Transcript State of agricultural insurance: experiences and challenges in

DR. ASHISH KUMAR BHUTANI
JOINT SECRETARY
MINISTRY OF AGRICULTURE & FARMERS WELFARE
GOVT. OF INDIA
STRUCTURE OF PRESENTATION
• Brief country profile / vital statistics
• Various risks to agriculture
• Climate Change, its impact and measures initiated
• Evolution of crop insurance in India
• Ongoing Schemes w.e.f. April 2016 (Summer ‘ 2016)
• Features of ongoing schemes
• New initiatives
• Statistics on coverage
A BRIEF PROFILE OF INDIA
Geographical Area : 329 million hectare
(including land area of 306 million hectare)
States : 29
Union Territories (UTs) : 7
Districts : 683
Gram Panchayats : 257000 (approx)
Villages : 640000 (approx)
Net Area sown (2012-13) : 140 mn ha
Cropped Area : 194 mn ha
Cropping Intensity: 138.92
No. of farmers (land holdings) : 137.75 million (2010-11)
POPULATION
(IN MILLION)
(CENSUS:2011)
Total
1210*
AEGR
Urban
Rural
Cultivators
377
833
(31.2%) (68.8%)
1.64
(2001-2011)
Density
382
(Person /
Sq.km.)
Literacy
(%)
72.99
*At present : 1300 million (approx).
118.7
Agl.
labours
144.3
SECTOR-WISE %AGE SHARE IN GROSS
VALUE ADDED (GVA)
Sl. No.
Sectors
2014-15 (%)
1.
2.
3.
Agriculture & Allied
Industry
Services
Total
16.11
31.37
52.52
100
DISTRIBUTION OF LAND HOLDING
(Agriculture Census: 2010-11)
Categories of
Farmers
No. of holdings
(million
Area (million
ha.)
Average
size (ha.)
Marginal (<1ha.)
92.8
35.9
0.39
Small (1-2 ha.)
24.7
35.2
1.42
Semi-medium (2-4 ha.)
13.8
37.7
2.71
Medium (4-10 ha.)
5.8
33.8
5.76
Large (> 10 ha.)
0.97
16.9
17.38
Total
138.3
159.5
1.15
PRODUCTION OF MAIN CROPS : 2014-15
(million tonnes)
Foodgrains
 Cereals
 Pulses
Oilseeds
Commercial Crops
 Cotton (million bales of 170kg)
 Jute & Mesta (million bales of 180kg)
 Sugarcane
Horticulture Crop (2012-13)
 Fruits
 Vegetables
252.02
234.87
17.15
27.51
34.81
11.12
362.33
81.28
162.18
LOANS ISSUED TO RAISE AGRICULTURE
PRODUCTION : 2014-15
(Short-term crop loan)
Category of Banks
No. of A/C (farmers)
(in million)
Crop loan Disbursed
(in Rs. million)
Cooperatives Banks
11.9
1016660
Commercial
Banks
53.3
4574970
Regional Rural Banks
08.9
762490
Total
74.1
6354120
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VARIOUS RISKS TO AGRICULTURE






Vagaries of weather
- rainfall (drought / flood)
- temperature (high / low)
- humidity
- wind
- cyclone
- storm / hailstorm
Pest & diseases
Landslide
Inundation
Natural fire and lightening
Recent Global Climate Change
GLOBAL CLIMATE CHANGE VIS-A-VIS
IMPACT ON AGRICULTURE IN INDIA
 The Inter-Governmental Panel on Climate Change (IPCC)
have been bringing out various assessment reports on
climate change since 1990.
 IPCC has projected 1.8–4.0 degree Celsius increase in
temperature by end of this century due to the global
atmospheric concentrations of various particles / agents
(CO2, CH4, N2O).
 IPCC also anticipated for more tense tropical cyclones with
larger peak wind speed and heavier precipitation. Sea level
would rise by 0.18-0.59 meter.
 Above pattern of climate change would adversely affect the
agriculture & allied sectors thereby, food supply.
10
CLIMATE CHANGE : IMPACT ON INDIAN
AGRICULTURE
 Indian Council of Agricultural Research (ICAR) has
analyzed the problem and assessed the impact of climate
change on agriculture.
 Reduction in crop yield has been projected for irrigated
Maize 18%, irrigated Wheat 6%, irrigated rice 4%, rainfed
rice 6% and rainfed Sorghum 2.5% by 2020.
 Crops identified as risk-prone to climate change are :
- Rice & Wheat in Indo-Gangatic Plains,
- Rice & Sorghum in rainfed regions,
- Kharif Maize in irrigated zones
- Potato in West Bengal & Southern plateau region. 11
R & D PROGRAMME / INITIATIVES BY
INDIA TO COPE WITH ADVERSE IMPACT
OF CLIMATE CHANGE
 ICAR is implementing an All India Coordinated Research
Project on Agro-meteorology (AICRPA) since 1983 to deal
with climate change.
 Government has established “National Institute for Aboitic
Stress Management (NIASM) during 2009.
 A network project on “National Initiative on Climate
Resilient Agriculture (NICRA)” was launched in February
2011.
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EVOLUTION & DEVELOPMENT OF
CROP INSURANCE IN INDIA

To mitigate the agricultural risks and to provide financial
support to farmers against yield losses , Govt. of India (GOI)
introduced a Comprehensive Crop Insurance Scheme (CCIS) in
1985 for the first time.

Thereafter, efforts have been continuing for development of
more farmers’ friendly products in terms of better services &
benefits through incorporating improvements & modifications
therein.
PAST COURSE OF CROP
INSURANCE IN INDIA
1)
2)
3)
4)
5)
6)
7)
Comprehensive Crop Insurance Scheme (CCIS) : 1985 to
Summer 1999 (yield index).
National Agricultural Insurance Scheme (NAIS): Winter 19992000 to Winter 2015-16 (yield index).
Pilot Farmers Income Insurance Scheme (FIIS): Summer 2003 to
Winter 2003-04 (yield index).
Pilot Weather Based Crop Insurance Scheme (WBCIS):
Summer 2007 to Summer 2013 (weather index).
Pilot Coconut Palm Insurance Scheme (CPIS): 2009-10 to
Summer 2013 (specific crop-based).
Pilot Modified NAIS (MNAIS): Winter 2010-11 to Summer 2013
(yield index).
National Crop Insurance Programme (NCIP) with componentschemes of MNAIS, WBCIS & CPIS: Winter 2013-14 to Winter
2015-16.
14
ONGOING CROP INSURANCE
SCHEMES FROM APRIL 2016

Yield index scheme of Pradhan Mantri Fasal Bima Yojana
(PMFBY) has been introduced replacing NAIS & MNAIS.

Weather index scheme of WBCIS is continued with change
in premium structure & criteria of area allocation - same as
PMFBY.

Pilot Unified Package Insurance Scheme (UPIS) in 45
districts from April 2016

CPIS continues as under NCIP
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FEATURES OF ONGOING SCHEME PMFBY
 Covers all Food crops, Oilseeds & Commercial /
Horticultural Crops
 Compulsory for Loanee & voluntary for non-loanee
 Risks/perils covered are :- Area approach: all non-preventable natural risks
viz., drought, flood, hailstorm, landslide, cyclone, pests &
diseases etc.
- Prevented sowing/transplantation: all natural
preventable risks
- Localized perils: Hailstorm, landslide & Inundation
- Post Harvest losses: Cyclone/Cyclonic rain &
Unseasonal rains (for crops in cut & spread condition
after harvesting)
FEATURES OF ONGOING SCHEME PMFBY
CONTD …
 Individual farm level assessment for perils covered under





Localized and Post Harvest losses.
Sum Insured: Broadly Scale of Finance for loanee & and
non-loanee farmers
Actuarial Premium Rate
Government provides upfront subsidy in premium
All claim liability on Insurance Companies
Maximum Premium Payable by farmers (as % of Sum
Insured):- For all Food & Oilseeds Crops : Kharif Crops : 2% &
Rabi 1.5%
- Commercial/Horticultural Crops: 5%
FEATURES OF ONGOING SCHEME PMFBY
CONTD …
 Three Indemnity levels (IL) : 70%, 80% & 90%
 Calculation of Threshold yield which is the average yield
of last 7 years (Minus max of 2 calamity years) multiplied
by IL
 Claims calculated on actual yield data furnished by State
Govt. based on Crop Cutting Experiments (CCEs).
FEATURES OF ONGOING SCHEME PMFBY
CONTD …
 Extensive use of Technology for assessment of loss and to




ensure early payment of claims
Remote Sensing, Drone, mobile technology etc for
accurate & quick estimation of losses
Use of Smart phone app for conduction & Transmission of
data/information of crop Cutting Experiment (CCEs)
An integrated crop insurance Portal for better
administration, coordination, transmission of information
& transparency
Coverage of farmers / cropped area has been set to be
increased to 50% from present level of 20% in 2-3 years.
SIMPLIFICATION & EARLY PAYMENT OF
CLAIMS
Simplification:
 Formation of cluster of districts for allocation of areas to
companies
 One premium for all crops in a season for farmers
 Allocation to company for 3 years or more
Early Payment of claims:
• Use of Remote sensing
• Use of smart phone app in conducting crop cutting
experiments & transfer of data on web servers for early
calculation of yield data and its accuracy.
• Better planning, sampling of crop cutting (Intelligent
Sampling)
• Outsourcing of manpower
• Direct payment of claims amount to insured farmers bank
accounts through NEFT
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FEATURES OF ONGOING SCHEME WBCIS
 Weather & productivity relationship based product
 Operates on Area approach linked to a Reference weather




station
Sum Insured based on ‘cost of cultivation’
All Crops may be covered including perennial horticulture
crops
Payouts/claims based on pre-defined triggers on
specified weather parameters (rainfall, temperature,
wind speed etc.)
Claims are calculated based on shortfall/excess in recorded
weather parameters with reference to defined trigger values
multiplied by notional Sum Insured of each trigger(s)
DEMERITS OF WBCIS
 High
basis risk due to poor density of Automatic weather
stations. There is weak correlation between the yield and the
weather indices.
 In
WBCIS if a farmer has lost the entire crop at particular stage
the compensation given is always less than the maximum sum
insured due to peril based sum insured, creating dissatisfaction
amongst the farming community.
 Only
weather based risks are covered (Rainfall as single
predominant parameter) against “All Risks” coverage under
NAIS/MNAIS. Risks such as pests, diseases, hailstorms, flooding
etc. are not covered.
22
FEATURES OF ONGOING SCHEME UPIS
• UPIS is being piloted in 45 districts of the country.
• Single tool to ensure all insurance needs of farmer
• Category - I: Crop Insurance : PMFBY/WBCIS (compulsory)
• Category - II: Farmer has to choose at least 2 out of 6 insurance
given below:
1.
2.
3.
4.
5.
6.
Loss of Life (PMJJBY)
Accidental Death & Disability (PMSBY)
Student Safety
Household
Agriculture implements
Tractor
N.B.: Area based insurance under Crops V/s Individual / assets based
insurance.
FEATURES OF ONGOING SCHEME UPIS CONTD…
• To provide comprehensive risk coverage of crops,
•
•
•
•
assets, life, and student safety to farmers
To provide all requisite insurance products for
farmers through one simple proposal/ application
Form.
Two flagship schemes of the Government viz. PMSBY
& PMJJBY have been included apart from assets.
Crop Insurance is implemented on Area Approach.
Processing of claims (other than Crop Insurance) on
the basis of individual claim report.
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FEATURES OF ONGOING SCHEME UPIS CONTD…
•
•
•
•


Insurance for death / loss of palm or palm becoming unproductive due to natural calamities & un-preventable
perils.
Individual farmer offering at least 5 healthy nut bearing
palms of age of 4-60 years.
Coverage is from 4th / 7th year to 60th year, and split into
two age groups i.e. 4-15 years and 16-60 years.
Sum Insured per palm: Rs. 900/ year for age group 4-15
years and Rs.1750/ year for age group 16-60 years.
Premium per palm / year: Rs. 9 for age group 4-15
years and Rs.14 for age group 16-60 years.
Subsidy on premium:- 50% by GOI and 25% by States.
25
CHALLENGES IN IMPLEMENTATION OF
ONGOING PMFBY/WBCIS/UPIS
26
 Due to absence of better technology for estimating the
yield, time taking cumbersome method of CCEs is used.
 Therefore, planning & conducting requisite number of
about 6 million CCEs under PMFBY is one of the most
challenging task.
 Under recent global climate changes, making assessment
and forecasting rains & other weather conditions in most
accurate manner has also become a challenge, which inturn affecting assessment of yield losses and thereby
payment of claims to farmers.
 Inadequate monetary resources & infrastructure for
covering the set target of 50% of farmer households /
cropped area in 2-3 years.
CHALLENGES IN IMPLEMENTATION OF
ONGOING PMFBY/WBCIS/UPIS CONTD…
 Poor density of AWS/ARG and lack of trust among farmers
in private AWS/ARG.
 UPIS: Crop Insurance is seasonal in nature and
underwritten on season basis while other products are
annual in nature & have to be underwritten annually.
 UPIS: Crop Insurance is implemented on Area Approach
while other risks are on individual claim report basis.
 Lack of awareness among farmers about the crop insurance
schemes and benefits thereof.
NEW INITIATIVES
 Mahalanobis National Crop Forecast Centre (MNCFC) has been
conducting pilots on Remote Sensing Technology (RST) to
supplement Crop Cutting Experiments (CCEs) since 2 years.
 Some States have also been conducting pilots in collaboration
with insurance companies and international agencies including
World Bank for setting up the protocol of use of RST in
supplementing estimation of yield through CCEs.
 Besides, use of Drones in estimation of yield losses specially due
to localized & post harvest perils is also being experimented.
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NEW INITIATIVES
CONTD…
 Web Portal on Crop Insurance (www.agri-insurance.gov.in)
launched for better administration, coordination amongst
stakeholders,
farter
transmission
of
information/communication & transparency.
 An Android based Mobile app on crop insurance has also
been developed for getting basic information about insured
crops / areas / schemes / insurance companies / Sum
Insured / Premium / Govt. subsidy / Threshold yield from
any where -any time from any place.
 Publicity & awareness campaigns have been launched
through TV channels, print media etc.
29
STATISTICS ON CUMULATIVE
ACHIEVEMENT
(TILL WINTER 2015-16)
Schemes/
Items
NAIS
(Since
Winter
1999-2000)
WBCIS
(Since
Summer
2007)
MNAIS
(Since
Winter
2010-11)
CPIS
(Since 200910)
TOTAL
Farmers
insured
( in million)
269
72
28
0.076
369
Area insured
(million ha)
389
94
30
0.026
513
Premium
collected
(Rs. In million)
140093
122712
50169
0.3
313008
Claims paid
(Rs. in million)
439853
99167
48042
0.5
587114
78
49
8
0.008
135
Farmers
Benefited
(in million)
Season
Farmers
Covered
Area
Covered
Total
Premium
Total Claims Farmers
Benefitted
2012-13
33
45
42978
74929
16
2013-14
33
43
47542
77229
16
2014-15
37
46
49380
77657
19
2015-16
47
53
55808
158436
21
ESTIMATION OF REQUIREMENT OF
GOVERNMENT FUNDS (CENTRE +STATES)
Particulars
2016-17
2017-18
2018-19
89180
120620
155000
(In Rs. million)
(at 30% coverage)
(40% coverage)
(50% coverage)
Revised Estimates
(In Rs. million)
350000
(also includes
spillover liability)
240000
300000
As per earlier Estimates
COVERAGE OF PRINCIPAL CROPS
2014-15
SL.
No.
Crops
Gross Area (in Insured Area (in
Million
Million Hectares)
Hectares)
Insurance
Coverage
%
1
Paddy
42.76
10.02
23.43%
2
Wheat
30.50
7.74
25.39%
3
Coarse Grains
25.15
5.95
22.88%
4
Sugarcane
5.44
0.15
2.67%
5
Cotton
11.90
1.53
12.92%
6
Jute & Mesta
0.85
0.07
8.18%
7
Oilseeds
29.10
10.43
35.84%
8
Pulses
21.96
5.77
26.27%
9
Vegetables
5.51
2.09
37.99%
10
Fruits
3.77
0.21
5.58%
194.40
45.34
23.32%
Grand Total
33
SCHEME-WISE COVERAGE OF CROPPED
AREA : 2015-16
Out of Gross Cropped Area
of about 195 million ha
 Yield-based (NAIS & MNAIS) : 37.27
 Weather-based (WBCIS)
 Crop Specific (CPIS)
: 9.02
: 0.003
Total
: 46.293
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LIVE STOCK CENSUS: 2012
Sl. No.
No Category
Population (in million)
1.
Cattle
191
2.
Buffalo
109
3.
Yaks
0.08
4.
Mithuns
0.30
5.
Bovines
300
6.
Sheep
66
7
Goat
135
8
Horses & Ponies
0.63
9
Mules
0.20
10
Donkeys
0.32
11
Camels
0.40
12
Pigs
10
Total Live stock
513
LIVE STOCK INSURANCE
 Livestock Insurance Scheme was Piloted from 2005-06 to




2007-08 in 100 selected districts.
From 2008-09, it is implemented on regular basis in 100
newly selected districts across country through Livestock
Development Board of States. Later on, it was extended to
300 districts.
Under the scheme, Crossbred & high yielding cattle and
buffaloes are insured at market price.
Premium was subsidized to 50% by Central Govt. for
maximum 2 animals and for maximum 3 years policy.
In 2014, Scheme has been modified incorporating more
districts and livestock including indigenous cattle, yak &
mithun.
36
LIVE STOCK INSURANCE
CONTD…
 In 2014, livestock insurance was merged with Centrally




Sponsored Scheme “Risk Management & Insurance” as
component of sub-mission on livestock development of
NLM.
The erstwhile scheme was improved & modified
incorporating extended to all animals across the country.
Maximum premium rates ranging 3-4% (animal’s market
price) for 1 year and 7.5-10.5% for 3 year according to
area-category (normal/hilly/NE/difficult).
Government provide subsidy in premium up to 90%
according to area-category.
Maximum 5 cattle and 50 small ruminant are insured per
household.
37
ACHIEVEMENTS
S.No.
Year
Total number of
Animals
No. of animal Insured
Amount released
by GOI
(No. in million)
(In million)
(Rs. in million)
1
2012-13
530*
0.803
458.5
2
2013-14
513#
1.088
475.4
3
2014-15
513#
1.650
248.3
4
2015-16
513#
1.017
113.1
*2007
Census
#2012
Census
TARGET POPULATION
Milch
Category
Small
Pack
Animal
Ruminant
Animals
300
211
2
513
100
71
0.7
171.7
Total
Animal Population
(In million)
Target Population at only 1/3 of
Animal Population
Fund requirement for Premium
(In Rs. million)
Fund
requirement
for
coverage of animal population
(In Rs. million)
27225
10312
990
81675
30936
2970
38527
100%
115581
CHALLENGES IN IMPLEMENTATION OF
LIVESTOCK INSURANCE IN INDIA
 Only 0.02% of total animal population is insured at present.
 To cover 1/3 of animal population, Rs.38527 million of
Government support is required but on the other hand,
Budgetary support of NLM including LIVESTOCK
INSURANCE is only 2920 million during 2016-17.
 To provide insurance protection to all animals of all farmers
in country require huge funds & infrastructure.
 Inadequate infrastructure with implementing agencies
(Insurance Companies) to implement the scheme to all
animals of all farmers.
 Farmers are also not coming forward to insure their animals
since the rate of premium is on higher side.
UNIVERSAL AGRICULTURE INSURANCE
(UAI)
 UAI has not yet planned / considered in India.
 India would require approx Rs. 715581 million for
providing insurance to 100% crops and livestock of
farmers .
 Developing countries may be able to afford UAI if insurance
cost / burden is shared according to Loss Index and
Development Index of the respective country.
41
THANK YOU
42