Crop Insurance Schemes

Crop insurance schemes are crucial for farmers as it provides insurance cover for their harvest. The farmers grow crops with hard labour. Thus, the government introduced a crop insurance system to protect them from loss of crop damage. The crop insurance scheme aims at mitigating financial losses suffered by farmers due to the destruction and damage of their crops resulting from various risks such as extreme weather, natural disasters or revenue loss due to price fluctuations in the agricultural market.

Crop Insurance Schemes in India

Currently, the following crop insurance schemes are available in India: 

• Pradhan Mantri Fasal Bima Yojana (PMFBY) 
• Weather Based Crop Insurance Scheme (WBCIS) 
• Pilot Unified Package insurance scheme (UPIS)
• Coconut Palm Insurance Scheme (CPIS) 

A farmer must compulsorily have coverage under any of these schemes mentioned above to avail of a crop loan for the notified crops. However, the coverage under these schemes is voluntary for non-loanee farmers.

Features of Crop Insurance Schemes

• It is voluntary to subscribe to these schemes for all farmers. However, the farmer must mandatorily subscribe to a crop insurance scheme to obtain a crop loan.
• The farmers who subscribe to these schemes should pay a maximum premium of 2% of the sum assured for Kharif crops, 1.5% for Rabi crops and 5% for annual commercial/horticultural crops.
• The difference between a farmer’s actual premium and the payable insurance rate will be shared equally by the State and Centre.
• The assessment for crop losses because of non-preventable natural risks will be done on the area approach.
• There are three levels of indemnity, i.e., 70%, 80% and 90%, for all crops corresponding to the crop risk.
• Crop Cutting Experiments (CCE) will be undertaken per crop or unit area on a sliding scale as provided under the respective scheme.
• The State Government decides and notifies the crop-wise insured sum.
• The State Government changes the insured sum from the first year/season to the subsequent year/season according to the changes in the Minimum Support Prices (MSP), Scale of Finance, or Farm-gate price available for the notified crops.
• The claim amount will be electronically credited to the farmers’ insured bank accounts. 

Benefits of Crop Insurance Schemes

• It will help develop crop production as the insurance provides financial support in case of a crop failure event.
• It encourages farmers to adopt higher technology or progressive farming practices in agriculture.
• It helps farmers maintain the flow of agricultural credit.
• It streamlines the loss assessment process and helps to build an accurate statistical base for crop production.
• There is a tax exemption on the premium payable by a farmer against the purchase of the crop insurance policy.
• The farmers can get a crop loan at low-interest rates when they avail of a crop insurance scheme.
• The country’s economy will strengthen since farmers can repay their loans with reimbursement received under the crop insurance policy.

Eligibility for Coverage Under Crop Insurance Schemes

All farmers are eligible to take the crop insurance schemes in India, including sharecroppers and tenant farmers. However, they need to grow the notified crops in the notified area provided under the schemes.

Risks Covered Under Crop Insurance Schemes

The following risks are covered under the crop insurance schemes:

Basic cover – It covers yield losses to the standing crop due to non-preventable risks like disease attacks, dry spells, landslides, drought, storms, inundation, flood, cyclones, hailstorms and natural fire due to lightning.

Prevented planting risk/sowing/germination – It provides cover against any problem in sowing or planting because of adverse seasonal conditions or deficit rainfall.

Mid-season adversity – It provides relief to farmers against losses occurring due to adverse seasonal conditions where the expected yield during the season is below 50% of the normal yield.

Post-harvest losses – It covers losses for up to a maximum of two weeks from harvesting.

Localised calamities – It covers losses against localised calamities and risks like landslides and hailstorms affecting isolated farms in the notified areas.

General exclusions – The losses arising from war, nuclear risks, malicious damage and other preventable risks are excluded from the insurance cover.

Types of Crops Covered Under Crop Insurance Schemes

• Food crops, such as pulses, cereals and millets.
• Oilseeds.
• Annual commercial or horticultural crops.

Farmers can additionally get coverage for the commercial crops/perennial horticultural for which the standard methodology for yield estimation is available.

Crop Insurance Scheme Claim Process

• The concerned insurance company is responsible for the payment of claim liabilities. 
•  Eligible claims will be calculated through the National Crop Insurance Portal (NCIP) based on the actual yield and loss reports.
• The concerned insurance company will initiate the payment of claims and remit it directly into the beneficiary account within the pre-defined timelines.
• In the case of a widespread calamity, claims are calculated on the NCIP after the State Government provides or finalises the yield data for each notified crop and area. Accordingly, the competent authority of the implementing insurance company will approve the claims, and the Public Financial Management System (PFMS) will initiate all claims.
• In case of claims under localised calamities, prevented/failed sowing and post-harvest losses, the insurance company will process the claims after assessment. It will release the claims as per the detailed procedure given in the scheme.
• The claim settlement intimation will be sent to each beneficiary farmer from the NCIP through an SMS.

The crop insurance schemes help farmers in their time of need. The farmers can adopt advanced agricultural techniques without worrying about losses when they have taken the crop insurance schemes. Though taking these insurance schemes is voluntary, it is highly recommended as it protects the framers from losses occurring to their crops.

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