Welcome to Presentation National Agricultural Insurance Scheme Pilot Modified National Agricultural Insurance Scheme (MNAIS)

Risks affecting Agriculture Production - A Major Challenge Vagaries of weather - rainfall - temperature - humidity - wind - cyclone - hailstorm - flood - frost Pest & diseases Fire Quality of inputs Soil Market prices

Risk Management in Agriculture Crop Insurance - An effective risk management tool which provides a mechanism to the farmers against uncertainties of crop production Existing Schemes - NAIS: yield based; non-actuarial premium except horticultural crops / annual commercial crops; underwriting of losses by Central & State Govt. on 50:50 ratio - WBCIS: weather based ; actuarial premium with premium subsidy shared equally by Central & State Govt. - CPIS: plant based; actuarial premium

Objectives of Crop Insurance To provide insurance coverage and financial support to the farmers in the event of prevented sowing & 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 in-puts and higher technology in Agriculture. To help stabilize farm incomes, particularly in unfavorable years.

Limitations of NAIS Large insurance unit area Delay in payment of claims due to late submission of yield data & availability of Govt. funds Pre- sowing/ Planting Risk is not covered Unattractive basis of calculation of threshold yield Low indemnity level Localized calamities are not covered Post Harvest Losses are not covered Different seasonality discipline for loanee & non-loanee farmers Lack of competition

Review of NAIS As per direction of PMO, a Joint Group was constituted by DAC on 31st August, 2004 to study NAIS & suggest improvements Joint Group under chairmanship of AS (MoA) and JS (MoA), JS (MoF) & CMD(AIC) as members Joint Group submitted its Report on 20.12.2004

Proposed Modifications Sl. No. Parameters NAIS Modified NAIS 1 Insurance Unit The defined area may be a Gram Panchayat, Mandal, Hobli, Circle, Phirka, Block, Taluka etc declared by GOS Village Panchayat 2 Early Settlement The claims are settled based on the final yield estimates submitted by GOS On account settlement of claims upto 25% of likely total claims 3 Pre- sowing/ Planting Risk Presently not covered Prevented/Failed Sowing Risk to be covered upto 25% of SI

Proposed Modifications SN Parameters NAIS Modified NAIS 4 Threshold yield Moving average yield of preceding 3 years for Rice & wheat and 5 years for other crops Average yield of preceding 7 years excluding max. 2 years of declared natural calamity by concerned Govt./authority. 5 Indemnity levels 60%, 80% & 90% 70%, 80% and 90% 6 Compulsory/ voluntary nature Compulsory for loanee farmers and voulntary for other farmers No change, compulsory for loanee farmers and voluntary for other farmers

Proposed Modifications Sl. No. Parameters NAIS Modified NAIS 7 Localized calamities Presently not covered Individual assessment of claims in case of hailstorm, landslide 8 Post Harvest Losses Post harvest losses on account of cyclones to be covered in coastal areas 9 Seasonality Discipline Different for loanee and non-loanee farmers Uniform seasonality discipline for loanee and non-loanee farmers

Subsidy & Net Premium for Farmers under MNAIS Sl.No Actuarial Premium (% of SI) Subsidy to Farmers (equally shared by Central and State Govt.) Premium payable by farmers 1 Upto 2% NIL 2 >2-5% 40% subject to minimum net premium of 2% of SI 2-3% 3 >5-10% 50% subject to minimum net premium of 3% of SI 3-5% 4 >10-15% 60% subject to net premium of 5% of SI 5-6% 5 >15% 75% subject to minimum net premium of 6% of SI >=6

Steps to be taken by GOI/States/IA Issue approval. Immediate States Select 5 districts - 22.09.10 Provide (historical) yield data of past 7 yrs to all IA (indicate calamity yrs) - 30.09.10 Decision to implement - 30.09.10 Decide reference parameters & W.S. for prevented sowing / on a/c payment - 05.10.10 Decide IA district-wise - 10.10.10 Issuance of State Government Notification - 15.10.10 Conduct State Level Bankers’ workshop - Before 20.10.10 Preparation & Plan for CCEs at village level - 30.11.10 Payment of premium subsidy (advance) - 31.12.10 IA Finalise actuarial premiums - 07.10.10 Publicity - Immediately upto the cut off date

Financial Implications on Govt. The scheme would be on actuarial regime in which insurance company will receive premium on commercial basis and will be responsible for all claims GOI & State Govts. will provide premium graded subsidy at different slabs of actuarial premium to make the scheme affordable for farmers The coverage in proposed MNAIS is expected to 25% of total farmers in 50 districts (about 30 lakh farmers) The financial implications of MNAIS in 50 districts (NAIS will be withdrawn) would be Rs. 715 crore during XI Plan (2010-11 Rs.156.50 crore & 2011-12 Rs.558.50 crore)

Benefits to farmers under NAIS & MNAIS 13

Thanks