India is an agrarian society with more than 75% of the population depending on it, for their livelihood. Agriculture or crop insurance has assumed importance with large scale damage caused due to pest attacks, crop diseases and vagaries of weather. The list of crops being covered for insurance differs from state to state. The crops are insured at the community or block or gram panchayat levels. Agriculture or crop insurance schemes are of immense help to farmers, providing them with financial security to the farmers against losses suffered by them due to crop failure on account of fire & lightning. Storm, cyclone, hailstorm, typhoon, tempest, hurricane, tornado. Flood, inundation & landslide. Drought, dry spells. Pests / Diseases (Exclusions: War, nuclear risks, malicious damage.) so as to restore their creditworthiness for the ensuing season.  

GENEISES OF CROP INSURANCE IN INDIA

A crop insurance scheme linking institutional credit (crop loan based on area approach) was suggested by Prof. Dandekar in 1976 & this scheme called as CCIS (Comprehensive Crop Insurance Scheme) was implemented from Kharif 1985 on all-India level. The National Agricultural Insurance Scheme (NAIS) was introduced in the country from the 1999-2000 Rabi seasons, replacing the Comprehensive Crop Insurance Scheme (CCIS) which was in operation in the country since 1985. The scheme is being implemented by the General Insurance Corporation (GIC) on behalf of the Ministry of Agriculture. Government set up an organization called Agriculture Insurance Company of India Ltd (AIC) with support from the general insurance companies and NABARD for effective implementation of the scheme. All major cereals and pulses and oilseed crops were covered under CCIS and few horticultural crops like onion, potato were covered in NAIS. Spread of CCIS was poor. But the CCIS has helped financial institutions to reduce over dues and maintain the flow of crop loans/ short term credit at least in areas where indemnities were paid by the GIC of India. There are also other schemes as listed in table no.2. NAIS is being implemented by 23 states and two Union territories. The scheme is operating on the basis of both 'area approach', for widespread calamities, and 'individual approach', for localized calamities such as hailstorms, landslides, cyclones and floods. And the performance of this scheme can be seen in table no.1

 Table1: Performance of National Agricultural Insurance Scheme

Source: Economic Survey 2008-09, National Accounts Statistics 2009 and AIC 2009

Table 2: Various Schemes Related to Crop Insurance in India and their Feature

Source; Raju , S. S., and Ramesh ,Chand., 2009, Problems and Progress in Agricultural Insurance in India    N.A. - Not Available

CONCLUSION

      Crop insurance was conceived as an instrument of risk management in agriculture and as a measure to provide relief to farmers whose crops were damaged by one or the other means. With increased commercialization of agriculture, price fluctuations have become highly significant in affecting farmers' income. Accordingly, market risk is now quite important in affecting farmers' income. Implementation of market insurance to cover price risk is much easier than yield insurance. This can be done by requiring the interested farmers to register their marketable surplus with insurance agency or market committee at the time of sowing of crop. The insurance agency should offer insurance cover to include price guarantee which could be the minimum support price in some cases or the market-based price from the past. Farmers should pay the premium for this kind of price insurance and initially the government should share some of the burden of the premium. During harvest, if the price in the notified market falls below the guaranteed price, then the insurance agency should pay indemnity. There is lot of interest in the private sector to invest in the general insurance business. This opportunity can be used to allot some targets to various general insurance companies to cover agriculture. To begin with, this target could be equal to the share of agriculture in national income. Despite various schemes launched from time to time in the country, agricultural insurance has served very limited purposes in terms of area, number of farmers.