PERFORMANCE ANALYSIS OF CROP INSURANCE SCHEMES IN INDIA- AN OVERVIEW

PERFORMANCE ANALYSIS OF CROP INSURANCE SCHEMES IN INDIA- AN OVERVIEW Dr. M. RAJARAJAN 1 Assistant Professor, Commerce Wing, DDE, Annamalai University, Annamalai Nagar-608 002, Tamilnadu, Mobile: 9443771454 Dr. S.V.MURUGESAN 2 Assistant Professor, Commerce Wing, DDE, Annamalai University, Annamalai Nagar-608 002, Tamilnadu, Mobile: 9443020048 ABSTRACT Crop insurance in India has largely been in the nature of weather insurance it was earlier provided by General Insurance Corporation and post liberalisation a separate company - the Agriculture Insurance Corporation of India was set up. The cover was earlier provided to farmers with loans. Later it was extended to even those who do not have loans. The downside of this cover was that the insurance company paid out claims only if the weather bureau declared a drought or flood for the district. However, there have been cases where farmers have suffered even without a drought being declared. Because of low premium paying ability private insurance companies do not find crop insurance unless there is a corporate involved who is doing the funding. Prime Minister Narendra Modi has proposed a scheme where claims would be paid even without the district being fully affected. This article highlights performance analysis of crop insurance schemes in India - an overview. www.apjor.com Page 55

INTRODUCTION India is an agriculture country and around 58 per cent (.7 Billion population) are engaged in agriculture and allied activities contributing about 14.6 to GDP (2009-10). Every 103 year, large scale crop failure occur in one part of the country or the other due to various natural calamities such as flood, drought, cyclone etc and damaging the crops in wide spread areas and making agriculture as the most risky business. Though such farmers were given some support from the government under various schemes but the help was not enough. The subject of crop insurance was discussed in Indian parliament as early as 1950 and Government assured that viable crop insurance scheme would be introduced. Accordingly, Government appointed various committees to suggest a viable crop insurance scheme. The scheme suggested by such committees were not acceptable to the State Governments due to huge financial implications and no insurance company was willing to implement any such scheme because of expected heavy losses. As elsewhere in the world, policy makers in India were also concerned about the risk and uncertainty prevalent in agriculture. Credit for pioneering work on crop insurance in India goes to Chakarvarti, who in 1920, proposed an agricultural insurance scheme based mainly on rainfall approach. The data on which the scheme was based pertained to Mysore State, but he had an all India perspective. Scheme suggested by him consisted of a package that included insurance of buildings, 104 granaries and agricultural implements; cattle insurance and; insurance of crops. He recognized that at the core of agricultural insurance is the assumption of the risk of loss or deficiency in respect of crops. Therefore, he attached higher importance to crop insurance than to the insurance of cattle and buildings. The issues then to be decided were: what should be the basis of crop insurance? And, should the crop insurance be on the value of a crop or on its quantity? He admitted that value should be the basis. As the prices and quantity are inversely related, in some cases the value of output in an unfavourable year may be more than in a normal year. However, there are practical problems in estimation of quantity and price to arrive at the value of the crops. CROP INSURANCE Crop insurance is purchased by agricultural producers, including farmers, ranchers, and others to protect themselves against either the loss of their crops due to natural disasters, such as hail, drought, and floods, or the loss of revenue due to declines in the prices of agricultural commodities. An Indian farmer, Agriculture in India is highly susceptible to risks like droughts and floods. It is necessary to protect the farmers from natural calamities and ensure their credit eligibility for the next season. For this purpose, the Government of India introduced many agricultural schemes throughout the country. The Government of India experimented with a comprehensive crop insurance scheme which failed. The Government then introduced in 1999-2000, a new scheme titled National Agricultural Insurance Scheme (NAIS) or Rashtriya Krishi Bima Yojana (RKBY) HISTORY OF CROP INSURANCE India is an agrarian country, where the larger part of the people depends on agriculture for their sources of income. The crop production in India is dependent largely on the weather and is harshly impacted by its vagaries as also by attack of pests and diseases. These unpredictable and uncontrollable extraneous perils render Indian agricultural and tremendously risky enterprise. It is here that crop insurance plays a crucial role in anchoring a constant development of the sector. Pre-Independence As far back as 1915 in the pre-independence era, Shri J.S. Chakravarthi of Mysore State had proposed a rain insurance scheme for the farmers with view to insuring them against drought. His scheme was based on, what is referred to today as the area approach. He published a number of papers in the Mysore Economic Journal enunciating the concept of Rainfall Insurance. In 1920 Shri Chakravarthi published a book titled Agricultural Insurance: Practical Scheme suited to Indian Conditions. Apart from this, certain substantial states like Madras, Dewas, and Baroda, also made attempts to introduce crop insurance relief in various forms, but with little success. Post-Independence After the Independence in 1947, crop insurance gradually started to find mention more often. The Central Legislature discussed the subject in 1947 and the then Minister of Food and Agriculture, Dr. Rajendra Prasad gave an assurance that the government would examine the prospect of crop and cattle insurance, and a special study was commissioned for this purpose in 1947-48.The aspect of crop insurance considered was whether the same should be on an Individual approach or on Homogenous area approach. The former seeks to indemnify the farmer to the full extent of the losses and the premium to be paid by him is determined with reference to his own past yield and loss experience. The 'individual approach' basis necessitates trustworthy and perfect data of crop yields of individual farmers for a sufficiently long period, for fixation of premium on actuarially sound basis. The 'homogenous area' approach envisages that in the absence of reliable data of individual farmers and in view of the moral hazards involved in the 'individual approach', a homogenous area comprising villages that are homogenous from the point of view of crop production and whose annual variability of crop production would be similar, would form the basic unit, instead of an individual farmer. The study reported in favour of a 'homogenous area' approach, as various agro-climatically homogenous areas treated as a single unit and the individual farmers in such cases pay the same rate of premium and receive the same benefits, irrespective of their individual fortunes. The Ministry of Agriculture circulated the scheme, for adoption by the State governments, but the States did not accept. Government of India decided to introduce a Crop Insurance Bill in October 1965 and a Model Scheme of Crop Insurance in order to enable the States to introduce crop insurance if they so desired. In 1970, the draft Bill and the Model Scheme were referred to an Expert Committee headed by Dr. Dharm Narain. Thus for over two decades the issue of crop insurance continued to be debated and discussed. www.apjor.com Page 56

First ever Crop Insurance scheme - 1972 The first crop insurance program was introduced in 1972-73 by the General Insurance Department of Life Insurance Corporation of India on H-4 cotton in Gujarat. Afterward, the newly set up General Insurance Corporation of India took over the experimental scheme and subsequently included Groundnut, Wheat and Potato. The scheme has implemented in the states of Gujarat, Maharashtra, Tamil Nadu, Andhra Pradesh, Karnataka and West Bengal. It is based on "Individual Approach". It continued up to 1978-79 and covered only 3110 farmers for a premium of Rs.4.54 lakhs against claims of Rs. 37.88 lakh. It was realized that crop insurance programs based on the individual farm approach would not be viable and sustainable in this country. Pilot Crop Insurance Scheme (PCIS) - 1979 Father of Crop Insurance in India (Professor V. M. Dandekar) suggested an alternate Homogeneous Area approach for crop insurance in the mid-seventies. In this Area approach, the General Insurance Corporation of India (GIC) introduced a Pilot Crop Insurance Scheme (PCIS) from 1979. The scheme covered cereals, millets, oilseeds, cotton, potato, gram and barley. The risk was shared by GIC and the respective State Govt. in the ratio of 2:1. The insurance Premium ranged from 5 to 10 per cent of the Sum Insured. This PCIS ran till 1984-85 by which 13 States had participated. The scheme covered 6.27 lakh farmers for a Premium of Rs. 1.97 crore against Claims of Rs.1.57 crore. Comprehensive Crop Insurance Scheme (CCIS) - 1985 The learning s from PCIS, the Comprehensive Crop Insurance Scheme (CCIS) was introduced in year of 1 st April 1985 by the Government of India with the active participation of State Governments. The Scheme was non-compulsory for the State Governments. The CCIS was implemented on Homogeneous Area approach and was linked to short-term crop credit, that is, all crop loans given for notified crops in notified areas were compulsorily covered under the CCIS. 15 States and 2 UTs had participated in the CCIS during its tenure from Kharif 1985 to Kharif 1999. This Scheme covered 7.63 crore farmers under an area of 12.76 crore hectares, for a Sum Insured of Rs. 24,949 crore at a premium of Rs. 403.56 crore. Experimental Crop Insurance Scheme (ECIS) - 1997 The new scheme was introduced during the Rabi 1997-98 season, viz. Experimental Crop Insurance Scheme (ECIS) in 14 districts of 5 States. The Scheme was similar to CCIS, except that it was meant only for all small/marginal farmers with 100 subsidy on Premium. The Premium subsidy and Claims were shared by the Central and respective State Governments in the ratio of 4:1. The Scheme was discontinued after one season due to its many administrative and financial difficulties. During its one season, the ECIS covered 4,54,555 farmers for a Sum Insured of Rs.168.11 crore at a Premium of Rs.2.84 crore against which the Claims paid were Rs.37.80 crore. Pilot Scheme on Seed Crop Insurance (PSSCI) - 2000 A Pilot Scheme on Seed Crop Insurance (PSSCI) was introduced in Kharif 2000 season in 11 States. This scheme is to provide financial security and income stability to the seed growers in the event of failure of seed crop. It was also provides the stability to the infrastructure established by the state owned seed corporations and state farms, and to give a boost to the modern seed industry by bringing it under scientific principles. All seed producing organizations, under Govt. or private control, producing certain classes of seed for identified crops/states/areas were eligible. All farmers growing the foundation and certified seed crops in the identified states /areas, which had offered the seed crop for certification and had got registered with the concerned certification agency, were eligible for coverage. Farm Income Insurance Scheme (FIIS) - 2003 Farmers income is a collective function of yield and market prices. In other words, a bumper harvest tends to bring down the market prices of grains and vice versa. Therefore, despite normal production, farmers often fail to maintain their income level due to fluctuations in market prices. To take care of unpredictability in both the yield and market price, the government introduced a pilot project, viz. Farm Income Insurance Scheme (FIIS) during Rabi 2003-04 seasons. The objective of the scheme was to protect not only the income of the farmer, but also to reduce the government expenditure on procurement at minimum support price (MSP). FIIS was implemented on the basis of homogeneous area approach in respect of rice and wheat crops only. The scheme was compulsory for loanee farmers and voluntary for non-loanee farmers. The premium rates were agricultural, determined for each State at the District level, to be subsidised by the Govt. of India. Claims would arise if the actual income (current yield X current market price) was lower than the guaranteed income (7 years Average yield X level of indemnity [80 or 90] X MSP). 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 Rs.4.15 lakh farmers for an area of 4.02 lakh hectares for a Sum Insured (i.e. guaranteed income) of Rs. 420 crore, collecting a premium of Rs. 28.5 crore and paid claims of Rs. 28.75 crore. From Rabi 1999 season, the CCIS was discontinued and replaced by the National Agriculture Insurance Scheme (NAIS), which is being implemented to date as the flagship yield based crop insurance program of the Government. Parallelly, the implementation and administration of crop insurance schemes, which were being done by General Insurance Corporation of India (GIC), was taken over by Agriculture Insurance Company of India Ltd. (AIC) since its commencement of business from 1 st April 2003. www.apjor.com Page 57

CROP INSURANCE BUSINESS IN INDIA Agriculture Insurance Company of India (AICIL) The Agriculture Insurance Company of India Limited was incorporated under the Indian Companies Act 1956 on 20th December, 2002 with an authorised share capital of Rs.15 billion and paid up capital of Rs.2 billion. The Government of India introduced the scheme in the year of 1999-2000 (Rabi season). This insurance scheme is to protect the farmers against losses suffered by them due to crop failure on account of natural calamities and the scheme is presently implemented by Agriculture Insurance Company of India (AICIL). The scheme covers all food crops (cereals, millets and pulses) and oil seeds and Annual commercial horticultural crops. This scheme is available to all the farmers, loanee and non-loanee, irrespective of size of their holding. NAIS is presently being implemented in 24 States and 2 Union Territories except in States of Punjab and Arunachal Pradesh. Weather Based Insurance Scheme Weather based Crop Insurance Scheme (WBCIS) is a unique Weather based Insurance Product designed to provide insurance protection against losses in crop yield resulting from adverse weather incidences. It provides payout against adverse rainfall incidence (both deficit and excess) during Kharif and adverse incidence in weather parameters like frost, heat, relative humidity, un-seasonal rainfall etc. during Rabi. It is not Yield guarantee insurance. Number of Farmers and Area Insured under WBCIS The number of famers insured and area insured under the weather insurance scheme is India from Kharif to Kharif in 2007-08 to 2014-15 has been presented in the Table 1. S. No. State Rs. UT Table 1: All-India Business of WBCIS from Kharif 2007-08 to 2014-15 Rs. Crore No. of Farmers Insured (000') Area Insured (000' Ha) 1 Andhra Pradesh 2881.827 8.44 4697.0543 10.21 2 Assam 4.737 0.01 2.660785 0.01 3 Bihar 6471.291 18.96 6815.3616 14.82 4 Chhatisgarh 202.213 0.59 372.31067 0.81 5 Gujarat 497.661 1.46 413.1264 0.90 6 Haryana 70.427 0.21 119.77416 0.26 7 Himachal Pradesh 98.701 0.29 39.388208 0.09 8 Jharkhand 225.132 0.66 170.60336 0.37 9 Karnataka 696.079 2.04 820.51957 1.78 10 Kerala 116.481 0.34 82.63254 0.18 11 Madhya Pradesh 428.554 1.26 843.12175 1.83 12 Maharashtra 1413.132 4.14 1581.4335 3.44 13 Orissa 214.43 0.63 309.60413 0.67 14 Punjab 0.017 0.00 0.095 0.00 15 Rajasthan 20241.367 59.30 29071.657 63.22 16 Tamil Nadu 76.04 0.22 72.66814 0.16 17 Uttar Pradesh 64.27 0.19 24.389991 0.05 18 Uttarakhand 77.62 0.23 25.737775 0.06 19 West Bengal 36.069 0.11 19.762997 0.04 Total 34136.419 100.00 45987.167 100.00 Source: National Agricultural Insurance Scheme The number of farmers insured in the WBCIS shows highest in the state of Rajasthan of 20241.367 thousand farmers of which accounts 59.30 per cent followed by Bihar and Andhra Pradesh of 6471.291 thousand farmers of which accounts 18.96 per cent and 2881.827 thousand farmers of which accounts 8.44 per cent respectively. The area insured also highest in the state of Rajasthan of 29071.657 thousand hectare consist of 63.22 percentage followed by Bihar of 6815.3616 thousand hectare consist of 14.82 per cent and 4697.0543 thousand hectare consist of 10.21 per cent in Andhra Pradesh. The number of farmers insured under WBCIS in Tamil Nadu accounts 76.04 thousand of which accounts 0.22 per cent and area insured 72.66 thousand hectares which accounts 0.16 per cent towards the scheme. www.apjor.com Page 58

Sum insured claims and number of farmers Benefited The number sum insured, claims and the number of farmers benefited in all India level in the weather based insurance scheme for 16 seasons comprises from 2007-08 to 2014-15 has presented in the Table 2. Sl. No. State Rs. UT Table 2: Number Farmers Insured and Benefited All-India Business of WBCIS from Kharif 2007 to 2014 Sum Insured (Rs. In Crore) Claims (Rs. In Crore) No. of Farmers benefitted (000') 1 Andhra Pradesh 11814.59 18.84 875.03 21.45 2016.44 10.61 2 Assam 16.16478 0.03 0.0636 0.00 0.068 0.00 3 Bihar 15631.47 24.92 832.45 20.41 3944.004 20.75 4 Chhatisgarh 726.9768 1.16 61.123 1.50 148.52 0.78 5 Gujarat 223.9475 0.36 8.5735 0.21 170.576 0.90 6 Haryana 440.6119 0.70 33.876 0.83 40.095 0.21 7 Himachal Pradesh 510.4604 0.81 48.992 1.20 75.711 0.40 8 Jharkhand 318.31 0.51 17.837 0.44 186.367 0.98 9 Karnataka 1513.269 2.41 78.874 1.93 482.886 2.54 10 Kerala 256.1158 0.41 14.558 0.36 59.034 0.31 11 Madhya Pradesh 1798.307 2.87 97.427 2.39 377.701 1.99 12 Maharashtra 3830.59 6.11 259.39 6.36 458.821 2.41 13 Orissa 389.3473 0.62 19.686 0.48 123.533 0.65 14 Punjab 0.19 0.00 0 0.00 0 0.00 15 Rajasthan 23654.23 37.72 1603.8 39.32 10600.086 55.77 16 Tamil Nadu 171.984 0.27 14.352 0.35 39.462 0.21 17 Uttar Pradesh 68.65508 0.11 2.1935 0.05 27.982 0.15 18 Uttarakhand 233.0846 0.37 36.756 0.90 45.789 0.24 19 West Bengal 48.17194 0.08 4.4505 0.11 27.841 0.15 Total 62714 100.00 4078.8 100.00 19006.57 100.00 Source: Agricultural Insurance Company of India Limited Table 2 depicts the sum insured in weather based insurance scheme in India. The sum insured shows highest in Rajasthan of Rs.23654.23 crore consist of 37.72 per cent followed by Bihar and Andhra Pradesh of Rs.15631.47 crore consist of 24.92 per cent and Rs.11814.59 crore consist of 18.84 per cent respectively towards WBCIS in India. The highest amount of claim is from Rajasthan state of which accounts Rs.1603.8 crore consist of 39.22 per cent followed by Andhra Pradesh and Bihar of which accounts 21.45 per cent (Rs.875.03 crore) and 20.41 per cent (Rs.832.45 crore) respectively towards the WBCIS. The highest number of farmers benefited is only from Rajasthan state of 10600 thousand farmers of which accounts 55.77 per cent of the total. The Bihar and Andhra Pradesh has second and third position of which accounts 20.75 per cent (3944 thousand farmers) and 10.61 per cent (2016.4 thousand farmers) respectively towards the WBCIS. As far as the Tamil Nadu is concerned 0.27 per cent, 0.5 per cent and 0.21 per cent towards in sum insured, claims and number of farmers benefited respectively in the WBCIS. NATIONAL AGRICULTURE INSURANCE SCHEME The Government of India has historically focused on crop insurance as a planned mechanism to mitigate the risks of natural perils on farm production. In 1999, GOI established the National Agricultural Insurance Scheme (NAIS) to reduce farmers' vulnerability to natural disasters. The NAIS offers insurance for food crops, oilseeds, and selected commercial crops through state owned insurer, Agriculture Insurance Company of India (AICI). Number of Farmer and Area Insured under the NAIS The number of famers insured and area insured under the NAIS ii India from Kharif to Kharif in 1999-00 to 2014-15 is presented in the Table 3. www.apjor.com Page 59

Table 3: All-India NAIS - Business Statistics from Rabi 1999-00 to Kharif 2014-15 S. No. State Rs. UT No. of Farmers Insured (000') Area Insured (000' Ha) 1 Andhra Pradesh 29952 13.06 45583.16 13.42 2 Assam 396 0.17 291.13 0.09 3 Bihar 6037 2.63 7377.7 2.17 4 Chhatisgarh 10425 4.55 20991.14 6.18 5 Goa 8 0.00 13.44 0.00 6 Gujarat 14870 6.48 33886.59 9.98 7 Haryana 636 0.28 769.04 0.23 8 Himachal Pradesh 321 0.14 248.84 0.07 9 Jharkhand 6277 2.74 3767.77 1.11 10 Karnataka 13150 5.73 20872.42 6.14 11 Kerala 461 0.20 414.74 0.12 12 Madhya Pradesh 32332 14.10 78058.92 22.98 13 Maharashtra 39190 17.09 32619.85 9.60 14 Manipur 26 0.01 37.22 0.01 15 Meghalaya 34 0.01 34.44 0.01 16 Mizoram 0 0.00 0.13 0.00 17 Orissa 17313 7.55 17018.22 5.01 18 Rajasthan 15059 6.57 31379.98 9.24 19 Sikkim 2 0.00 1.32 0.00 20 Tamil Nadu 6556 2.86 8495.08 2.50 21 Telengana 2 0.00 3 0.00 22 Tripura 19 0.01 12.64 0.00 23 Uttar Pradesh 23426 10.21 31070.39 9.15 24 Uttarakhand 399 0.17 372.51 0.11 25 West Bengal 12364 5.39 6223.12 1.83 26 A & N Islands 4 0.00 5.77 0.00 27 Puducherry 40 0.02 56.63 0.02 28 Jammu and kashmir 49 0.02 68.99 0.02 Total 229348 100.00 339674.18 100.00 Source: Agricultural Insurance Company of India Limited The area insured in the national agriculture insurance scheme shows highest number of farmers in the state of Maharashtra of 39190 thousand farmers of which accounts 17.09 per cent followed by Madhya Pradesh and Andhra Pradesh of 32332 thousand farmers of which accounts 14.10 per cent and 29952 thousand farmers of which accounts 13.06 per cent respectively. However, it is differ from area insured shows highest in the state of Madhya Pradesh of 78058.92 thousand hectare consist of 22.98 percentage followed by Andhra Pradesh of 45583.16 thousand hectare consist of 13.42 per cent and 33886.59 thousand hectare consist of 9.98 per cent in the state of Gujarat. The number of farmers insured in Tamil Nadu of 6556 thousand farmers consist of 2.86 per cent and area insured of 8495.08 thousand hectares consist of 2.50 per cent towards the national agriculture insurance scheme. Sum Insured and Number of Farmers Benefited Under the NAIS The insured amount, claims paid and the number farmers benefited under the national agriculture insurance scheme is presented in the Table 4. www.apjor.com Page 60

Table 4: All-India NAIS - Business from Rabi 1999-00 to Kharif 2014-15 Sum S. Claims No. of Farmers State Rs. UT Insured No. (Rs.in Crore) benefitted (000') (Rs. in Crore) 1 Andhra Pradesh 62181 17.78 4649.1 13.95 6730 11.38 2 Assam 807.21 0.23 16.53 0.05 65 0.11 3 Bihar 11904 3.40 2306.2 6.92 2431 4.11 4 Chhatisgarh 11511 3.29 398.57 1.20 1706 2.88 5 Goa 3.18 0.00 0.02 0.00 1 0.00 6 Gujarat 44954 12.86 6503.5 19.51 4946 8.36 7 Haryana 834.96 0.24 43.36 0.13 129 0.22 8 Himachal Pradesh 543.77 0.16 17.83 0.05 108 0.18 9 Jharkhand 3401.5 0.97 522.99 1.57 2183 3.69 10 Karnataka 16418 4.70 1949.4 5.85 5223 8.83 11 Kerala 871.66 0.25 30.63 0.09 85 0.14 12 Madhya Pradesh 58206 16.65 4234.3 12.70 6459 10.92 13 Maharashtra 27085 7.75 2919.7 8.76 10790 18.24 14 MANIPUR 94.02 0.03 7.71 0.02 19 0.03 15 MEGHALAYA 65.53 0.02 0.52 0.00 3 0.01 16 Mizoram 0.23 0.00 0.11 0.00 0 0.00 17 Orissa 27260 7.80 1830.3 5.49 3047 5.15 18 Rajasthan 16203 4.63 2621.7 7.87 5201 8.79 19 Sikkim 2.54 0.00 0.01 0.00 0 0.00 20 Tamil Nadu 18462 5.28 2937.2 8.81 2633 4.45 21 Telengana 11.26 0.00 0 0.00 0 0.00 22 Tripura 29.08 0.01 0.58 0.00 3 0.01 23 Uttar Pradesh 33538 9.59 1169.4 3.51 4518 7.64 24 Uttarakhand 870.98 0.25 41.88 0.13 119 0.20 25 West Bengal 14180 4.06 1122.4 3.37 2742 4.64 26 A & N Islands 16.66 0.00 1.15 0.00 1 0.00 27 Puducherry 103.63 0.03 3.15 0.01 7 0.01 28 Jammu and Kashmir 109.02 0.03 1.23 0.00 4 0.01 Total 349666.78 100.00 33329.38 100.00 59154 100.00 Source: Agricultural Insurance Company of India Limited The sum insured shows highest amount in Andhra Pradesh of which accounts 17.78 per cent followed by Madhya Pradesh and Bihar of which accounts 16.65 per cent and 12.86 per cent respectively towards NAIS in India. However, the claim amount paid highest in the state of Gujarat of which accounts 19.51 per cent followed by Andhra Pradesh and Madhya Pradesh accounts 13.95 per cent and 12.70 per cent respectively towards NAIS in India. The number of farmers benefited in the scheme highest number of 10790 thousand farmers (18.24 per cent) in Maharashtra followed by Andhra Pradesh of 6730 thousand farmers (11.38 per cent) and Madhya Pradesh of 6459 thousand farmers (10.92 per cent) under the NAIS. The sum insured in Tamil Nadu of Rs.18462 crore consist of 5.28 per cent, claims of Rs.2937.2 crore and number of farmers benefited of Rs. 2633 cores under the NAIS. Modified National Agricultural Insurance Scheme (MNAIS) MNAIS is an improvement over NAIS, and is based on actuarial premium rates. The main objective the scheme is to make it more farmers friendly. This scheme is expected to generate more benefits to farmers through coverage of prevented sowing/planting risk and post-harvest losses, increase in minimum indemnity level from 60 to 70, more precise calculation of threshold yield. Payment of upfront premium subsidy by State and Central Governments will facilitate quick settlement of claims The Scheme is to be implemented by Agriculture Insurance Company (AIC) of India and the Private sector insurers., with adequate infrastructure and experience will also be allowed on selective basis by implementing states, out of the companies shortlisted by DOA, GOI with the aim of creating a competitive market for crop insurance to enable the farmers to insure their crops at reasonable premium rates. Number of Farmers and Area Insured under the MNAIS The number of famers insured and area insured under the MNAIS ii India from Kharif to Kharif in 2010-11 to 2014-15 is presented in the Table 5 as given below. www.apjor.com Page 61

Table 5: All-India MNAIS - Business Statistics from Rabi 2010-11 to Kharif 2014-15 S. No. of Farmers Insured State Rs. UT No. (000') Area Insured (000' Ha) 1 Andhra Pradesh 1342 13.86 1428.91 13.19 2 Andaman & Nicobar 0 0.00 0 0.00 3 Assam 17 0.18 12.67 0.12 4 Bihar 1223 12.63 1370.07 12.64 5 Chhatisgarh 0 0.00 0.03 0.00 6 Goa 0 0.00 0.18 0.00 7 Gujarat 0 0.00 0.59 0.01 8 Haryana 102 1.05 210.98 1.95 9 Jharkhand 12 0.12 6.05 0.06 10 Karnataka 1026 10.60 1656.61 15.29 11 Madhya Pradesh 79 0.82 150.79 1.39 12 Maharashtra 52 0.54 49.62 0.46 13 Mizoram 1 0.01 0.49 0.00 14 Orissa 120 1.24 87.32 0.81 15 Rajasthan 3256 33.63 4010.01 37.01 16 Tamil Nadu 476 4.92 522.47 4.82 17 Tripura 3 0.03 2.91 0.03 18 Uttar Pradesh 747 7.72 765.57 7.06 19 Uttarakhand 70 0.72 62.3 0.57 20 West Bengal 1149 11.87 488.47 4.51 Total 9681 100.00 10836.36 100.00 Source: Agricultural Insurance Company of India Limited The area insured in the MNAIS shows highest number of farmers in the state of Rajasthan of 3526 thousand farmers consist of 33.63 per cent followed by Andhra Pradesh of 1342 thousand farmers consist of 13.86 per cent and Bihar of 1223 thousand farmers consist of 12.63 per cent in the scheme. The area insured also shows highest in the state of Rajasthan of 4010.01 thousand hectares consist of 22.98 percentage followed by Karnataka of 1656.61 thousand hectare consist of 15.29 per cent and Andhra Pradesh of 1428.91 thousand hectare consist of 13.42 per cent under the MNAIS. The number of farmers insured under the MNAIS in Tamil Nadu 476 thousand farmers consist of 4.92 per cent and area insured 522.47 thousand hectares consist of 4.82 per cent. 3.6.5 Sum Insured and Number of Farmers Benefited Under the MNAIS The insured amount, claims paid and the number farmers benefited under the modified national agricultural scheme is presented in the Table 6. Table 6: All-India NAIS - Business Statistics from Rabi 1999-00 to Kharif 2014-15 Sum S. Claims No. of Farmers benefitted State Rs. UT Insured No. (Rs. in Crore) (000') (Rs. in Crore) 1 Andhra Pradesh 5189.07 24.29 774.46 45.04 524 31.64 2 Andaman & Nicobar 0 0.00 0 0.00 0 0.00 3 Assam 49.54 0.23 0.63 0.04 1 0.06 4 Bihar 2266.79 10.61 153.9 8.95 62 3.74 5 Chhatisgarh 0.05 0.00 0 0.00 0 0.00 6 Goa 0.26 0.00 0 0.00 0 0.00 7 Gujarat 2.61 0.01 0 0.00 0 0.00 8 Haryana 853.04 3.99 26.07 1.52 22 1.33 9 Jharkhand 14.61 0.07 0.03 0.00 0 0.00 10 Karnataka 2439.94 11.42 77.89 4.53 115 6.94 11 Madhya Pradesh 197.23 0.92 0.22 0.01 0 0.00 12 Maharashtra 76.21 0.36 0 0.00 0 0.00 13 Mizoram 0.99 0.00 0.09 0.01 1 0.06 14 Orissa 297.07 1.39 65.1 3.79 56 3.38 www.apjor.com Page 62

15 Rajasthan 3292.8 15.42 119.8 6.97 346 20.89 16 Tamil Nadu 1283.39 6.01 204.58 11.90 180 10.87 17 Tripura 67.32 0.32 0 0.00 0 0.00 18 Uttar Pradesh 1896.76 8.88 219.75 12.78 246 14.86 19 Uttarakhand 209.99 0.98 3.35 0.19 11 0.66 20 West Bengal 3185.97 14.92 73.62 4.28 91 5.50 Total 21359.41 100.00 1719.5 100.00 1656 100.00 Source: Agricultural Insurance Company of India Limited The sum insured shows highest amount in Andhra Pradesh of Rs.5189.07 crore of which accounts 24.29 per cent followed by Rajasthan and West Bengal of Rs.3292.8 crore, and Rs.3185.97 crore of which account 15.42 per cent and 14.92 per cent respectively towards MNAIS in India. The claim amount paid highest in Andhra Pradesh of Rs.774.46 crores of which accounts 45.04 per cent followed by Uttar Pradesh and Tamil Nadu of Rs.219.75 crore, and Rs.204.58 crore consist of 12.78 per cent and 11.90 per cent respectively towards MNAIS in India. The number of farmers benefited in the scheme highest number of 524 thousand farmers (31.64 per cent) in Andhra Pradesh followed by Rajasthan of 346 thousand farmers (20.89 per cent) and Uttar Pradesh of 246 thousand farmers (14.86 per cent) under the MNAIS. CROP INSURANCE SCHEMES IN TAMIL NADU Number of farmers insured in the NAIS The number of farmers insured under the NAIS in Tamil Nadu shows the Kharif and Rabi seasons from 2000-01 to 2013-14 is presented in the below Table 3.7. Table 7: Number of Farmers Insured in Kharif and Rabi in Tamil Nadu (RS.'000') S.No. Year Kharif Rabi Total 1 2000-01 16 94 110 2 2001-02 19 145 164 3 2002-03 15 73 88 4 2003-04 9 57 66 5 2004-05 12 133 145 6 2005-06 13 107 120 7 2006-07 46 269 315 8 2007-08 18 539 557 9 2008-09 28 829 857 10 2009-10 74 870.01 944.01 11 2010-11 72 967.31 1039.31 12 2011-12 88.43 400.46 488.89 13 2012-13 96.74 986.22 1082.96 14 2013-14 99.92 476.42 576.34 Total 607.99 5947.83 6555.82 Source: aicofindia.com/aiceng/pages/offices/tamilnadu NAIS Detail.aspx The season wise crop insurance scheme shows that the number of farmers insured in Rabi season is more than the Kharif season in Tamil Nadu. The number of farmers insured in Rabi season of 16 thousand farmers in 2000-01 increased to 99.92 thousand farmers insured in the year 2013-14 with lowest farmers insured of 9 thousand in 2003-04. The Kharif season insured farmers of 94 thousand in 2000-01 increased to 476.42 thousand farmers insured in 2013-14 with highest farmers insured in 967.31 thousand farmers insured in 2010-11 and lowest farmers insured of 57 thousand in 2003-04. Area Insured in the NAIS The area insured under the NAIS in Tamil Nadu shows the Kharif and Rabi seasons from 2000-01 to 2013-14 is presented in the below Table 8. www.apjor.com Page 63

Table 8: The area insured in the Kharif and Rabi season (Rs. '000') S. No. Year Kharif Rabi Total 1 2000-01 35 196 231 2 2001-02 34 215 249 3 2002-03 28 118 146 4 2003-04 16 86 102 5 2004-05 23 224 247 6 2005-06 24 188 212 7 2006-07 76 364 440 8 2007-08 29 828 857 9 2008-09 30 965 995 10 2009-10 92 1047 1139 11 2010-11 84 1161 1245 12 2011-12 117.7 585.20 117.7 13 2012-13 120 1108.96 1228.96 14 2013-14 124.04 570.76 694.8 Total 835.45 7659.61 8495.07 Source: aicofindia.com/aiceng/pages/offices/tamilnadu/tamidnadu_naisdetail.aspx The area wise crop insurance scheme shows that the hectare insured in Rabi season is more than the Kharif season in Tamil Nadu. The area insured in Rabi season 35 thousand hectare in 2000-01 increased to 124.04 thousand hectare in 2013-14 with lowest of 16 thousand hectare in 2003-04. The Kharif yyseason insured area of 196 thousand hectare in 2000-01 increased to 570.76 thousand hectare in 2013-14 with highest of 1108.96 thousand hectare in 2012-13 and lowest of 86 thousand hectare in 2003-04. Amount insured in the NAIS The amount insured under the NAIS in Tamil Nadu shows the Kharif and Rabi seasons from 2000-01 to 2013-14 is presented in the below Table 9. Table 9: The Sum insured in the Kharif and Rabi season (Rs. In Crore) S.No. Year Kharif Rabi Total 1 2000-01 22 120 142 2 2001-02 26 171 197 3 2002-03 25 103 128 4 2003-04 16 88 104 5 2004-05 24 269 293 6 2005-06 29 229 258 7 2006-07 100 405 505 8 2007-08 40 911 951 9 2008-09 70 2169 2239 10 2009-10 209 2537 2746 11 2010-11 229 3332.43 3561.43 12 2011-12 287.57 1398.25 287.57 13 2012-13 419.67 2986.9 3406.57 14 2013-14 485.72 1759.92 2245.64 Total 1497 11732.63 13229.21 Source: aicofindia.com/aiceng/pages/offices/tamilnadu/tamidnadu_naisdetail.aspx www.apjor.com Page 64

The sum insured in Rabi season Rs.22 crore in 2000-01 increased to Rs.485.72 crore in 2013-14 with lowest of Rs.16 crore in 2003-04. The Kharif season sum insured of Rs.120 crore in 2000-01 increased to Rs.1759.92 crore in 2013-14 with highest of Rs.3332.43 crore in 2010-11and lowest of Rs.88 crores in 2003-04. Gross Premium in the NAIS The gross premium under the NAIS in Tamil Nadu shows the Kharif and Rabi seasons from 2000-01 to 2013-14 is presented in the Table 10. Table 10: The Cross Premium for Crop Insurance (Rs. In Crore) S. No. Year Kharif Rabi Total 1 2000-01 0.59 2.00 2.59 2 2001-02 0.65 3.00 3.65 3 2002-03 0.52 2.00 2.52 4 2003-04 0.31 1.81 2.12 5 2004-05 0.48 5.72 6.20 6 2005-06 0.76 4.74 5.50 7 2006-07 2.70 9.00 11.70 8 2007-08 1.00 19.00 20.00 9 2008-09 2.00 53.00 55.00 10 2009-10 7.00 58.24 65.24 11 2010-11 6.62 86.00 92.62 12 2011-12 10.73 33.50 10.73 13 2012-13 15.53 84.32 99.85 14 2013-14 18.75 41.16 59.91 Total 70.10 404.66 474.76 Source: aicofindia.com/aiceng/pages/offices/tamilnadu/tamidnadu_naisdetail.aspx The gross premium collected Kharif season crop insurance scheme of Rs. 0.59 crore in 2000-01 increased to 18.75 crore in 2013-14 with lowest premium of Rs.0.31 crore in 2003-04. The Rabi season gross premium collected of Rs.2 crore in 2000-01 increased to Rs.41.16 crore in 2013-14 with highest premium of Rs.86 cores in 2010-11. The total Gross premium of Rs.2.59 crore increased to 59.91 crore in 2013-14 with highest premium of 99.85 crore in 2012-13 and lowest gross premium of 2.12 crore in 2003-04. Claims in the NAIS The claims under the NAIS in Tamil Nadu shows the Kharif and Rabi seasons from 2000-01 to 2013-14 is presented in the Table 11. Table 11: Claims in Crop insurance Scheme (Rs. In Crore) S. No. Year Kharif Rabi Total 1 2000-01 0.01 0.50 0.51 2 2001-02 0.81 16.00 16.81 3 2002-03 2.74 31.00 33.74 4 2003-04 0.54 8.41 8.95 5 2004-05 0.89 37.65 38.54 6 2005-06 0.59 47.68 48.27 7 2006-07 2.26 47.50 49.76 8 2007-08 0.23 289.00 289.23 9 2008-09 3.00 677.61 680.61 10 2009-10 22.00 109.00 131.00 11 2010-11 11.22 247.00 258.22 www.apjor.com Page 65

12 2011-12 8.29 31.90 8.29 13 2012-13 37.96 898.97 936.93 14 2013-14 0.50 444.48 444.98 Total 91.34 2845.82 2937.16 Source: aicofindia.com/aiceng/pages/offices/tamilnadu/tamidnadu_naisdetail.aspx The claims paid under the Kharif season shows highest amount of Rs.37.96 crore, Rs.22 crore Rs.11.22 crore and Rs.8.29 crore paid in the year 2012-13, 2009-10, 2010-11 and 2011-12 respectively towards the crop insurance scheme. In the case of Rabi season claim paid is differ from the Kharif season. The Rabi season highest claim paid of Rs. 898.97 crore, 677.61 crore 444.48 crore 289 crore and 247 crore in the year 2012-13, 2008-09, 2013-14, 2007-08 and 2010-11 respectively towards the insurance claim paid. Number of farmers benefited in the NAIS The number of farmers benefited under the NAIS in Tamil Nadu shows the Kharif and Rabi seasons from 2000-01 to 2013-14 is presented in the Table 12. Table 12: Number of Farmers Benefited in the Crop Insurance Scheme (Rs. In Crore) S.No. Year Kharif Rabi Total 1 2000-01 0.00 3.00 3.00 2 2001-02 5.50 64.00 69.50 3 2002-03 12.00 49.00 61.00 4 2003-04 2.70 13.86 16.56 5 2004-05 4.00 43.52 47.52 6 2005-06 2.50 6.94 9.44 7 2006-07 8.00 15.00 23.00 8 2007-08 0.00 314.00 314.00 9 2008-09 7.00 574.25 581.25 10 2009-10 34.00 149.00 183.00 11 2010-11 21.88 297.31 319.19 12 2011-12 11.88 30.05 41.93 13 2012-13 34.00 887.00 921.00 14 2013-14 2.00 0.00 2.00 Total 145.00 2488.00 2633.00 Source: aicofindia.com/aiceng/pages/offices/tamilnadu/tamidnadu_naisdetail.aspx The number of farmers benefited in the insurance scheme under Kharif season shows highest of 34 thousand farmers each in 2009-10 and 2012-13 and 21.88 farmers in 2010-11. The number of farmers benefited in the insurance scheme in Rabi season of 921 thousand, 581.25 thousand, 319.19 thousand and 314 thousand in 2012-13, 2008-09, 2010-11 and 2007-08 respectively. Number of Farmers and Area Covered Under the MNAIS The number of farmers covered and area insured under the modified national agriculture scheme is presented in the Table 13. Year Table 13: Number of Framers and Area Covered Under the MNAIS Since Rabi 2010-11 to Rabi 2013-14 (As on 14-1-2015) Area Insured No. of Farmers Covered (In Hectares) Kharif Rabi Total Kharif Rabi Total 2011-12 45510 4599 50109 61507 7457 68964 2012-13 154545 7684 162229 161926 9258 171184 2013-14 101015 117831 218846 95891 137827 233718 Total 301070 130114 431184 319323.91 154541.805 473865.715 Source: aicofindia.com/aiceng/pages/offices/tamilnadu/tamidnadu_naisdetail.aspx www.apjor.com Page 66

The number of farmers in Kharif season 45,510 in 2011-12 increased to 101015 farmers in 2013-14 and the Rabi season 4,599 farmers in 2011-12 increased to 1,17,831 farmers in 2013-14 towards the MNAIS. The area covered under the kharif season 61,507 hectares in 2011-12 increased to 1,61,926 hectares in 2012-13 and decreased to 95891 hectares in 2013-14. The area covered under the Rabi season 7,457 hectares in 2011-12 increased to 1,37,827 hectares in 2013-14. SUGGESTIONS AND RECOMMENDATIONS In view of the findings made in chapter-5, the following suggestions are drawn: The private insurance companies should focus towards the whole micro insurance business i.e. life, health and crop as the preference is less into the market. The public insurance companies have the better preference in micro life insurance business than to micro health and micro crop insurance. Thus it is suggested that public insurance companies must do some promotional activities to promote more low income population towards health and crop related issues. The indemnity limit is fixed by the insurer and remains unchanged during the insurance period. But it is necessary to vary year to year as the amount of crop damage due to natural calamities changes in the affected years. Near about ninety nine percent insured farmers belong to the small and marginal groups. They are economically weak. In that situation it is necessary to implement the Farm Income Insurance Scheme (FIIS) especially for commercial crop Potato and more risky paddy, Boro Paddy in the district Hooghly. The government should take measures so that the loanee farmers cannot be converted into local moneylenders and re-lend the sum of money borrowed by them at high rate of interest in the local money market (to the other farmers). This will resist the diversification of the crop loan from the productive investment to non-productive activities. From our collected secondary data we observed that very small percent (only four per cent) of Aman and Boro Paddy producing farmers come under the crop insurance scheme. The large portion of Aman and Boro Paddy producing farmers is outside the crop insurance scheme. This happens mainly due to the certain rules and regulation of the insurer about the disbursement of crop loan. The productive use of crop loans has always a positive and favourable effect on the actual Production of agriculture and the ability to repay the crop loan to the banks. The government or the appropriate crop loan sanctioning authority should be watchful enough so that the loanee farmers do not get the scope to diversify the crop loan from the agricultural activities to non agricultural activities. Small and marginal farms and in many cases medium farms have been able to use the costly input like fertilizers and seeds. Even though did not have bore-well irrigation facility, the crop insurance scheme has help them enjoy the facility of irrigation by purchasing irrigation facility from big and semi-medium farm who have the capacity of installation of shallow and deep tube well for watering their own land. CONCLUSION The performance of crop insurance schemes in India and Tamilnadu, All-India Business of WBCIS from Kharif, number farmers insured and benefited, All-India NAIS - business from Rabi number of farmers insured in Kharif and Rabi in Tamil Nadu, the sum insured in the Kharif and Rabi season, The cross premium for crop insurance, number of farmers benefited in the crop insurance scheme, weather based crop insurance scheme and number of framers and area covered under the MNAIS. The researcher attempted the study on evaluation of crop insurance schemes in Tamilnadu. Here we pointed out in brief about the meaning of crop insurance and various types of crop insurance applicable for Indian agriculture. Even we also discussed in brief about the main objective of crop insurance and need of the study. REFERENCES 1. Chandan K Parhi & Prashanta C Panda. (July 2007). Covering Crop. Asia Insurance Post, p 25-26. 2. Converse, J.M. [et al.]. (1986). Survey questions - handcrafting the standardized questionnaire. Newbury Park: SAGE Publishing. 3. Government of Karnataka. (1996). Report on Comprehensive Crop Insurance Scheme 1985-95. Bangalore: Directorate of Economics and Statistics and the State Agriculture Census Commissioner. 4. Ilangovan S. (January 2002,, Volume 2/1). Crop Insurance Scheme, 2002. Bimaquest, pp. 43-44. 5. Kalavakonda,V. and Mahul, O. (2005), Crop Insurance in Karnataka, books.google.co.in/books or www.google.co.in.,pp1-32. 6. Makki, S.S. and Somwaru, A. (August 2001), Farmers Participation in Crop Insurance Markets: Creating the Right Incentives, American Journal of Agricultural Economics, Vol. 83, No. 3, pp. 662-667. 7. Muntaqa Gulam. (No. 141 - September 2006). Crop Insurance - An Indian Experience. FAIR Review, 4 10. 8. Poddar M K. (December 2007). Yield-based Crop Insurance Covers In India - A Historical Perspective. IRDA Journal, p.23-25. 9. Smith V H and Goodwin B K. (1996). Crop Insurance, Moral Hazard and Agricultural Chemical Use. American Journal of Agricultural Economics, pp. 28 (2) : 428-438. 10. Walker T S, Singh R P, Asokan M. (June 21-28, 1986). Risk Benefits, Crop Insurance and Dryland Agriculture. Economic and Political Weekly, Vol. XXI, Nos. 25 and 26. www.apjor.com Page 67