The Historical Background of Crop Insurance - Before and After Independence

Agricultural Crop Insurance is a step to help and protect farmers against either their loss of crops due to natural calamities such as Flood, Drought, Landslide, Hail, and Cyclone or due to the decline in the price of the Agricultural commodities.

Pre –Independence Scenario:

• In 1915, Mr. J.S.Chakravarthi of state Mysore had proposed a scheme regarding the rain insurance for the farmers for drought.

• His scheme was based on an area approach.

• He published a number of research papers in the Mysore Economical Journal enlighten the concept of rainfall insurance.

• States like Madras, Dewas, and Baroda also made attempts to introduce crop insurance relief in various forms but get little success.

Post –Independence Scenario:

• After independence in 1947, Crop Insurance gradually fined mention in the media more often.

• Rajendra Prasad, Minister of Food and Agriculture gave assurance to the Government that it would re-examine its crop insurance.

• The Government of India decided to introduce a crop Insurance Bill in October 1965.

• In 1970, the draft Bill and the Model scheme were referred to an expert committee; leading by Dr. Dharm Narain.

Individual Approach Basis (1972-1984):

The first crop Insurance program was introduced in 1972-73 by the ‘General Insurance’ Department of LIC. Later General Insurance Corporation of India took an experimental scheme known as “Individual Approach”. It continued up to 1978-79 and covered only 3110 farmers. It was realized that the Crop Insurance program based on Farm Approach would not be viable and sustainable for the country.

Pilot Crop Insurance Scheme/PCIS (1979-1984):

 Professor V.M. Dandekar as the ‘father of crop insurance in India’ suggested an alternate ‘Homogenous Area approach’ for crop insurance in mid -70’s. Based on this approach General Insurance Corporation of India (GIC) introduced a Pilot Crop Insurance Scheme (PCIS) from 1979. The scheme covered cereals, millets, oilseeds, potato, gram, and barley. This insurance premium ranged from 5 to 10 percent of the sum insured. This ran till 1984-85 and a total of 13 states participated. It covered 6.27 farmers for a premium of 1.97 crores against Claims of 1.57 crore.

Comprehensive Crop Insurance Scheme-CCIS (1985-1999):

CCIS was introduced on 1^st April 1985 by the Government of India with the active participation of state Governments. The CCIS was implemented on Homogenous Area Approach was linked to short term crop credit. 15 states and 2 (Union Territory) had participated in the CCIS from Kharif 1985 to Kharif 1999. In this entire period, the scheme covered 7.63 crore farmers under an area of 12.76 crore hectares for a sum insured 24,949 crores at a premium of 403.56 crores. This was discontinued after Kharif 1999. This scheme was replaced by the ‘National Agriculture Insurance Scheme’ (NAIS).

Experimental Crop Insurance Scheme-ECIS (1997-1998):

This scheme was introduced in Rabi 1997. A total of 14 districts of 5 states are under this scheme. It was similar to CCIS. It gives 100% subsidy on premium and was discontinued after one season due to many Administrative and financial difficulties. The ECIS covered 4, 54,555 farmers for a sum insured of 168.11 crores at the premium of 2.48 crore against the claims paid 37.80 crores.

National Agricultural Insurance Scheme- NAIS (1999…):

NAIS was introduced in the country from the Rabi season of 1999-2000. The Agricultural Insurance Company of India was incorporated to implement the NAIS. Only 9 states/ UTs participated in this scheme. The crops which are under this insurance were sugarcane, potato, cotton, ginger, onion, turmeric, chilies, coriander jute, banana, and pineapple.

Pilot Scheme on Seed Crop Insurance – PSSCI (2000):

 The scheme was introduced in 11 states in Kharif 2000. Its main aim is to provide the stabilization to the Infrastructure that owned by seed corporations and seed farms. It provides financial security and income stability to the farmers in the event of failure of the seed crops. It was established by the State seed Corporation to give a boost to the modern seed industry by scientific method.

Pradhan Mantri Fasal Bima Yojana – PMFBY (2016 – Present):

It was introduced by Pradhan Mantri Narendra Modi on 18^th February 2016. It was a joint scheme by state and central Government. It gives a premium of 2% for Kharif crops, 1.5% for Rabi crops, and for annual commercial and Horticulture crops premium is 5%.