in the rural India the Union of India has rightly framed the
said scheme’.
The
central Government has invested `3135.00
crores towards crop insurance during 2010-11and budgeted for `1025.00 crores and `1136.00 crores for the year 2011-12
and 2012-13 respectively[85].
Press Information Bureau has reported that 4.86 crore farmers are benefited, as
on 19.1.2012, covering more than 17 crore farmers in the country[86]. To make insurance more farmers friendly the
Union Government has recently notified[87]
for exempting the service tax for WBCIS, MNAIS, NAIS, Pilot Scheme on seed crop
insurance and others.
In
Karnataka, during the year 2010-11, under NAIS, 25, 19 and 5 crops were
notified at Hobli level for Kharif, rabi and summer seasons, respectively. To
compensate the crop losses on individual basis to the farmers in the event of
crop failure due to localized calamities like flood, hailstorm, cyclone and
landslide, all the notified districts are covered during the year 2010-11. The
financial allocation for the year 2010-11 is `5000.00 lakh[88]and
it is increased to `6000.00 lakh for the year 2011-12. Crops notified during
Kharif, Rabi and summer 2010-11 and progress made under NAIS since inception
and until up to 31.03.11 about 176 million farmers have been insured, covering
an area of 269 million hectares for a sum insured value of ` 2,21,213 crore,
against a premium of ` 6589 crore. Claims to the tune of about `22190 crore
have been reported so far benefiting nearly 47.6 million farmers representing a
claim ratio of 1:3.37[89].
During
2010-11, the Economic Survey of Karnataka 2011-12 reports[90],
the state has achieved an all time high food grain production of 139.86 lakh
tones comprising 124.21 lakh tons cereals and 15.65 lakh tons of pulses. Under
NAIS[91] a
total of 109.49 lakh farmers have paid
a premium of `40743.58 lakh till
Khariff 2010 from inception, and a total claim of `160142.26 lakh settled to 40.983 lakh,
farmers as against the insured amount of `154767.44 lakh. As an alternative to NAIS, under the WBCIS till
2010-11 Rabi season total numbers of farmers participated is 240287 with a
premium of `1360.76 lakh and total claim disbursed was `2840.489 lakh to 158712
beneficiaries. The MNAIS was also implemented on pilot basis in 3 districts
(Tumkur, Shivamogga and Gulbarga) of Karnataka covering 20 crops during Khariff
2011 and extended to Uttara Kannada district during Rabi and Summer 2011-12.
During 2010-11, a total of 1.57lakh farmers participated in MNAIS by paying
premium of `198.72 lakh.
The
above data shows that both the Central and State Government are performing
positively to address the farmers who were at risk fulfilling the directive of
the Constitution and guidelines of WTO Agreement on Agriculture. In spite the
‘Lemons Problem’[92]
persists as the parties to an insurance transaction do not have the same degree
of information ("asymmetric information") necessary to make an
informed decision.
6.2 Crop insurance – some
shortcomings:
The Government
policy and regulation plays an important role encouraging and persuading the insurance sector and
farmers, by providing fiscal and other concessions in reducing
farmers’ woe, but the delivery of different insurance programs and their
failure have shown that they found to have lesser effect. It is because that the contract
of Crop insurance is more complicated than other general insurance contracts.
The loss occurred due to natural calamities, uncertainty at different stages of
cultivation like, pre sowing and post harvest risks, sampling of crop cutting
experiments, inadequate data of weather index and crop yield, approach
methodology[93],
etc. are some of the reasons for the complication in claim settlement. The insurability under agricultural insurance
policy prescribes certain conditions like- (1) The risks should cause economic
loss to the farmer covered under the policy; (2) The loss should be expressed
specifically in monetary terms; (3) The risk of loss in the future can be
estimated by analyzing the past data's; and (4) The loss must not be minor or
negligible; and 5. The insured farmer should have the financial capacity to pay
the premium amount or should be eligible for government assistance[94].
The satisfaction of these conditions is necessary to claim compensation by the
insured. Further the exemption clauses that are adopted in other general
insurance contracts could not equally be made applicable for crop insurance
because of agricultural risk is unique (the risks are neither completely
independent nor correlated). The valuation of insurable interest is again a
difficult task that too in case of voluntary crop insurance (in case of compulsory
insurance it is equivalent to the loan amount).
The government
has admitted[95]
that it lacks the resources to administer a proper insurance scheme. Former
President Dr.APJ Abdul Kalam has said "The finance ministry has doubled agricultural
credit by banks to 2, 00,000 crore, but
it did not touch the lives of needy farmers — crop insurance is not taking
place”[96].
The National Consumer Disputes Redressal Commission[97]
has observed that non-implementation of the scheme, in accordance with the
provisions, bound to increase rural debt, exploitation and said “It appears
that Government of India is announcing Crop Insurance Welfare Schemes at
various levels from time to time.
Affected farmers have to wait for years to get the relief because of
method adopted for its implementation”[98]
The NCDRC has further observed that ‘different officials of the agencies involved
in various stages for processing the implementation of the crop insurance
scheme…should be properly trained and guided…’
at least by the GIC[99]
before recovering the premium from the poor farmers and in any case before
giving them hope that if there is failure of the crop, they would get
the assured sum within reasonable time and they would not be driven from pillar
to post…[100]
because ‘insured farmer is the basis’ and not the Credit Societies[101]or
other implementing agencies.
Liability clause:
There
is an authorization to State Level Coordination Committee on Crop Insurance to
oversee the implementation of the Schemes of insurance[102].
The schemes prescribed the roles of Government of India[103],
State Government/ Union Territory Administration[104],
Banks[105]
including Nodal Banks, Insurance companies[106]
and Farmers[107].
The farmer required to submit the papers and documents pertaining to land and
the banks are required to collect applications and premiums with in the
stipulated period and maintain the records of the loanee and non-loanee farmers separately on
the basis of crops and insurance units and notify the list farmers and beneficiaries. Further
the banks are duty bound to transmit the records to the insurance company with
in the time limitation and allow the insurance company to inspect the records
maintained in the bank. However there is no provision for local inspection of
the lands and records of the insured. Therefore, no insurance authority could
ever maintain a supervising agency which would be able to watch and enforce
that every insured field receives the required amount of care and attention at
the hands of its cultivator[108].
Area based approach: The
area based approach aiming at yield guarantee to greater extent protected the
interest of the farmers from natural calamities, etc. But farmers insured under
the NAIS are not guaranteed indemnity for their yield losses. Computation of threshold yields and indemnity
levels are different depending on the area. The sampling CCE within the large
insurance unit area helps the computation and all good and bad cultivators
stand equally for the compensation. Since insurance units have become smaller
units under MNAIS the calculation of threshold and indemnity level shall
require to be modified. For better result CCE, threshold yield and physical
assessment of loss shall always be done individually. This has not been
incorporated it till today.
It
has provided major opportunity for adverse selection at the state level as
availing of insurance is compulsory for loanee farmers. It is observed when a group of farmers is
offered crop insurance at the same premium as is often the case in government
or subsidized crop insurance[109].
The cross-subsidization is
another defect[110]
in the area approach because it indirectly subsidizes the worse farmers when
policy purchased by the better farmers. These defects may be cured by
implementing “watch and enforce” policy and privately administered insurance
scheme or by adopting the ‘individual based approach’. Ministry of Agriculture
has expressed that an 'individual' crop insurance scheme is not possible in
India for several reasons, including "prohibitive costs due to huge requirement
of men and material" and "disputes over fixing guaranteed yield and
loss assessment."[111] Thus the defective schemes and other
new schemes like weather index approach shall be comprehensively revisited for
the betterment of the farmers. Accordingly an ‘integrated
credit-cum-crop-livestock-human health insurance package’[112]
is recommended by Dr. M S Swaminathan.
Though being
defective in some context, the crop insurance schemes have done better in
preventing suicide of farmers. According
to the National Crime Records Bureau (NCRB), the total number of farm suicides
since 1995 has touched 2, 70,940. In Karnataka it is 2100 during 2011 as
against 2585 during the year 2010 showing fall in numbers. Karnataka stands 3
among the leading 5 states[113].
The implementation of the insurance have saved many farmers life and if had not
been floated the rate of suicide would have been much more.
Insurance
literacy and limited reach: The Insurance schemes provided
for creation of awareness among the cultivators for availing insurance policy.
Press information Bureau has reported that 4.86 crore farmers are benefited, as
on 19.1.2012, covering more than 17 crore farmers in the country[114].Thus
the efforts of the participating agencies are commendable in this regard. But
much more insurance literacy is aimed to be created, through support services[115], and other awareness creation programs to
reach the farmers to the fuller extent. It was recommended by Dr. M S
Swaminathan to promote … insurance literacy through
the ‘Every Village a Knowledge Centre
movement’ introducing policies for more extensive use of Community
Radio linked to the internet/ cell phone[116].
The need is to expand the cover to all farmers and all crops in a time bound
manner. But still the majority of small and marginal farmers are kept away with
the insurance benefits.
Fairness
and transferency: No system is devoid of defects. The
implementing authorities and the persons for whose interest the schemes adopted
must act fairly. Otherwise it would lead to fail. Those who act unfairly must
be curbed. The National Consumer Disputes Redressal Commission has rightly
observed and said ‘those farmers who are having no irrigation facility even
though they pay insurance premium, they are the sufferers and they do not get
any relief except litigation from one District Forum to State
Commission/National Commission and thereafter to the Supreme Court’[117].
Further, under crop insurance, crop to be covered is yet to exist and its
existence or nature thereof depends on the actions of the insured farmer. It
may become impossible for any insurer to monitor whether the insured farmer is
deliberately not putting in adequate effort to optimize production. This
contravenes the basic principle of insurance, "the principle of utmost good
faith"[118].
It is not only the farmers who
may claim the insurance in an unfair manner but the implementing agencies also
may involve in unfair activities. The NCDRC has identified the irregularities
committed by the banks, such as (a) while disbursing credit loan deducts the
share capital and crop insurance premium; (b) adjustment towards share capital
etc; (c) reporting of loan is for groundnut alone, while cultivation in
villages is for several crops; (d) mistake or error in classification of big
farmers under small and marginal farmers for getting benefits of subsidy[119].
But adjustment of the Crop insurance compensation by the Bank against the loan
account of the individual farmers will not be an irregularity as it fall under the general right of lien of
the Bank…for recovering the amounts due[120].
It would have been anticipated while making the provisions prohibiting the
unfair activities. However, no
prohibitory, liability or penalty clause has been included except imposing
liability on the Nodal Bank/ branch/ PACS for misreporting in case of farmers
coverage[121].
The right created cannot be claimed without observing the correlative duty. So,
it is necessary to include the liability clause even on the farmers for their
act of misleading, fraud, etc. in the best interest of themselves and providing
sanctity to the schemes.
Claims are
assessed by crop cutting (loss adjustment) experiments in which yield
assessment is made in few farms and the results are supposed to represent a
large geographical area. The experiment results are not available for public
verification and therefore the objectivity of the experiments is in doubt.
Further there
have been region wise diversifications which lag the NAIS’s implementation. Gujarat accounted for the highest
claim ratio and Madhya Pradesh on
other, having the lowest
indemnity pay
out[122].
Compulsory
coverage: The crop insurance schemes introduced by the
Government are mandatory for loanee farmers and optional for the non-loanee
farmers and subsidy benefit prescribed will be available only to loanee farmers
and required to pay reduced premium. The non loanee farmers have to pay higher
premium. This classification as loanee and non-loanee farmers would create an
imbalance among the farmers community.
The dichotomy in the system is that if the state authorities decide to
implement the NAIS or MNAIS the producer must purchase insurance, and producer
has no choice (except going for higher sum insured by paying higher premium at
actuarial rate as applicable to non-loanee farmers). Further the product is
tied to the crop loans given by rural public sector banking system. The
coverage is compulsory for the borrowers and not voluntary. In many cases
farmers themselves do not know that they were covered[123]
or not.
There are other feelings with the
farmers that-(i) the premium payable is not refundable. So they feel that it is
a waste of money;(ii) the government agencies do not educate them properly;
(iii) this is for the benefit of the
government and the Insurance Companies only; (iv) they believe that the
government will and should take up the responsibility every year. It is
necessary that farmers are to be properly informed about the schemes or
otherwise schemes would fail.
The subsidized crop insurance
scheme, in India, is largely linked to lending banks and recognized financial
institutions. One can assume that there is desire to safeguard the loan granted
by the financial institutions (the
linking with banking and financial institutions, on the other hand, is a cost
saving measure in obtaining data and administration of the schemes). The NAIS and MNAIS made provision for
compulsory insurance but option given to non-loanee farmers. The Government has
intended for inclusion of only food crops encouraging food security. Along with
food security, the national growth is also to be secured. Therefore, all
agricultural crops are to be included within crop insurance schemes without an
anomaly of making classification among peasants.
Indemnity
and settlement of claims:
In case of NAIS
indemnity payouts were made easier in case of subsidized food crops rather than
in Annual Commercial and Horticultural Crops. But due to previous inadequate
data of crop yield the settlement of claims were being delayed. However under MNAIS this is modified
providing for immediate claim settlement to 25%, covering pre sown and post
harvest crop loss.
Under any of the
scheme farmers are not entitled to file or lodge any claims. The claims are
payable automatically if there is a shortfall in yield due to any non-preventable
risk in a notified area against guaranteed yield obtained from crop cutting
experiments conducted by State Governments under General Crops Estimation
Survey (GCES). No doubt, it has conferred an advantage to farmers, but claim
settlement process takes a very long time‐
from six months to two years in some cases, thereby allowing all the bad
consequences of the yield loss to occur before the compensation reaches the
insured. This considerably reduces the developmental impact of the insurance.
One of the reasons for delay is method adopted for its implementation as
observed by NCDRC[124].
Uniform premium and Inequality of benefits: The premium rate[125]
is uniform for a crop across the whole country while the premiums and claims
were not “equitably” distributed across crops and states. In case where no loss
occurred, the insured would have permitted to withdraw the premium paid. Under
any of the insurance scheme the refund of the premium is recognized. The
farmers associations have demanded for in this regard.
The benefit of
the welfare scheme should reach the concerned persons and the object of the
schemes is not frustrated. Therefore there shall be flexibility in the scheme
rather than rigidity[126].
The flexibility can be more attained through legislations than the executive
orders.
Lack of viability and Administrative cost: Administrative cost is very
high as crop cutting method is used for loss assessment and it is admitted by
the Government that it lacks the resources to administer a proper insurance
scheme. Wherever
crop insurance has been implemented by the public agencies/Govt. bodies up till
now, it has been proved financially un-viable. The reasons cited by S.D. Chopra[127]
are-(i) Public Crop Insurance Schemes generally try to cover un-insurable risks
which occur frequently and the required premiums are too high for most of
the farmers (small and marginal farmers) to pay and (ii) where there are large
number of small and marginal farmers scattered over the country, administration
cost will be very high.
Further crop cutting experiments planned in a district, taluk, and villages
involves higher financial risk. However, use of the modern technologies like
Remote Sensing[128],
Global Positioning System (GPS) and Geographic Information System (GIS) to
avail spatial statistics would lessen the administrative cost which in turn
reduce non-sampling errors and to improve the reliability of the estimates of
the CCE.
Majority
of the people living in rural areas depend on agriculture for their living. For
survival, due to the risks, the landless farmers and most of the small farmers
are depending more on non-farm activities, and it is agriculture for other
farmers despite of facing risks. It is because the affirmative programs of the Governments
to support the farmers against the losses had not reached the whole of the
farmers’ class. The figure of covering more than 17 crore at the national
level, mentioned above, is not a big figure and assumes that the crop insurance
schemes are lagging behind. One of the reasons for this may be that the schemes
have remained as an ad hoc measure and not aimed to provide a permanent
statutory solution. Thus the suggestive
measures, below mentioned, may be adopted by the Government to achieve more of
affirmative action initiated to mitigate the risks of production facing by the
farmers.
7.
Conclusion:
The crop insurance schemes do not
directly increase the productivity and income but is a risk intervention
mechanism. It is a financial mechanism to minimize the impact of loss in farm
income, has got human and legal dimensions. There is a need for relook in to
the legal dimensions in the present changed scenario of environment and mind
set of the farmers. The recent proposal of the Central Government to replace
the NAIS and continue the MNAIS or to introduce an integrated scheme called
National Farmer Security Cover Programme is a good move but government must see
that the schemes shall be enforced through legislation. The following
suggestions may require to be incorporated in the proposed continuing or new
programme to protect the further interests of the farmers:
- the government
shall pass a suitable legislation enforcing the agricultural insurance as a
constructive and permanent risk management programme covering all type of risks
facing by the farmers
- Premium to be
refunded to farmers when a claim has not taken place,
-methodology for
computation of threshold yields and indemnity levels shall be revisited because
the insurance units have become smaller units under MNAIS,
-The practice of
physical assessment of losses on an individual basis in all the areas is a
need,
-Since remote
sensing technology is introduced the CCE and loss assessment methods shall be
improved to avoid sampling and other errors,
-Proper
awareness shall be created amongst the farmers about the insurance scheme,
-introduction of
liability or penalty clause is the need for proper implementation of the scheme
and to provide benefits to the farmers who really suffered the loss,
- having keep
with banking linkage for better administration and implementation of the insurance schemes, the government shall
make provision to bring all categories of agricultural crops with in the
agricultural insurance scheme, and
- watch and
enforce policy is necessary to avoid misleading or fraudulent acts on the part
of the farmers in availing the insurance benefit.
From the above
discussion, it is opined that the crop insurance schemes introduced by the
government are in the better interest of the farmers. It has provided some
assurances to the farmers against their investment. It is open to the
government to improve the schemes to meet adequately the demands of the policy
and of the farmers by enforcing a proper legislation.
****
Address: KG KRISHNAMURTHY
PRINCIPAL
VIVEKANANDA LAW COLLEGE,
NEHRU NAGAR, PUTTUR-574203 (DK)
kgkrishnamurthyrao@gmail.com
Ph-08251 230561(O),
9880350576 (M)
[1]
http://planningcommission.nic.in/aboutus/committee/wrkgrp12/agri/wg_repcons.pdf;
Ch.IV, 4.1, p.65
[2] Ibid, at Ch.IV, 4.3 p.66;
rainfall variations account for more than 50% of variability in crop yields:
http://www.indg.in/agriculture/schemes/varsha-bima-2005/?searchterm=varsha bima
2005,
[3] For Example, low soil moisture
in the pre-sow period adversely affects seed germination; heavy rainfall during
early growth period causes submersion of plants; hailstorms, cyclones, etc.
damage the standing crops and high humidity may cause outbreak of pests and
diseases.
[4] Supra note 1 at p.67
[5] Risk is referred to the income
variations. See, Gurudev Singh, Crop Insurance in India, at
http://www.iimahd.ernet.in/publications/data/2010-06-01Singh.pdf,
[6]
Quoted D. Rajsenan in “Evaluation
of Coconut Palm Insurance Scheme (CPIS)” @
http://agricoop.nic.in/CDB2152012.pdf
[7] Andhra Pradesh Rythu Sangham v.
Union of India, decided on 18 February, 2002 (AP) at http://www.indiankanoon.org/doc/1678399/
[8] Romiro
Itarrioz, Agricultural insurance, primer series on insurance, issue 12,
november 2009 at
http://siteresources.worldbank.org/FINANCIALSECTOR/Resources/Primer12_Agricultural_Insurance.pdf
[9] S. Yoga and
Dr.K.Vetrivel, Origin and Progress of Crop Insurance in India- A historical
view: Review Research ,Feb 2012 at
http://www.reviewofresearch.net/PublishArticles/72.pdf
[10] in 1948 G S Priolkar was
appointed to study the feasibility of crop & cattle insurance scheme and on
the basis of recommendations a pilot
scheme was drafted by Indian Council of Agricultural Research. See Shivtar
Singh, Crop Insurance in India- A brief Review, p.218 at
www.isas.org.in/jias/jsp/volume/vol57/shivtarsingh.pdf
[11] K L Krishna & Uma Kapila,
eds, Readings in Indian Agriculture and Industry, (Academic Foundation, New
Delhi, 2009) p.200
[12] Shivtar Singh, Crop Insurance in
India- A brief Review, p.218;
www.isas.org.in/jias/jsp/volume/vol57/shivtarsingh.pdf
[13] Evolution of Crop Insurance;
http://www.aicofindia.com/AICEng/Pages/evolution.aspx
[14] ibid; The Scheme was implemented
during 2 seasons only, viz. Rabi 2003-04 season in 18 Districts of 11 States
for wheat/rice, and Kharif 2004 season in 19 Districts of 4 States for rice
alone. In all, the scheme covered 4.15 lakh farmers for an area of 4.02 lakh
hectares for a Sum Insured (i.e. guaranteed income) of 420 crore, collecting a premium of 28.5 crore and paid claims of 28.75 crore and Discontinued w.e.f. rabi
2004-05.
[15] Ministry of
Agri, Dept. of Agri.& Cooperation, GoI, New Delhi, letter No.13011/02/2008
- credit II, Dated 17th September, 2010; www.agricoop.nic.in/MNAIS029910.pdf
[16]
http://articles.economictimes.indiatimes.com/2007-01-18/news/28445031_1_crop-insurance-marginal-farmers-agricultural-credit
[17] Article 6 (1)
of Uruguay Round Agreement on Agriculture, 1986-1994 read with Annex 2 para 8, @ http://www.wto.org/english/docs_e/legal_e/14-ag_02_e.htm#articleXXI
[18] Annex 2 of the WTO Agreement on
Agriculture
[19] Supra, note 6
[20]
http://financialservices.gov.in/insurance/gssois/nais.asp
[21] clause 1, National Agricultural
Insurance Scheme
[22] A premium rate is only an
estimate of the future requirements to pay losses
[24] clause 7; SMALL
FARMER means A Cultivator with a land holding of 2 hectares (5 acres) or less,
as defined in the land ceiling legislation of the concerned State/ UT. MARGINAL
FARMER means A Cultivator with a land holding of 1 hectare or less (2.5 acres)
[26] clause 3
[27] Clause 12
[28] ibid
[30] Clause 13
[31] Clause 19
[32] Incorporated
on 20 December, 2002 and had taken over the implementation of NAIS w.e.f.
April, 2003.
[33] Clause 7 of the NAIS Operational
Modalities
[34] Clause 8 of Features of NAIS
[35] Clause 4
[36] ibid
[37] Clause 5
[38] Clause 9; Village Panchayat or
equivalent is made as unit under the MNAIS(Clause 4(a) of Operational
guidelines of MNAIS)
[39] Ibid
[40] Clause 10
[41] clause 8 of Operational
guidelines of MNAIS
[42] Clause 13A of NAIS
[43] Clause 9 (B) of Operational
guidelines of MNAIS
[44] Tenth Report of Standing Committee on Finance (2004-2005)
on CREDIT FLOW TO AGRICULTURE—CRISIS IN RURAL ECONOMY AND CROP INSURANCE SCHEME
(Action Taken Report) p.20 para 41-42, at
http://164.100.24.208/ls/CommitteeR/finance/10rep.pdf
[45] Clause 6 of MNAIS
[46] Clause 9 (C) (f)
[47] Clause 4(a)
[48] Clause 9 (A) (iii)
[49] Clause 9 (A) (iv)
[50] Clause 9 (A) (ii)
[51] Clause 9 (A)(i); Threshold yield
based on average yield of past seven years, excluding up to two years of
declared natural calamities.
[52] ibid
[53] Clause 7
[54] ibid
[55] Clause 8
[56]
http://indiabudget.nic.in/ub2007-08/bh/bh1.pdf
[57] `1135
crore allocated for Crop Insurance (3 schemes) in 2012-13 Union Budget;
http://indiabudget.nic.in/ub2012-13/bag/bag5.pdf
[58] Earlier General Insurance
Co.Ltd. was authorised to deal with Agricultural Insurance.
[59] IRDA Act 1999
[60] ICICI Lombard
General Insurance Co. Ltd., HDFC ERGO General Insurance Co. Ltd., and
Cholamandalam General Insurance Co. Ltd.
[61] Insurance Regulatory and Development
Authority (Obligations of Insurers to Rural Social Sectors) Regulations, 2000
[62]
http://www.aicofindia.com/AICEng/General_Documents/Annual_Report/AnnualReport 2011-12/AnnualReport_2011-12.pdf
[63] Article 48 of the Constitution
of India
[64] Art.39 (a) and 41; Olga Tellis
v.Bombay Municipal Corporation, AIR 1986
SC 180
[65] Maneka Gandhi’s case, AIR 1981 SC 746
[66] Art. 19(1)(g)
[67] Art. 300-A
[68] italics added by the author
[69] Andhra Pradesh
Rythu Sangham v. Union Of India, decided on 18 February, 2002 (AP) at http://www.indiankanoon.org/doc/1678399/ ;
see also, A.P. Rythu Sangham v. Secretary, Ministry Of Agriculture, New Delhi,
decided on 18 February, 2002 (WRIT PETITION No.20650 of 2000 )
http://indiankanoon.org/doc/479467/,
[71] Rai Sahib Ram Jawaya Kapur v. The State Of Punjab (1), AIR 1955 SC 549
[72] State Of Madhya Pradesh v. Thakur Bharat Singh, AIR 1967 SC 1170
[73] In Motilal v. The Government of
the State of Uttar Pradesh {ALL. HC(FB)}
[74] AIR 2003 Kant 157
[75] Entry 47 of List I of Sch.VII
[76] Entry 14 of List II of Sch.VII
[77] Entry 18 of List II
[78] For Example, Model Rent
Legislation 1992 and the recent draft of Land Titling Bill 2011
[79] Sample survey in Karnataka
provides that production risk is around 3.5% out of total risk taken into as
10. (Table IV. Basic information on the
sample households) @ http://www.nabard.org/fileupload/DataBank/EvaluationStudy/Risks%20Vulnerability%20in%20Karnataka.pdf
[81] Tie-up between farmers and various market players,
watershed development projects, Farm Innovation and Promotion, Farmers’
Technology Transfer, refinance disbursement for investment credit for farm
activities, etc. For details see, NABARD annual Report, Supra,80
[82] Daily labour, dairy/sheep rearing, petty-shop, tailoring, etc.
[83]
http://planningcommission.nic.in/aboutus/committee/wrkgrp/agricrdit.pdf, page
84
[84] AIR 2003 Kant 157
[85]
http://indiabudget.nic.in/ub2012-13/eb/sbe1.pdf
[86]
http://pib.nic.in/newsite/erelease.aspx?relid=80025
[87] Notification No. 25/2012-Service Tax, New Delhi, the 20th
June, 2012; http://www.servicetax.gov.in/notifications/notfns-2012/st25-2012.htm
[88] Economic Survey of Karnataka 2010-11, Pp.98-99.
[89] Supra, Note 20
[90]
http://www.advantagekarnataka.com/images/pdf/Economic-Survey-2011-2012.pdf
[91]
Appendix 4.12 of Economic survey of Karnataka 2011-12:
http://planning.kar.nic.in/sites/planning.kar.nic.in/files/Economic_Survey/2011-12/Statistical%20Appendix.pdf
[92] popularized by a 1970 research
paper by economist George Akerlof
[93] Individual farm based or area
based approach; Specific crop or all
crops based approach; rain approach or weather index based approach
[94] Dr.A.Oliver Bright and Dr.S.
Maria John, Agriculture Insurance – An Effective Control Mechanism for
Non-Performing Assets in District Central Co-Operative Banks of India,;
http://www.articlesbase.com/insurance-articles/agricultural-insurance-an-effective-control-mechanism-for-nonperforming-assets-of-district-central-cooperative-banks-in-india-319061.html#
[95] Supra, Note 44
[96] http://articles.economictimes.indiatimes.com/2007-01-18/news/28445031_1_crop-insurance-marginal-farmers-agricultural-credit
[97]
Agriculture Insurance Company of India Ltd. v. The Farmers Service Cooperative
Society Ltd., NCDRC, New Delhi in First Appeal No.362 Of
2006
[98] ibid
[99] Now called as Agriculture
Insurance Company of India Ltd.(AIC)
[100] Agricultural Insurance Company
of India Ltd. v. Kemlegowda, NCDRC, New Delhi, dtd. 05.10.2006
[101]
Gujarat State Consumer’s Protection Centre v. General Insurance Corpn. Of India,
NCDRC, New Delhi, dtd: 24.02.2005
[102] Clause 3 (c) of MNAIS
Operational Modalities
[103] Clause 13 (A) of MNAIS
[104] Clause 13 (B)
[105] Clause 13 (C)
[106] Clause 13 (E)
[107] Clause 13 (F)
[108] Reshmy Nair, Risk mitigation and
crop insurance in India: a performance analysis; http://www.freepatentsonline.com/article/Journal-Social-Economic-development/253535290.html,
[109] Jennifer Ifft, Government vs Weather-The
True Story of Crop Insurance in India, p.3 at http://ccsindia.org/RP01_10.asp;
at later part Jennifer Ifft observes that in India adverse selection can
clearly be seen at the state level, as
Punjab and Haryana do not not participate in the NAIS.
[110] Ibid, p.5
[111] ibid
[112] Prof. M.S.Swaminathan Report:
National Commission on Farmers p. 9 ; http://agricoop.nic.in/NCF/NCF%20Report%20-%203.pdf
[113] P. Sainath, Farm suicides rise
in Maharashtra, State still leads the list, The Hindu, July 3, 2012 at
http://www.thehindu.com/opinion/columns/sainath/article3595351.ece
[114]
http://pib.nic.in/newsite/erelease.aspx?relid=80025
[115] Community
Radio, internet, cell phone, ‘Kisan Call Centers (KCCs), Mass Media Support to Agriculture Extension,
Focused Advertisement Campaign
[116] Supra, note 112
[117] Agriculture Insurance Company of
India Ltd. v. The Farmers Service Cooperative Society Ltd., NCDRC,New Delhi, First
Appeal No.362 Of 2006.
[118] Supra, note 108.
[119] ibid
[120] per, Ashok Bhan, J. in Vyavasaya
Seva Sahakari Bank Ltd,Unkal, Taluk Hubli v. Sannadyamanagouda NCDRC,New Delhi in
Revision Petition No. 1764 Of 2006 dtd. 26th February, 2010
[121] Clause 13 (C)(d) of MNAIS
[122] Supra, note 108
[123] M.Karthikeyan, Insuring
small and Marginal farmers against crop losses on a large scale: A note for
Twelfth Five Year Plan, at http://www.indiawaterportal.org/sites/indiawaterportal.org/files/Insuring_Small%20&%20Marginal%20Farmers_Crop%20Losses_M%20Karthikeyan_DHAN%20Foundation.pdf
[124] Agriculture Insurance Company of
India Ltd. v. The Farmers Service Cooperative Society Ltd., NCDRC, New Delhi, First Appeal No.362 Of 2006
[125]As
per UNCTAD document on "Agricultural Insurance in Developing
Countries" a standard Actuarial model for calculating the premium for crop
insurance has not yet been developed. The specific formulae that have been
developed in different countries is depending upon the parameters and variables
of their programmes; see,
http://www.microinsurancecentre.org/resources/documents/doc_download/266-agricultural-insurance-in-developing-countries.html
[126] Agriculture Insurance Co. of
India Ltd v. Farmers Service Cooperative Society Ltd, I (2007) CPJ 128 NC
[127] S.D. Chopra, Crop Insurance as a Measure of Risk
Management in Agriculture, Journal
of The Indian Society of Agricultural Statistics, vol. 54, p.154, at http://www.isas.org.in/jisas/jsp/volume/vol54/Symposium_2%20.pdf
[128]
FASAL-‘Forecasting Agricultural Output using Space Agro meteorology and Land
based observations’ is being implemented by Space Application Centre, Ahmedabad
(Interim Report of the Expert Committee on Agricultural Statistics, July 2010, para
2.3.1, at http://eands.dacnet.nic.in/Interim_Report.pdf: And it was suggested
for use of Remote Sensing methodology after testing its viability ( para 3.1.2)
