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Agriculture Insurance in India

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... On the one hand, the immediacy and adequacy of claim settlement determines the effi cacy of a single or multi-peril insurance, for example, rainfall (weather) and crop-based insurance schemes (Nair 2010). On the other hand, the consideration of actuarial premium rate based on the risk profi le of a cluster or insurance unit, sum insured linked to fair value of the crop grown, index-based parametric measure for crop loss or shortfall in expected yield, determine the (economic) viability of agricultural insurance products and services (Sinha 2007). ...
... While drawing a comparison between crop-and weatherbased insurance, we need to bear in mind that actuarial premium rate (commercial rate based on the likelihood of occurrence of event and extent of loss) may vary for both the schemes, but the maximum premium payable by farmers (loanee and non-loanee) for major food crops and annual commercial crops for the two schemes is made at par (for more details, see the comparison between various schemes, National Agricultural Insurance Scheme (NAIS), Modifi ed NIAS (MNAIS), PMFBY, and WBCIS in Ministry of Agriculture and Farmers' Welfare). However, the systematic risk is prevalent in both the cases, for example, if the rainfall index is constructed separately for each crop-area using weights that yields maximum correlation between the rainfall and areayield crop index (Sinha 2007). Second, in case of area-based crop insurance scheme like PMFBY, moral hazard is eliminated to some extent while rainfall insurance completely eliminates that problem. ...
... Rainfall insurance can also have similar kind of basis risk segregated into temporal, spatial and crop-specifi c components as the rainfall data for the index construction can only be collected from a limited number of locations within a geographical area. An additional source of basis risk arises when there is less than perfect correlation between rainfall and area yield index (Miranda and Vedenov 2001;Sinha 2007;Smith 2016). Fourth, adverse selection is a result of Asymmetric information-the farmer usually has better information about his risk than the insurance company when setting the premium rate. ...
Article
The Pradhan Mantri Fasal Bima Yojana (during kharif 2016) and Weather-based Crop Insurance Scheme (kharif 2007-kharif 2014) are assessed by considering a set of performance indicators, namely average sum insured per insured cropped area, percentage of loanee and non-loanee farmers covered, average area insured per farmer, total claim ratio, farmer claim ratio, premium as percentage of sum insured, gross profit to insurance agencies. The study finds that claim payout can increase farmers' coverage under PMFBY while subsidy and actuarial premium rate significantly impact farmers' coverage for WBCIS. However, as recourse to complement the performance of two schemes, we propose a total insurance package like seed insurance through replanting guarantee programme, crop cycle insurance, prepaid insurance card, to name a few.
... Un buon livello di sviluppo delle assicurazioni per indici climatici e per indici di resa è stato raggiunto anche in India, dove diversi studi, antecedenti l'introduzione di tali strumenti, avevano portato alla necessità di aggregazione della popolazione agricola per aree a causa della minuscola dimensione aziendale media del Paese (Sinha, 2007). In India la popolazione agricola ha usufruito storicamente delle assicurazioni solo per il 10% delle proprie produzioni; tuttavia sembra che l'introduzione nell'ultimo quinquennio di progetti pilota di assicurazioni su reddito e rese, oltre che di assicurazioni areali basate su indici climatici e indici di resa, stia portando buoni frutti e nel 2007 erano 20 milioni gli agricoltori indiani assicurati, per una superficie pari al 14%. ...
... In India, le piccole dimensioni medie aziendali e l'alto livello di esposizione al rischio da parte degli agricoltori hanno portato alla realizzazione di diversi studi in merito alla ricerca di strumenti per la gestione dei rischi in agricoltura (Sinha, 2007;Bhise et al., 2007). A seguito di tali studi, è emerso che uno dei metodi più efficaci sarebbe stato l'assicurazione basata su indici meteoclimatici e areali (zonizzazione delle aziende omogenee per produzione e per esposizione alle medesime tipologie e agli stessi livelli di rischio), che avrebbe reso possibile l'immissione sul mercato di polizze vantaggiose per entrambe le parti. ...
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L’impresa agricola si trova oggi ad operare in un contesto caratterizzato da una globalizzazione dei mercati sempre più spinta, dalla necessità di produrre derrate alimentari di pregio e qualità, ottenute in modo sostenibile dal punto di vista ambientale, della salute e benessere degli animali e delle piante e della salute pubblica. Nel contempo l’impresa agricola è parte attiva nella gestione delle risorse naturali e l'agricoltura in senso lato costituisce uno strumento importante per preservare il paesaggio rurale, lottare contro la perdita di biodiversità, favorire l'adeguamento al cambiamento climatico mitigandone gli effetti. L’attività agricola è essenziale inoltre per garantire la dinamicità dei territori rurali e la loro vitalità economica nel lungo periodo. Da questi argomenti è partita la riflessione che porterà alla definizione dei nuovi strumenti attuativi della PAC dopo il 2013. Per operare in questo contesto l’impresa agricola necessita di adattamenti continui che richiedono impegni finanziari anche di medio e lungo termine. La bassa redditività del settore e la presenza, oltre ai rischi di mercato come tutte le altre imprese, anche di quelli climatici e fitosanitari, non garantiscono la sostenibilità economica degli investimenti nel tempo. Da queste considerazioni nasce la necessità di implementare la politica di gestione dei rischi, partendo dalla nostra esperienza nazionale e tenendo conto di ciò che stanno facendo gli altri Paesi. Lo studio di INEA rappresenta uno strumento necessario di focalizzazione della realtà sia dal punto di vista dell’analisi degli eventi climatici e della loro connessione con gli effetti sulla gestione delle imprese agricole, che dell’efficacia ed efficienza degli strumenti attualmente utilizzati per la gestione dei rischi. Dai risultati dello studio si possono ricavare importanti spunti per stimolare un confronto tra parte pubblica e stakeholder per adeguare le politiche di settore e consentire alle imprese agricole di cogliere al meglio le opportunità offerte dai cambiamenti in corso.
... While the crop insurance is notionally available, very few individuals purchase it. (Sinha, 2004 1 ) The reasons are many: …rst, it is primarily sold through government banks, which require agricultural borrowers to purchase the insurance. However, few farmers, and in particular very 1 A more thorough discussion of agricultural insurance in India may be obtained from Sinha, 2004. ...
... (Sinha, 2004 1 ) The reasons are many: …rst, it is primarily sold through government banks, which require agricultural borrowers to purchase the insurance. However, few farmers, and in particular very 1 A more thorough discussion of agricultural insurance in India may be obtained from Sinha, 2004. few poor farmers, are able to borrow from government banks. ...
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This paper presents the results of a series of randomized …eld experiments conducted in villages in rural Gujarat. Rainfall insurance, an innovative risk-management tool, was marketed to farmers and agricultural laborers. Wealth, education, risk-aversion, and the ability to understand probabilities positively predict take-up. We …nd no evidence that access to insurance or take-up immediately causes shifts in other production technology choices. Marketing experiments imply, …rst, that the price elasticity of demand for insurance is between 0.65 and 0.9, and second, that pure framing manipulations in marketing materials can in‡uence take-up as much as a 50% price discount.
... The Czech Ministry of Agriculture started agricul-tural insurance support programme named subsidy class 8D "Infection Insurance Support" in 2000, (Vávrová, 2000;Vávrová, 2005). In India, crop insurance has been subsidized by the central and state governments, mana-ged by the general insurance corporation (GIC) and delivered through rural financial institutions, usually tied to crop loans (Sinha, 2007). In April 2007, the Chinese government plans to provide 1 billion Yuan RMB for agricultural insurance subsidy in six provinces for five crops involved (corn, cotton, rice, soybean and wheat) (Kailiang and Wenjun, 2007). ...
... In this model, farmers will first be informed about agricultural insurance through informal training and after this training, pioneer or voluntary farmers will be encouraged to enter into agricultural insurance (crop and/or animal) contracts. Crop insurance policies are delivered, sold, serviced, and underwritten by private insurance companies in USA (Sinha, 2007). The executing agency will be Basak Insurance Company, which is to cooperate with the local Agriculture Bank. ...
Article
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The sector of agriculture needs protection for its critical role in responding to human needs as well as its vulnerability to various risks. This risk factor emanates from sector's high dependence to natural conditions and it is mainly this factor, which necessitates protection. Insurance is one way to cope with natural risks involved in agricultural activities. The main theme of this insurance is agricultural production in general, covering both crop farming and livestock activities. The importance of insurance in agriculture becomes clearer when one considers that in Turkey, 97% of all cultured land receives precipitation in the form of hail, that farmers' loss in areas with heavy hail may even reach such rates as 46% and that only a small amount of this loss can be compensated for under the existing law. The study is an attempt to examine the present state of social protection in the 9 villages of Siran District, Gumushane and to expose the patterns of crop farming and animal husbandry, risks involved in these activities, existing insurance practices, and level of information and tendencies of local farmers in regard to insurance. It was also the aim of the study to come up with viable and sustainable insurance models inthe context of the "Project for Income Generating Activities" carried out in the area jointly by the Turkish Development Office (TDO) and German Technische Zusammenarbeit (GTZ).
... Sidharth Sinha (2007), The study on Agriculture Insurance in India have identified that Crop Yield Insurance is unsuccessful due to low coverage and high claims to premium ratio. The major fault with the scheme is design and implementation. ...
... Sidharth Sinha (2007), The study on Agriculture Insurance in India have identified that Crop Yield Insurance is unsuccessful due to low coverage and high claims to premium ratio. The major fault with the scheme is design and implementation. ...
Experiment Findings
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Agricultural insurance plays a predominant role in times of uncertainties. Agriculture in India suffers from various uncontrollable factors such as drought, floods, monsoon and crop failure. It a prerequisite to cover farmers from natural calamities and set back proper credit mechanism is followed in future seasons. To safeguard the farmers against uncertainties government have introduced many agricultural schemes all over the country. The uncertainties due to natural calamities and monsoon failure are properly regulated through various insurance schemes and policies. There are various schemes announced by government namely Pradhan Mantri Fasal Bima Yojana (PMFBY), National Agriculture Insurance Scheme (NAIS), Restructured Weather Based Crop Insurance Scheme (RWBCIS), and Modified National Agriculture Insurance Scheme (MNAIS). Thus, of above four the flagship insurance scheme at present is PMFBY & RWBCIS. PMFBY & RWBCIS is one flagship program that is performing well in many states in India. Government has taken initiatives to make the program successful in many deprived states of India and throughout India. This paper has incorporated the flagship insurance scheme PMFBY & RWBCIS. This study analyzes the benefits obtained through insurance schemes provided by government and how farmers have benefitted through it. Government role on combating agricultural problem is taking major structure during risky period. This study had used the secondary data set to measure the effectiveness of the scheme. This paper is an attempt to study the benefits attained by the farmers.
... According to them, the objective of crop insurance scheme was to provide insurance coverage to the farmers in the case of any event or natural calamities, which aff ect the crops. Sinha (2007) explains the history and evolution of crop insurance in India. His paper explains that the comprehensive crop insurance started in India during [1985][1986][1987][1988][1989][1990][1991][1992][1993][1994][1995][1996][1997][1998][1999]. ...
Article
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Indian farming is risk based and every natural calamity or unforeseen weather change disrupts the farming practices altogether. It forces the farmers to depend more on public capital support to survive the natural calamity. Apart from government funding, insurance is a major source of capital support to the distressed farmers. Both public and private sector involve in crop insurance sector; however, the performance assessment report on crop insurance forces us to look at it critically. Th e data shows that it has become a source of extracting capital rather than supporting the capital formation of calamity/risk aff ected farmers. Companies are extracting money as premium payment and paying negligible percentage to the farmers. Th e basic principle of insurance is not being put into operation, which is further excluding the distressed farmers.
... It is argued that instead of opting for subsidy route, if the same resources are invested in improvement in irrigation and infrastructure to supply water in the long run, results would be far better (Sinha 2007). Social overhead plays an important role in the development of a country, many countries, including India, had implemented the importance of education, health, nutrition, housing, social security, and social welfare (Murthy and Mundial 1990). ...
... Such solution fails to fulfil the aim of social welfare in the long term(Bhattacharyya 2012). It is argued that instead of opting for subsidy route, if the same resources are invested in improvement in irrigation and infrastructure to supply water in the long run results would be far better(Sinha 2007). Social overhead play important role in the development of a country, many countries, including India had implemented the importance of education, health, nutrition, housing, social security and social welfare(Murthy and Mundial 1990). ...
Thesis
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Sun is the principle source of energy on the earth, which makes the biosphere act as a vast biomass generation facility. There biomass generation facility can also be considered as a large carbon sink. Proper management of these carbon sinks is vital for handling the issue of climate change. Biomass contribute about 12% of today's world primary energy supply, while in many developing countries, its contribution ranges to even 40-50%. India is an agrarian country and biomass is abundantly available resource of the nation. It is observed that processing of agricultural crops during harvesting produces a substantial amount of agricultural residues. However, a large portion of the residues is inefficiently burned, in the field itself, primarily to clear the field from straw and stubble after the harvest of the preceding crop. The issue of open field burning is a widespread phenomenon, especially in northern parts of India (Punjab and Haryana). Given the fact that 23% of rice straw residue produced in India, 48% in Thailand, and around 95% in the Philippines burns in open field, open field burning has become an environmental threat as well as health related issue. Punjab is considered as the food bowl of India and, it is surprising to note that burning of straw is widespread. These statistics suggest a strong need for an effective utilization of the agro residues so that the environmental impact of open field burning can be reduced. At the same time the country is also suffering with frequent power cuts and poor availability of electricity, especially in rural areas. Considering both these factors, an effective solution could be to make the use of the biomass for electricity generation. If agro residue is used for electricity generation, instead of burning it in an open field, it can address not only the issue of emission, but also provide electricity in the rural area. It is also observed that the Indian grid has high emission numbers and electricity generation is heavily dependent on low cost fuel, e.g. coal. For instance, the specific CO2 emission from the electricity grid reached an alarmingly high level, 0.81 kg of CO2/kWh in 2011. As a result of this the contribution of coal, oil and gas, taken together if high. For instance, 82% of entire electricity generation in 2013 resulted from these sources alone. It appears that the energy security of India may come under heavy stress and emission intensive electricity generation trend would be difficult to reverse in the near future. Under such circumstances there is a strong need to evolve a technology option that is not only environmentally neutral, but that actually absorbs emission from the environment and cut down the environment emission. Biomass is the only energy source which has capacity to absorb carbon in its structure. Emission issues can be handled effectively if, large availability of biomass in the country is made available for achieving dual goal of energy generation as well as carbon sequestration. In the present work the literature for the open field burning is reviewed first and the technology option of utilizing agro residue is studied in particular. It is inferred that the solution to the issue of open field burning and the shortage of electricity can be addressed by opting for Intermediate Pyrolysis (IP) process. Further, in order to test the IP process using local agro residues an exhaustive experimental program is laid out. Under this, trial runs on IP process are carried out to obtain process parameters. Further, a detailed chemical analysis is undertaken, in which different samples of feedstock, biooil and its blend and biochar is analyzed for different tests. The intermediate Pyrolysis process utilizes the straw from the field and produces biooil and biochar. The biooil can be used for energy generation while biochar can be used in the field as a fertiliser. To investigate and obtain pertinent data for use of biooil blend in the engine an engine trial is carried out in the laboratory. Similarly, to investigate the effect of the use of biochar in the field, a field trial for growing of crops, onion and capsicum, was carried out. The data and the process parameters obtained by conducting these trials are used for the further analysis. The intermediate Pyrolysis process produces biooil and this biooil can be used for power generation in the blend. Since carbon emission from the biooil is environmentally neutral, power generation from biooil qualifies under renewable energy. Additionally, the use of biochar is considered as a low cost carbon sequestration as biochar could remain in the soil for the years to come. These two emission-reduction advantages of the IP process (products of biooil & boichar) are on different time scales (few hours and several years respectively). Therefore, in order to correctly assess these, the concept of time value of the carbon emission approach is very important. In order to incorporate the effect of the time value of carbon emission a novel emission model is presented. This model can assess the time value of carbon emission from IP process and compare the IP process vice-a-vice other conventional processes. The novelty of the model is that it predicts the effect of emission for a given process in terms of a single value (known as emission discounting number). Literature suggests that biooil can be used for the power generation in the blend (up to 30%) with biodiesel or with the diesel. In the former case (blend with biodiesel) the emission from the blend will be environmentally neutral, but in the latter case (blend with diesel) the emission from the blend will only be partially environmentally neutral. In case if the emission from the blend is partially environmentally neutral, the energy produced from this blend can be considered as combination of gray and green energy. Referring to the literature, the provision of such mixed combination of energy is not in the present scope of biofuel policy of India. This calls for certain readjustment, correction and modifications in the existing policy and the way economics of such mixed mode of energy is accounted. Present study, therefore proposes an ISCB (Incentive scheme, Sustainability aspect, Carbon credit and Banking facility) model which account for a mixed mode of energy generation option. This model considers the benefits like embedded energy, carbon credit based pricing system, banking facility and other incentive offered by government for promotion of renewable energy. One of the products of IP process is biochar and literature suggests biochar can be used as a slow-release fertiliser in the field. The use of fertiliser in the field has several implications, it can be used as a tool to bring down the cost of farming and hence, it can lift the social as well as the economic conditions of farmer in particular and society in general. Besides this IP process can also reduce emission to a great extent. Combining all these effects, one can comment that the IP process has positive implications on all fronts of sustainability, i.e. social, economic as well as environment. In order to correctly estimate its implication a triple bottom line (TBL) analysis is carried out in the present study. Finally, based on the overall results, it is concluded that the IP process prevents open-field burning, and instead produces biooil and can thus generate surplus renewable energy, with very little duration of the engine performance. Further, the use of biochar as a fertiliser can increase the yield of the crop, around 140% and 12% for capsicum and onion respectively. The emission discounting model shows positive effects on emission, up to 10% decrease is estimated. Further, ISCB model can help smooth the implementation of IP process, while triple bottom line analysis shows improvement in performance across all the three pillars of sustainability. Keywords: Renewable energy; open field burning: intermediate pyrolysis process; biomass; carbon sequestration; policy; triple bottom line; sustainability; biochar; biooil
... Agricultural insurance, specifically insurance against crop loss, has been around for many years, even in developing countries like India. Pilot crop insurance programs implemented since 1972-73 led to the first major government crop insurance program in 1985-86, the Comprehensive Crop Insurance Scheme (CCIS) that was subsequently replaced by the improved National Agricultural Insurance Scheme (NAIS) in 1999-2000 (Nair, 2010a;Sinha, 2004). These programs used an ''area approach", whereby insurance payouts are made to all farmers in an area where average yields fall below the guaranteed yield (Nair, 2010a). ...
Article
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Droughts have historically had large impacts on agricultural production in rainfed agricultural systems. Scientists and policymakers have proposed various strategies for managing risks, with limited success. In this study we consider two such strategies, specifically drought tolerant rice and weather index insurance. While neither drought tolerant cultivars nor weather index insurance products are perfect solutions for adequately managing drought risk in and of themselves, there is scope to exploit the benefits of each and bundle them into a complementary risk management product, specifically through proper index calibration and an optimized insurance design. In this study, we explore preferences for such a complementary risk management product using discrete choice experiments in Odisha, India. We are able to estimate the added value that farmers perceive in the bundled product above and beyond the value associated with each of the independent products. We also show that valuations are very sensitive to the basis risk implied by the insurance product, with farmers less enthusiastic about risk management products that leave significant risks uninsured.
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