Panel set up to review crop insurance recommends agriculture insurance Act

Published on Down To Earth (http://www.downtoearth.org.in)

Panel set up to review crop insurance

recommends agriculture insurance Act
Author(s):
Jyotika Sood [1]
Issue Date:
2014-6-20
Insurance companies should be allocated districts for minimum three years, instead of one season, to
remove uncertainties, says panel headed by P K Mishra

Farmers inspect crops damaged by

hailstorm in Hoshangabad district of Madhya Pradesh after the freak hailstorms destroyed vast tracts of
crops in north and central India in February and March this year (Photo: Lokesh Tiwari)
The committee set up by the Central government to review the implementation of crop insurance schemes
in India has recommended introduction of an agriculture insurance Act to take care of specific
requirements of the crop insurance and agriculture insurance in general.
The four-member committee, appointed in September 2013, was headed by former agriculture secretary,
P K Mishra, and submitted its report [2] in May this year.
General insurance v crop insurance
The report says crop insurance is different from general insurance in many ways and does not strictly
follow rules and regulations of general insurance, such as receipt of insurance premiums and claim
intimation by the insured. But the Insurance Regulatory and Development Authority (IRDA) has placed
crop insurance under the miscellaneous category of the general insurance business. In the absence of
appropriate law, various provisions such as compulsory coverage of loan availing farmers being
challenged in courts. Therefore, it would be appropriate to have an agriculture insurance Act, says the

http://www.downtoearth.org.in/print/44849[6/22/2014 6:21:55 AM]

Panel set up to review crop insurance recommends agriculture insurance Act

committee.
The committee was formed to examine the loopholes, in any, in the implementation of existing crop
insurance schemesthe National Agricultural Insurance Scheme (NAIS), Modified National Agricultural
Insurance Scheme (MNAIS) and Weather-Based Crop Insurance Scheme (WBCIS)and suggest
measures for plugging them. The panel members comprised Raj Kumar and D B Gupta, principal
secretaries for agriculture in Gujarat and Rajasthan respectively, and P J Joseph, chairperson-cummanaging director of Agriculture Insurance Company of India Limited. They were asked to submit their
report within six months.
The committee has pointed out that under the present crop insurance system, districts are allocated
through bids to insurance companies every season, creating uncertainty among insurers willing to invest in
insurance education and awareness. Even those insurers who pay a large amount of claims in a particular
season may not reap goodwill in the next season when they are allocated another district. The committee
has, therefore, recommended that districts/crops be allocated to an insurer (the insurance company) for a
minimum of three years.
Gujarat model
The report says that a web portal along the lines of the one in Gujarat should be developed by the National
Informatics Centre (NIC) for other states so as to make data about land records available to financial
institutions. The web portal would enable financial institutions to link each farmers existing loan account to
the unique land account, making it possible to detect multiple loans taken against the same land.
The committee says that state governments should ensure the use of GPRS-enabled, camera-fitted
mobile phones or hand-held machines while conducting crop cutting experiments (to determine average
yield in a district), so as to transmit data on a real-time basis. The applications developed in Gujarat and
also by the pilot studies under the World Bank technical assistance in Maharashtra and Rajasthan, can be
utilised to put in place appropriate systems in other states, the report says.
The committee claims that implementation of recommendations in a time-bound manner, with some
prioritisation, would help to plug the loopholes, thereby, effectively addressing the issues involved.

Other key recommendations

RBI and NABARD should monitor the compliance of their circulars

regarding compulsory crop insurance for loan availing farmers with
respect to notified crops in identified areas
Revisit the premium rates for Modified National Agricultural
Insurance Scheme
New and innovative products of insurance may be introduced
An atlas of critical weather elements which trigger crop-yield losses
in different crop growth periods should be developed for different
agro-climatic regions
The Central government, through ministry of home and agriculture,
should take measures to integrate crop insurance schemes with or
link them to disaster mitigation activities.

http://www.downtoearth.org.in/print/44849[6/22/2014 6:21:55 AM]

Panel set up to review crop insurance recommends agriculture insurance Act

Source URL: http://www.downtoearth.org.in/content/panel-set-review-crop-insurance-recommends-agriculture-insurance-act

http://www.downtoearth.org.in/print/44849[6/22/2014 6:21:55 AM]