Crop Insurance in India: Key Issues and Way Forward
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A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Gulati, Ashok; Terway, Prerna; Hussain, Siraj Working Paper Crop insurance in India: Key issues and way forward Working Paper, No. 352 Provided in Cooperation with: Indian Council for Research on International Economic Relations (ICRIER) Suggested Citation: Gulati, Ashok; Terway, Prerna; Hussain, Siraj (2018) : Crop insurance in India: Key issues and way forward, Working Paper, No. 352, Indian Council for Research on International Economic Relations (ICRIER), New Delhi This Version is available at: http://hdl.handle.net/10419/176379 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. 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Introduction ........................................................................................................................ 1 2. Evolution of Crop Insurance Schemes in India .............................................................. 4 2.1 Crop Insurance in India – The beginning ............................................................................ 4 2.2 Pradhan Mantri Fasal Bima Yojana (PMFBY) - Kharif 2016 onwards ............................. 4 3. Evaluation of the Performance of crop insurance schemes ........................................... 5 3.1 Rolling out PMFBY: Experience of Kharif 2016 and Rabi 2016-17 ................................... 7 3.2 Challenges in the Implementation of PMFBY ................................................................... 13 4. Learning from International Best Practices .................................................................. 20 4.1 Crop Insurance in USA ...................................................................................................... 20 4.1.1 Farm bill 2014 ......................................................................................................... 21 4.2 Crop Insurance in China ................................................................................................... 22 4.2.1 Government Support in Agriculture Insurance ....................................................... 24 4.2.2 Agriculture Reinsurance .......................................................................................... 24 4.2.3 AIR Worldwide ........................................................................................................ 24 4.3 Crop Insurance in Kenya- Kilimo Salama ......................................................................... 25 4.3.1 Progress of the scheme ............................................................................................ 26 4.4 Lessons for India ................................................................................................................ 26 5. Role of Technology in Crop Insurance .......................................................................... 27 5.1 Application of Satellites in Agriculture.............................................................................. 27 5.2 Application of Drones in Agriculture ................................................................................ 28 5.3 Low Earth Orbits (LEO) .................................................................................................... 29 5.3.1 Planet Labs .............................................................................................................. 30 5.4 Government of India’s Programmes of use of Satellite Data for Agriculture ................... 30 5.5 Remote sensing-based Information and Insurance for Crops in Emerging Economies (RIICE) ............................................................................................................ 30 6. Conclusions and Policy Recommendations ................................................................... 31 References ............................................................................................................................... 39 Annexures ............................................................................................................................... 41 List of Tables Table 1a: Farmers Covered (million) under NAIS, WBCIS, MNAIS and PMFBY (Kharif 2013 to Kharif 2016) ............................................................................... 8 Table 1b: Farmers Covered (million) under NAIS, WBCIS, MNAIS and PMFBY (Rabi 2012-13 to Rabi 2016-17) .......................................................................... 8 Table 2a: Area Insured (million ha.) under NAIS, WBCIS, MNAIS and PMFBY (Kharif 2012 to Kharif 2016) ............................................................................... 9 Table 2b: Area Insured (million ha.) under NAIS, WBCIS, MNAIS and PMFBY (Rabi 2012-13 to Rabi 2016-17) .................................................................................. 10 Table 3a: Gross Premium (Rs crore) under NAIS, WBCIS, MNAIS and PMFBY (Kharif 2012 to Kharif 2016) ............................................................................. 11 Table 3b: Gross Premium (Rs crore) under NAIS, WBCIS, MNAIS and PMFBY (Rabi 2012-13 to Rabi 2016-17) .................................................................................. 11 Table 4a: Sum Insured (Rs crore) under NAIS, WBCIS, MNAIS and PMFBY (Kharif 2013 to Kharif 2016) ......................................................................................... 12 Table 4b: Sum Insured (Rs crore) under NAIS, WBCIS, MNAIS and PMFBY (Rabi 2012-13 to Rabi 2016-17) .................................................................................. 12 Table 5a: Sum Insured (Rs) per hectare under NAIS, MNAIS and PMFBY (Kharif 2012 to Kharif 2016) ......................................................................................... 12 Table 5b: Sum Insured (Rs) per hectare under NAIS, MNAIS and PMFBY (Rabi 2012-13 to Rabi 2016-17) .................................................................................. 13 Table 6a: Gross Premium as a Percentage of Sum Insured (Kharif 2012 to Kharif 2016) .................................................................................................................. 13 Table 6b: Gross Premium as a percentage of Sum insured (Rabi 2012-13 to Rabi 2016- 17) ...................................................................................................................... 13 Table 7: Comparison between NAIS, MNAIS and PMFBYs ......................................... 18 Table 8: Area Insured and Premiums paid by the Government (USA) ........................... 21 Table 9: Premium Subsidy given by the Central and Provincial Government ................ 24 List of Figures Figure 1: Average Annual Growth Rate (%) and Coefficient of Variation of GSDP Agriculture (2005-06 to 2014-15) ............................................................................ 2 Figure 2: Total Premium Paid and Claims Received from Agriculture Insurance (2001- 2013) ...................................................................................................................... 23 Figure 3: Representation of Replanting Guarantee ............................................................... 26 Figure 4: Area under Crop Insurance in India, China and USA ........................................... 32 Figure 5: Gross Premium and Sum Insured (all schemes combined) under Crop Insurance ..... 34 List of Abbreviations ADWDRS Agricultural Debt Waiver and Debt Relief Scheme AIC Agriculture Insurance Company of India Limited ARC Agriculture Risk Coverage AWS Automatic Weather Stations CCIS Comprehensive Crop Insurance Scheme CCE Crop Cutting Experiment CHAMAN Coordinated Horticulture Assessment and Management using geo informatics CPIS Coconut Palm Insurance Scheme DACFW Department of Agriculture,