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A wider insurance cover, with options to choose from

From the next kharif season, crop insurance is set to spread wider with two schemes taking the place of the current one. The National Agriculture Insurance Scheme is being upgraded to the Modified NAIS; it will compensate for damage on the basis of crop yield. The Weather-based Crop Insurance Scheme (WBCIS) will provide for compensation […]

Nagpur |
February 7, 2014 12:15:38 am

From the next kharif season, crop insurance is set to spread wider with two schemes taking the place of the current one.

The National Agriculture Insurance Scheme is being upgraded to the Modified NAIS; it will compensate for damage on the basis of crop yield. The Weather-based Crop Insurance Scheme (WBCIS) will provide for compensation on the basis of variations (deficit, excess, unseasonal) in rains, frost, heat, and humidity, even if these variations don’t actually cause damage on the ground.

The modified scheme brings the farmer two major advantages. The unit area for determining damage is smaller. This will bring the claims down from the level of a revenue circle (about 25 villages) to that of a panchayat, which may consist of one or two villages. Earlier, an insured farmer would get relief only if his entire revenue circle suffered crop damage to a specified extent.

The second key advantage is a revision in this specification. The indemnity level has been raised from 60 per cent to 80 or 90 per cent, depending to the vulnerability of the area. It means farmers will get insurance even if the yield is down to 90 per cent of threshold levels. States such as Maharashtra have already been following 80 per cent under NAIS for the last two years for some crops in the rabi season.

Other vital advantages with MNAIS are that it covers prevented sowing/planting risk (inability to sow due to prevailing adverse weather conditions) and offers post-harvest losses in coastal areas. Moreover, ahead of making a likely claim, an insured farmer will get on-account payment up to 25 per cent of the sum insured.

Farmers who have taken a loan will have to take either of the schemes compulsorily. Non-loanees, too, can choose either of these voluntarily.

WBCIS, however, may not be immediately available as the second choice uniformly across the country since it depends on the availability of automatic weather stations. Five thousands AWSs are being created in the country with 50 per cent funding from the Centre.

Unlike earlier, when it would be paid almost entirely by the farmer but for a nominal subsidy, the half premium in MNAIS will now be subsidised by the central and state governments. It will be graded: the higher the risk, the higher the premium. The farmers’ part will be added directly into his loan amount.

For the first time, even farmers’ groups and societies serviced by fertiliser companies and pesticide firms, crop growers’ associations, self-help groups and agriculture NGOs have been covered under the modified scheme.

Satellite imagery will be used to check the ground reality of damage and hence the claims as also to decide the sample size of the crop-cutting experiments done to assess the actual yield of a particular area. It is subtracted from the threshold yield of the area to arrive at the shortfall in yield..

Threshold yield, also called guaranteed yield, is the average yield of the area for the past seven years, with that for up to two government-declared calamity years to be excluded.

The major challenge, however, is the massive crop-cutting exercise that will have to be undertaken since MNAIS has upped the number of CCEs from 12 per revenue circle to 12 per panchayat level, which is 10-fold increase. State governments currently lack the machinery to carry this out. “It’s a huge ask. We need to graduate to higher technical modes such as remote sensing to be able to manage it,” said Maharashtra’s additional chief secretary (agriculture) Sudhir Kumar Goel.

In case of the weather-based scheme, “adverse weather incidence” will be the basis for arriving at payouts. It is a measure of the deviation of “actual weather” from “trigger weather” (a predefined weather condition for a given crop in a given area). Payouts will be automatically computed on the basis of this deviation and the money deposited directly in the farmer’s account.

What’s new
Under Modified National Agriculture Insurance Scheme, unit area reduced to the village/village panchayat level for major crops

Threshold yield based on average yield of the preceding seven years excluding up to two calamity years declared by concerned state/UT.

On-account payment up to 25% advance of likely claims as immediate relief.

Minimum indemnity level raised to 80% and 90% based on crop and location.

From the next kharif season, crop insurance is set to spread wider with two schemes taking the place of the current one.

The National Agriculture Insurance Scheme is being upgraded to the Modified NAIS; it will compensate for damage on the basis of crop yield. The Weather-based Crop Insurance Scheme (WBCIS) will provide for compensation on the basis of variations (deficit, excess, unseasonal) in rains, frost, heat, and humidity, even if these variations don’t actually cause damage on the ground.

The modified scheme brings the farmer two major advantages. The unit area for determining damage is smaller. This will bring the claims down from the level of a revenue circle (about 25 villages) to that of a panchayat, which may consist of one or two villages. Earlier, an insured farmer would get relief only if his entire revenue circle suffered crop damage to a specified extent.

The second key advantage is a revision in this specification. The indemnity level has been raised from 60 per cent to 80 or 90 per cent, depending to the vulnerability of the area. It means farmers will get insurance even if the yield is down to 90 per cent of threshold levels. States such as Maharashtra have already been following 80 per cent under NAIS for the last two years for some crops in the rabi season.

Other vital advantages with MNAIS are that it covers prevented sowing/planting risk (inability to sow due to prevailing adverse weather conditions) and offers post-harvest losses in coastal areas. Moreover, ahead of making a likely claim, an insured farmer will get on-account payment up to 25 per cent of the sum insured.

Farmers who have taken a loan will have to take either of the schemes compulsorily. Non-loanees, too, can choose either of these voluntarily.

WBCIS, however, may not be immediately available as the second choice uniformly across the country since it depends on the availability of automatic weather stations. Five thousands AWSs are being created in the country with 50 per cent funding from the Centre.

Unlike earlier, when it would be paid almost entirely by the farmer but for a nominal subsidy, the half premium in MNAIS will now be subsidised by the central and state governments. It will be graded: the higher the risk, the higher the premium. The farmers’ part will be added directly into his loan amount.

For the first time, even farmers’ groups and societies serviced by fertiliser companies and pesticide firms, crop growers’ associations, self-help groups and agriculture NGOs have been covered under the modified scheme.

Satellite imagery will be used to check the ground reality of damage and hence the claims as also to decide the sample size of the crop-cutting experiments done to assess the actual yield of a particular area. It is subtracted from the threshold yield of the area to arrive at the shortfall in yield..

Threshold yield, also called guaranteed yield, is the average yield of the area for the past seven years, with that for up to two government-declared calamity years to be excluded.

The major challenge, however, is the massive crop-cutting exercise that will have to be undertaken since MNAIS has upped the number of CCEs from 12 per revenue circle to 12 per panchayat level, which is 10-fold increase. State governments currently lack the machinery to carry this out. “It’s a huge ask. We need to graduate to higher technical modes such as remote sensing to be able to manage it,” said Maharashtra’s additional chief secretary (agriculture) Sudhir Kumar Goel.

In case of the weather-based scheme, “adverse weather incidence” will be the basis for arriving at payouts. It is a measure of the deviation of “actual weather” from “trigger weather” (a predefined weather condition for a given crop in a given area). Payouts will be automatically computed on the basis of this deviation and the money deposited directly in the farmer’s account.

What’s new
Under Modified National Agriculture Insurance Scheme, unit area reduced to the village/village panchayat level for major crops

Threshold yield based on average yield of the preceding seven years excluding up to two calamity years declared by concerned state/UT.

On-account payment up to 25% advance of likely claims as immediate relief.

Minimum indemnity level raised to 80% and 90% based on crop and location.

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