THE NATIONAL AGRICULTURE INSURANCE SCHEME (NAIS)

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By Mayank Gaur Mayank Kashyap Rahul Agrawal Rajeev Aggarwal Sarthak Mishra

Objectives

NAIS was introduced from 1999-2000 rabi season To 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 & diseases. To encourage the farmers to adopt progressive farming practices, high value inputs and higher technology in Agriculture. To help stabilise farm incomes, particularly in disaster years.

Administration and Operating Expenses

The A&O expenses would be shared equally by the Central Government & respective State Government

100% in 1st year, 80% in 2nd year, 60% in 3rd year, 40% in 4th year, 20% in 5th year and 'zero' thereafter

Corpus Fund
Managed by the IA General Insurance Company of India Government of India and State / UT on 50:50 basis.

Calamity Relief Fund for contributions to the Corpus Fund. Reinsurance Cover in International Market

Crops Covered

Food crops - Cereals, Millets & Pulses Annual Commercial/Horticultural crops Oilseeds, Sugarcane, Cotton & Potato
Reason

Adequate yield data is available

More crops can be covered with the availability of data

State and UTs

At present, the scheme is being implemented by the 25 States and 2 Union Territories Demand driven scheme

The States / UTs opting for the Scheme, would be required to take up all the crops identified for coverage in a given year.

Exit clause Three years Till Kharif 2009

1524 lakh farmers Area of 2363 lakh hectares Rs. 174910 crore of the sum insured. Rs. 18725 of claims made Premium of Rs. 5266 crore benefiting about 427 lakh farmers.

Farmers Covered

All farmers - Sharecroppers, Tenant farmers, etc

Growing

the notified crops in the notified areas

Participation
On

a Compulsory Basis: All farmers growing notified crops and availing Seasonal Agricultural Operations (SAO) loans from Financial Institutions i.e. Loanee Farmers. On a Voluntary Basis: All other farmers growing notified crops (i.e., Non-Loanee farmers) who opt for the Scheme.

Risks Coverage

Comprehensive risk insurance will be provided to cover yield losses due to non-preventable risks, viz.:
Natural

Fire and Lightning Storm, Hailstorm, Cyclone, Typhoon, Tempest, Hurricane, Tornado etc. Flood, Inundation and Landslide Drought, Dry spells Pests/ Diseases etc.

Premium Rates
S.N Season Crops o 1 Kharif Bajra & Oilseeds Premium rate
3.5% of SI or Actuarial rate, whichever is less

Other crops (cereals, other millets 2.5% of SI or Actuarial rate, & pulses) whichever is less
2 Rabi Wheat 1.5% of SI or Actuarial rate, whichever is less 2.0% of SI or Actuarial rate, whichever is less

Other crops (other cereals, millets, pulses & oilseeds)

Kharif & Rabi

Annual Commercial / annual Horticultural crops

Actuarial rates

Premium Rates

Premium Subsidy

50% subsidy in premium is allowed in respect of Small & Marginal farmers,

Shared equally by the Government of India and State/UT Govt.

The definition of Small and Marginal farmer would be as follows:

Small Farmer:

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. A Cultivator with a land holding of 1 hectare or less (2.5 acres).

Marginal Farmer:

Unit of Insurance

Area Approach
Gram

Panchayat, Mandal, Hobli, Circle, Phirka, Block, Taluka etc. Widespread calamities

Individual approach
Only

in limited areas, in experimental stage Local events (hailstorm, landslide, cyclone and flood)

Levels of Indemnity

Three levels of Indemnity

Low Risk - 90%, Medium Risk - 80% High Risk 60% Higher indemnity, additional premium

Indemnity

Indemnity shall be calculated as per the following formula

(Shortfall in Yield/Threshold yield ) X Sum Insured for the farmer Shortfall in Yield = Threshold Yield - Actual Yield

Actual and Threshold Yields(AY) per hectare of the insured crop for the defined area in the insured season All the insured farmers growing that crop in the defined area

Localised phenomenon, the IA will estimate such losses at individual farmer level in consultation with DAC/State/UT.

Approval Procedure

State Govt Cut off Date Yield Data

Implementation Agency Claim Calculation Claim Cheques

Nodal Banks Farmer Account Deposit Notice Board

Management and Review

Agricultural situation to be closely monitored District Level Monitoring Committee - Fortnightly reports of agricultural situation

Area sown, seasonal weather conditions, pest incidence, stage of crop failure (if any) etc.

Operations to be reviewed annually, and modifications as may be required would be introduced. Periodic Appraisal Reports prepared by Ministry of Agriculture, the Government of India / Implementing Agency.

Challenges

The coverage is limited to certain crops and certain areas for which yield data is available. Lack of credit institutions in terms of coverage the farmer would be deprived of insurance coverage. Corruption Lack of proper communication of yield data Feasibility of the scheme i.e. premium in case of small and marginal farmers is subsidized by 50 % and is shared equally by Central and state government.

Contd

The indemnity coverage for the high risk areas is 60% as a result the marginal farmers are not able to take full advantage; thereby making the scheme less attractive to farmers Problems w.r.t Area figures Absence of appropriate institutions, delivery mechanism, procedural and governance issues had become serious impediments in the effective implementation of the scheme

Way forward

Broad based coverage Comprehensiveness or a package approach Area approach Coverage of major crops Public private partnerships Examining the possibility of proxy measures.

Thankyou.