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Agriculture Insurance: Meaning, New Agriculture Insurance Schemes and Problems


Agriculture Insurance
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.
New Agriculture Insurance in India
The new scheme works towards making it more attractive for the farmers. The farmers have now to pay just 2% of the premium for kharif crop and 1.5% for rabi while the same for horticulture will be fixed at 5%. The balance premium is to be paid by the government – both state and central.
Problems in New Agriculture Insurance in India
The new crop insurance scheme approved by the Union Cabinet must be viewed from two angles.
1 Unpredictable Nature: There has been considerable unpredictability in farm output due to the uncertain of nature which has often resulted in lower production or excess unseasonal rainfall that has destroyed crops.This has in turn led to financial distress of farmers who have not been able to service their debt leading to a build-up of Non Performing Assets (NPAs) thus pressuring the banking system. In fact, this has led to the debate about whether there should be loan waivers to farmers which are policies pursued by both the central and state governments.
2. Lack of Awareness: The government has been working towards spreading financial literacy by providing access to the common man to insurance products in both the life and health segments thus bringing about some degree of financial inclusion. Starting a new crop insurance scheme can be viewed as an extension of the same ideology. There is a lack of awareness among the farmers about the new agriculture insurance schemes. The old Comprehensive Crop Insurance Scheme (CCIS, 1985) replaced by the National Agricultural Insurance Scheme (NAIS).
3. Not for Small Farmers: The smaller farmers have to be targeted as this is particularly the vulnerable class. Presently the scheme does not distinguish between the large and small farmer as that does raise the issue of identification.
4. Settlements of Claims: The scheme has to work in the sense of speedy claim settlements. In the assessment of agriculture loss requires lots of inquiry and verification and also it needed local government approval to settle the claims.
5. Proper Land Records: as part of maintenance, land records need to be in place for making assessment of the premium.
6. Fixation of Premium: While fixing premium is needed to access the weather data in various regions that is not captured by the IMD. Efforts by private players to create such weather stations like those by NCMSL (National Collateral Management Services Limited) have to increase as all decisions on premium as well as payouts would be contingent on this data.
7. Role of Banks: When banks are closely work with farmers for giving crop loan they should assist to the insurance firms to help them in the process of getting premium and settling the claim amounts to the needed farmers.


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