Over 80% Of Indian Farmers Out Of Insurance Cover , Exposed To Vagaries Of Weather : ASSOCHAM
12 April, New Delhi
Less than 20 per cent of farmers’ crop in India is insured, exposing a vast majority of the farming community to the vagaries of weather which leads them to taking desperate steps like committing suicide, as is being seen after a vast damage to the Rabi crop this year by unseasonal rains, ASSOCHAM-Skymet Weather joint study pointed out.
At the all-India level, only 19 per cent of farmers reported ever having insured their crops. A very large proportion of 81 per cent were found to be unaware of the practice of crop insurance.
Of the uninsured, 46 per cent were found to be aware but not interested while 24 per cent said that the facility was not available to them. Only 11 per cent felt that they could not afford to pay the insurance premium, mentioned the joint study.
As per the joint report, there are about 32 million farmers who have been enrolled in various crop insurance schemes across India. However, issues in design, particularly related to delays in claims settlement, have led to farmers not being covered, despite significant government subsidy. Releasing the study, conducted by ASSOCHAM and Skymet D S Rawat, Secretary General ASSOCHAM said,
“Implementation and technical challenges lie ahead which can be addressed but will require a comprehensive strategy, innovative solutions, and timely roll out”.
To address the problems, the government is piloting a modified National Agricultural Insurance Scheme (NAIS), a market-based scheme with involvement from the private sector, Mr Rawat said. Compared with the existing scheme, the new program has a design that can offer more timely, claim settlement, less distortion in the allocation of government subsidies and cross-subsidies between farmer groups, and reduced basis risk, he said.
For coping with natural risks, crop insurance is one of the mechanisms available to mitigate loss. In this context, the Government on pilot basis developed many crop insurance schemes. The central government is working on farm income insurance scheme which will be rolled out soon for Kharif 2015.
These weather-based insurance products are advantageous over yield- based insurance products in terms of time taken for claim settlement and transparency in settlement of claims, reveals the study. The government introduced the scheme from Rabi 1999-2000 season to protect the farmers against losses suffered by them due to crop failure on account of natural calamities.
The scheme is currently implemented by Agriculture Insurance Company of India (AICIL). The scheme is available to all the farmers, loanee and non-loanee, irrespective of size of their holding.
Rawat further added, the shift from a social crop insurance program with ad-hoc funding from the government to a market based crop insurance program with actuarially sound premium rates and product design is a major step forward. Agricultural production and farm incomes in India are frequently affected by natural disasters such as drought, floods, cyclone, storm, landslide, earthquake etc.
Susceptibility of agriculture to these disasters is compounded by the outbreak of epidemics and man-made disasters such as fire, sale of spurious seeds, fertilizers and pesticides, price crashes, etc, the study said. With growing commercialization of agriculture, the magnitude of loss due to unfavourable eventualities is increasing. But, agricultural insurance is considered an important mechanism to effectively address the risks to output and income resulting from various natural and man-made events.