Our economy is, pre-dominantly, an agrarian economy
which ensures food and nutrition to India’ billion people, raw materials for
its expanding industrial base and surpluses for exports, and more importantly
daily bread and butter to about seventy percent of the farming community for
the services they render to the society.
Despite, its being vital sector of the economy, it
is prone to high levels of risks which mainly emerge from the natural elements
which include highly uncertain events such as drought / famine, floods,
cyclone, inundation, hailstorm, frost, cold/heat waves etc. Besides, diseases
related to plants and animals like scab, anthrax etc., insects and pests, which
have adverse effect on the agricultural productivity.
The agriculture sector is also subject to
uncertainties in social, environment, technological and economic factors which
have casual effects on the effective demand and fluctuations in process of
agricultural inputs which in turn impact the quality of agri products and trade
potential.
Agriculture Insurance represents an effective risk
management tool to provide security to the farming sector against such
uncertainties. The government has taken some steps in this direction but nothing
much has been achieved so far.
BACKGROUND
AND EVOLUTION
The concept of Agriculture Insurance is not new in
our country and has been available in some or other form since independence it
self. The question of introduction of Agriculture Insurance in the form of crop
insurance scheme was taken up for examination soon after the Indian
independence in 1947 and a special study was commissioned in 1947-48 to examine
the modalities but the focus of this study too was limited to crop insurance
and cattle insurance.
In 1965, the Government introduced a Crop Insurance
Bill but different experiments on crop insurance on a limited, ad-hoc and
scattered scale started from 1972-73. Meanwhile, the general insurance business
was nationalized and, by an Act of Parliament, the General Insurance
Corporation Of India was set up which took over all these schemes. and some
systematic efforts started.
In the backdrop of the aforesaid experimental
schemes for crop insurance, a study was commissioned by General Insurance Corporation
and entrusted to eminent agricultural economist, Prof. V.M.Dandekar. Based on
recommendations of Prof. Dandekar, a Pilot Crop Insurance scheme was introduced
by GIC from 1979, which continued till 1984-85. The focus of this scheme was
crops only, which included Cereals, Millets, Oilseeds, cotton, Potato and Gram.
With effect from 1st April 1985, the
Government Of India introduced the Comprehensive Crop Insurance Scheme (CCIS)
for major crops, coinciding with the introduction of the Seventh- Five –Year
Plan, with active participation of State Governments though it was optional for
the state governments. The subject matter of the scheme was, again limited to
crops only which included food crops, pulses and oil seeds.
While, CCIS was still being implemented, attempts
were made to modify the existing CCIS from time to time as demanded by the
states. During 1997, a new scheme, the Experimental Crop Insurance Scheme
(ECIS) was introduced.
Thereafter, in view of the demands of States for
improving scope and contents of CCIS, a broad-based “National Agricultural
Insurance Scheme (NAIS)” was introduced in the country in 1999-2000. The scheme
was administered by the Ministry of Agriculture and initially implemented by
General Insurance Corporation of India on their behalf. This scheme besides
food crops and oilseeds, also covered annual commercial/horticultural crops.
The objective of NAIS is to provide insurance coverage and financial support to
the farmers in the event of failure of any of the notified crop as a result of
natural calamities, pests & diseases and stabilise farm incomes,
particularly in disaster years.
So much has been
done in respect of Agriculture Insurance but, the scope of all these schemes has been
limited to crop insurance only which remains only a segment of the area .
Another milestone in the field has been set by way
creation of Agriculture Insurance Company Of India Limited (AICL) which has
been formed by the Government of India consequent to the announcement by
the Union finance Minister in his
General Budget Speech of the year 2002-03. The AICL has taken over
implementation of National Agricultural Insurance Scheme (NAIS)
THE REFORMS AND
DEVELOPMENT ENVISAGED IN AGRICULTURE SECTOR
While discussing needs and scope of agricultural insurance,
in addition to the present day scenario, we will always have to keep in mind
the reforms and development envisaged in this sector. The new Agriculture
Policy of government explains them very elaborately.
The National Policy on Agriculture seeks to actualize
the vast untapped growth potential of Indian agriculture, strengthen rural
infrastructure to support faster agricultural development, promote value
addition, accelerate the growth of agro business, create employment in rural
areas, secure a fair standard of living for the farmers and agricultural
workers and their families, discourage migration to urban areas and face the
challenges arising out of economic liberalisation and globalisastion.
Sustainable
Agriculture
The policy will seek to promote technically sound,
economically viable, environmentally non-degrading, and socially acceptable use
of country’s natural resources – land, water and genetic endowment to promote
sustainable development of agriculture. Measures will be taken to contain biotic
pressures on land and to control indiscriminate diversion of agricultural land
for non-agricultural purposes. The unutilized wastelands will be put to use for
agriculture and afforestation. Particular attention will be given for
increasing cropping intensity through multiple cropping and inter-cropping.
Food and
Nutritional Security
Special efforts will be made to raise the
productivity and production of crops to meet the increasing demand for food
generated by unabated demographic pressures and raw materials for expanding
agro-based industries. Attention will be given to development of new crop
varieties, particularly of food crops, with higher nutritional value through
adoption of biotechnology particularly genetic modification, while addressing
bio-safety concerns.
A major thrust will be given to development of rain
fed and irrigated horticulture, floriculture, roots and tubers, plantation
crops, aromatic and medicinal plants, bee-keeping and sericulture, for
augmenting food supply, exports and generating employment in rural areas.
Animal husbandry and fisheries also generate wealth
and employment in agriculture sector.
Development of animal husbandry, poultry and dairying and aquaculture will
receive a high priority in the efforts for diversifying agriculture, increasing
animal protein availability in the food basket and for generating exportable
surpluses.
Research and
Technology
Application of frontier sciences like
bio-technology, remote sensing technologies, pre and post-harvest technologies,
energy saving technologies, technology for environmental protection through
national research system as well as proprietary research will be encouraged.
The endeavor will be to build a well organized, efficient and result-oriented
agriculture research and education system to introduce technological change in
Indian agriculture. Up gradation of agricultural education and its orientation
towards uniformity in education standards, women empowerment, user-orientation,
vocationalization and promotion of excellence will be the hallmark of the new
policy.
Inputs Management
Adequate and timely supply of quality inputs such as
seeds, fertilizers, plant protection chemicals bio-pesticides, agricultural
machinery and credit at reasonable rates to farmers will be the endeavor of the
Government.
Protection to plant varieties through a sui generis
legislation, will be granted to encourage research and breeding of new
varieties particularly in the private sector in line with India’s obligations
under Trade-related Intellectual Property Rights (TRIPS) Agreement. Integrated
pest management and use of biotic agents in order to minimize the
indiscriminate and injudicious use of chemical pesticides will be the cardinal
principle covering plant protection.
Incentives for
Agriculture
The government will endeavor to create a favourable
economic environment for increasing capital formation and farmer’s own
investments by removal of distortions in the incentive regime for agriculture,
improving the terms of trade with manufacturing sectors and bringing about
external and domestic market reforms backed by rationalization of domestic tax
structure by reviewing the taxes on food grains and other commercial crops. Investments in
Agriculture
The agriculture sector has been starved of capital.
A conducive climate will be created through a favourable price and trade regime
to promote farmers’ own investments as also investments by industries producing
inputs for agriculture and agro-based industries. Private sector investments in
agriculture will also be encouraged .
Rural electrification will be given high priority.
The quality and availability of electricity supply will be improved and the
demand of the agriculture sector will be met adequately in a reliable and cost
effective manner. The use of new and renewable source of energy for irrigation
and other agricultural purposes will also be encouraged.
Bridging the gap between irrigation potential
created and utilized, completion of all on-going projects, restoration and
modernization of irrigation infrastructure including drainage, evolving and
implementing an integrated plan of augmentation and management of national
water resources will receive special attention for augmenting the availability
and use of irrigation water.
Emphasis will be laid on development of marketing
infrastructure and techniques of preservation, storage and transportation. The
establishment of cold chains, provision of pre-cooling facilities to farmers as
a service and cold storage in the terminal markets and improving the retail
marketing arrangements in urban areas, will be given priority. Up gradation and
dissemination of market intelligence will receive particular attention.
Setting up of agro-processing units in the producing
areas to reduce wastage.
Agriculture
Insurance Company of India Limited
In the union budget for the year 2002-03, the Finance Minister announced the establishment
of an organisation to exclusively cater to agriculture insurance. Accordingly,
Agriculture Insurance Company Limited was formed by the Government and
incorporated on 22nd December 2002 for implementation of National
Agricultural Insurance Scheme (NAIS), which until March 31, 2003 was being
executed by the General Insurance Corporation of India.
The AICL has been promoted by General Insurance Corporation
of India (GIC), National Bank for Agriculture and Rural Development (NABARD),
National Insurance Company Limited, New India Assurance Company Limited,
Oriental Insurance Company Limited and United India Insurance Company Limited.
The AICL has since taken over the implementation of
the NAIS from GIC. The NAIS is optional to states and extends to all farmers,
loanees on compulsory basis and non-loanees on voluntary basis in the
implementing states. The scheme covers food crops and oils seeds and annual
commercial/horticultural crops.
Now on, AICL would be transacting all insurance
businesses directly or indirectly concerning agriculture and its allied
activities and, to start with, has
taken over the implementation of National Agricultural Insurance Scheme
(NAIS) which until 2003 was implemented by General Insurance Corporation of
India.
The mission statement says that the AICL has been
created to provide financial security to persons engaged in agriculture and
allied activities through insurance products and other support services.
With this, perhaps for the first time we get an
indication that the scope of agriculture insurance is going to spread beyond
simply crop insurance.
PRESENT STATUS OF
AGRICULTURE INSURANCE
Now, with this, the main responsibility to take care
of agriculture insurance lies with AICL which has completed just over an year
and has not yet to started working full steam. The initial efforts of AICL are
again focused on the crop insurance only and National Agriculture Insurance Scheme
has been taken over by it for implementation and, in fact, they have started
implementing the same.
In addition to earlier efforts by the Crop Insurance
Cell GIC, the state owned insurance companies have been catering to the needs
of farmers and agricultural community through their rural insurance schemes
which are as under –
1. Livestock cover ( cattle, sheep, goat, elephant,
bullocks etc)
2. Bird Covers ( poultry, ducks etc.)
3. Sub-animal covers ( sericulture, freshwater fish,
prawn etc.)
4. Human Cover ( like Janta Personal Accident, Gramin
Personal Accident Universal Health etc.)
5. Plants Covers ( for cash crops )
6. Other rural covers ( well, bio-gas plants, pump
sets, hut, bullock cart etc.)
Now, with liberalisation of the industry even the
private Insurance Companies too have started taking some steps in this
direction but they are still sounding hesitant. One of the private insurance
companies ICICI-Lombard has devised a weather- index based insurance product
with support from ICICI Bank and the World Bank. It covers the likelihood for
diminished agricultural output/yield resulting from a shortfall of any of the
pre-defined weather parameter for a specific geographical location and time
period, subject to a maximum of the sum insured. But again seeks to address the
traditional crop insurance schemes. Some of other insurance companies have also
devised some products but they are mainly personal accident covers like
IIFCO-TOKYO has devised a cover, which goes with number of fertilizer bags,
purchased.
RISK STRUCTURE OF
AGRICULTURE SECTOR
As any other sector, the agriculture sector is also
exposed to variety of risks, which can be classified, broadly, as under:
Meteorological
Risks
This includes natural calamities and climatic risks,
such as flood, drought, inundation, cyclone, hailstorm, Plants diseases,
insects and other pests.
Social Risks
This includes risks related to human elements, such
as fire, burglary, malicious damage, theft, burglary embezzlement, civil
commotion and other moral hazards.
Economic Risks
The economic risks are little lesser in case of
agriculture sector but nevertheless they are there. These risks include adverse
price fluctuations and depreciation in the value of investment in agriculture
Personal Risks
All activities involve human element and so is the
case with agriculture and therefore, all risks pertaining human being are
available in this sector too. These risks are accident or disease suffered by
farmers or his family member, death, disablement etc.
Other Risks
This includes all left over risks like breakdown of
agricultural implements including tractors, trailer, Legal Liability, Storage
and transportation risk, Financial Risk etc.
RISK MANAGEMENT
All these agricultural activities – existing or
proposed in the National Agriculture Policy, have quite a vide range and is
subject to variety of risks and uncertainties. All these risks fall under one
of these two categories, viz. natural calamities and risks arising out
technological advancement and development. There are several methods of handling
these risks.
There are certain risks which are inherent to the
activity and the only way to handle those kind of risks is to avoid undertaking
that activity itself which is, indeed, very drastic way of handling the risk
and therefore we have no choice but to accept those risks.
There are certain kind of risks in case of which it
is possible to reduce the frequency or severity of the losses. By way of
contingency planning it is possible to minimise the extent of losses caused by
the occurrence of a loss producing event. Beside making plans to minimise
physical damage by ensuring that people are trained to deal promptly with
emergencies and to carry out salvaging operations.
Risk can also
be handled by retaining the same i.e. meet the losses out of one’s own
resources but that is possible only in case of relatively smaller losses. The
bigger losses can be met by setting aside some contingency funds but again
there is limit to that too. It can be done individually as well as by combining
a large number of independent farmers.
Probably, the best way to handle a risk is by way of
insuring the same. Again there is a limitation to this because all the risks
can not be underwritten by the insurers and even if the insurance is available,
it will be available at prohibitive cost. So some of the risks will have to be
born by the farmers where as some risks can be transferred to the insurance
company by purchasing suitable insurance policy.
In order, to devise suitable products and to cater
the specific needs of the agricultural community, the government has promoted a separate
Insurance Company, in addition to already existing state owned four insurance
companies, to cater the needs of Agriculture Sector.
WHY AGRICULTURE
INSURANCE SHOULD GO BEYOND SIMPLY CROP INSURANCE
·
Limited purpose will be served
Agriculture covers wide varieties
of activities and crops is one of them. If we confine our focus to one this
segment alone then only limited purpose will be served. The idea is to develop
the agriculture sector as a whole and not any particular segment. The reforms
and development in this sector will thro’ open many new areas, opportunities and threats which will
definitely require matching agri-insurance products.
·
Crop Insurance alone will not be
a viable proposition
o
Premium subsidy burden; and
The government has been
subsidising the crop insurance premium charged to small and marginal farmers to
the extent of 50 percent in order to ensure that the resource poor farmers are
able to afford insurance. For six seasons from Rabi 1999-2000 to Kharif 2002
total amount spent on subsidy is Rs. 15754.91 lacs which is a huge amount by
any standard.
The intention is definitely noble
but we have to understand that no activity can sustain for indefinite period of
doles and subsidies. Eventually, the subsidy regime has to go make the farmers
self-sufficient.
o
Claim Ratio
The claim amount for crop
insurance under National Agriculture Insurance Scheme for the same six seasons from Rabi 1999-2000 to
Kharif 2002 is whopping Rs.358479.49 lacs as against the premium of Rs.85893.14
lacs in this respect. With such a heavy claim experience, we can not call it an
insurance activity.
One of the main reason for such a heavy claim experience
is limited spread and coverage under the
scheme. Despite so much efforts only
85.65 lacs farmers could be covered under the scheme in Kharif 2001 and
20.83 lacs farmers in Rabi 2001-2002.
o
High Administrative Cost
High administrative cost has made
the scheme unsustainable in the long
term.
SCOPE AND POTENTIAL
- BEYOND CROP INSURANCE
There is a vast scope beyond crop insurance and that
needs to explored and exploited. Now, we will have a look at the areas hitherto
either left unexplored or remained under exploited.
Cattle and
Livestock
Live
stock sector is a prominent sector among agriculture and allied activites in
India. In 1997-98, live stock alone contributed to 25 percent of the total
value of agriculture GDP.
By and large the dairy farming is the most popular
subsidiary occupation amongst small and marginal farmers and the most common
occupation for landless laborers, who
consider it as the only means for earning their livelihood and for their
socio-economic upliftment. Cooperative dairies on the Amul pattern have been
successfully established and new dairies like those established by Rajasthan
Cooperative Milk Federation and the Punjab Dairy Development Corporation have
come into existence. Thereby the farmers are getting better prices for their
products now.
With massive surge in favour of dairy industry, the
need for Cattle insurance has assumed very large proportions. Even if one
considers 20% of the bovine population of 289 millions ( as per 1992 livestock
census-205 million cattle and 84 million buffaloes), i.e. about 58 million is
insurable. As per one estimate note more than 10% of these cattle and buffaloes
are covered under insurance. Hence there is tremendous scope for further
expansion of cattle insurance in India.
The position of live stock insurance is getting from
bad to worse, which is depicted, in the following table-
Year
|
No. of animals insured
(millions)
|
Premium Collected
(Rs. in crores)
|
1997-98
|
22.83
|
137.06
|
1998-99
|
23.50
|
145.47
|
1999-2000
|
17.10
|
131.19
|
2000-01
|
15.35
|
144.70
|
2001-02
|
16.49
|
135.38
|
Source: Ministry of Agriculture
Now when we compare the number of total livestock
with the number of livestock covered under the insurance schemes, it becomes
quite evident that substantial number remains uncovered.
Poultry
Poultry means domesticated species of birds, reared
for eggs, meat, and feathers and includes chicken, ducks, gees, turkey, quails,
guinea fowls, etc. The poultry farming has found a special favour with the
rural poor because of its ability to provide supplementary income in the
shortest possible time and without heavy demands on capital resources.
The poultry production in the country has made
significant progress over the years due to research and development thrust of
the government and organised private sector. It has transformed from a backyard
activity into a modern, scientific and vibrant industry driven by technology.
India is the second largest egg producer and one of the top ten broiler
producers in the world. Our poultry industry contributes approximately
Rs.22,000 crores to the GNP and supports the livelihood of 2.0 million people.
The egg production has increased to the level of 28 billion during 1996-97 as
compared to 10 billion during 1980-81.
Hatcheries established in India produced about 208
million improved layer chicks and broiler chicks in 1996-97, consisting of
about 100 million broilers chicks and about 108 million hybrid layer chicks.
With the increasing popularity of commercial poultry
farming at all levels and in al parts of the country, the demand for day-old
chicks is gaining increasing momentum. Consequently, more and more hatcheries
are being set up. Hatchery includes farm house, hatchery building, stores,
staff quarters, etc. Thus, in turn, it is increasing the scope of poultry
insurance.
Dairy Development
Dairy
sector ranks first among the individual agriculture commodities in terms of
total value of production. The value of milk output and its products is 70,000
crores rupees and that of dairy industry as a whole is 1,05,000 rupees.
The significant role played by cooperatives in
stimulating dairying has proved to be an important source of progress of the
rural economy. Operation Flood Programme, which was world’s largest dairy
development programme, has grown beyond expectations and has since completed it
III phase in 1996.
By March 1997 about 73,930 dairy cooperative
societies were organised in 170 milk sheds involving over 9.3 million farmer
members which by now must have increased substantially. As per world bank
experts opinion, for an initial investment of Rs.200 crores in Operation Flood
II, the net return/year to the rural economy had been rupees 24,000 crores.
The milk production is showing steady increase from
the level of 685 lacs tonnes in 1996-97 to 846 lac tonnes in the year 2000.
With this India stands first in world milk production. 12 percent of total milk
produced in the country is processed in 567 dairy factories for conversion into
milk and milk products valued at Rs.6934 crores annually.
Productivity performance of dairy industry across
the country has registered an annual growth of 17.1 percent for the country as
a whole with highest market share of 23.5 percent for Maharashtra followed by Gujrat with 17.2%.
With this scenario, the scope of insurance directly
in this sector and allied sector is very promising and which we cannot afford
to ignore.
Horticulture/Plantation
Agro
climatic suitability coupled with abundance of natural resource endowment,
equips India with a unique comparative edge in the cultivation of a variety of
horticultural crops. In realization of their potential for providing
nutritional security, employment generation capacity and foreign exchange
earnings, horticulture has been accorded the top priority in the last two five
year plans.
Horticulture
toady contributes for over 24.5 % of the countries agricultural GDP, over 10%
of the total agricultural export earnings and supports more than 19 percent of
the labour force. India contributes 10-13 percent of the total world production
of fruits and vegetables occupying second place in the world. Fruits are grown
in an area of over 3.73 million ha in India, contributing to an annual
production of 46.04 million tonnes in 2001.
Vegetable-
based industries are emerging as powerful engines for economic growth in rural
India. India is the second largest producer of vegetables in the world,
accounting for about 10 percent of the world’s production. In 2002, India
produced 78.2 million tons from 5.73 million ha of land. India is a major
exporter of vegetables, exporting approximately $246 million of vegetables
annually.
In
addition to above, the contribution of plantation output to GDP is also on
increase and provides for a good scope for diversifying the base of agriculture
insurance in this sector. This includes Rubber plantation, Tea Plantation,
Apple Plantation, and other fruits plantation.
Medicinal and
Aromatic Plants
Medicinal
and Aromatic Plants, natural source of raw material for industrial products
offer a great scope to achieve net higher returns. With ever increasing demand
of natural products in food pharmaceutical, perfumery, flavour and cosmetic
industries cultivation of MAPs has now become popular and economically viable
proposition.
Farm
Mechanisation
In
order to enhance the efficiency, farm mechanisation is on increase. In addition
to tractors, variety of agriculture implements are being used by the farmers
which includes D G Sets, Thrashers, Tube well,
Pumps, Chaff Cutters, Trailers, Hole Digger, Front Loader, Front Dozer,
V-Ripper, Back-Hoe, Mixavator for composting, Sugarcane Harvester, Sugarcane Leaf
Stripper cum De-Topper, Baler and Shredder for Bio-Mass Co-Generation.
These
machines are subject to accidental break down and need insurance cover.
Biogas Plants
The National Project on Bio-gas Development (NPBD)
of the Ministry of Non-Conventional Energy Sources was started in 1981-82 for
promotion of family type biogas plants, the current potential of which is
estimated at 12 million, to provide clean alternate fuel to the rural masses
and enriched organic manures for agriculture.
BARRIERS
1. New Concept
The agriculture insurance is a
relatively new concept in India and is still in developing phase. Though some
efforts were made by the government in this direction but the pace and intent
was found to be lacking.
2. Limitation of
Subsidy.
In view of poor financial status
of the majority of the farming community, the immediate efforts of the
government have been to subsidise the insurance premiums charged to
small/marginal farmers to the extent of 50 percent. But, there is always limit
to subsidy and to cover such a vast area thro’ such a heavy subsidy will
consume huge funds out of funds allocated to agriculture sector.
3. Paying capacity
of farmers
Majority of farmers are small and
marginal with very poor paying capacity. Together, ‘small and marginal’ farmers
constitute 78 percent of the Indian farming population, owning only 32 percent
of area operated. This resource poor segment being impoverished, have recourse
mainly to informal sources of finance which are very meager and not even
sufficient to ensure food for self and family. In such a state of affair,
sparing money for paying insurance premium is something impossible.
4. Lack of education
Majority of farmers belong to
villages which do not have adequate education facilities and therefore,
remained illiterate. Lack of education deprives them from understanding
importance and benefits of agri-insurance. They do not understand as to how
risk of few is spread over many.
5. Lack of efficient
channels of distribution
Presently, we have two channels
of distribution, Agency force and
Brokership System. The later one is recent phenomena and has to develop as yet
particularly in view of agriculture insurance it needs to go a long way because
their roots are mainly in urban area.
Though the agency force has some
base in rural areas but their activities could not penetrate very far as the
individual premium amount is very small. Their area of operation was limited
only to Banks from where they could get chunk premium.
6. Public Sector
Monopoly
Insurance sector, as a whole, has
been public sector monopoly since 1973. Only government owned four subsidiaries
of General Insurance Corporation were authorised to transact insurance
business. This restriction has definitely contributed to stunted growth of
insurance sector in general and agri-insurance in particular.
7. Low incentives
Even the best of schemes will
never take off if the implementation force is not offered good incentive and so
was the case with agriculture insurance. The incentive offered to the agents by
way of commission was only 5% whereas the cost involved by way of travelling to
far flung areas and others was almost equal to, if not more, the incentive
because agri-insurance business is scattered far and wide in villages and the
individual premium was very less.
STRATEGIES TO
MOVE AGRICULTURE INSURANCE BEYOND CROP SEGMENT
Product
Development
The PSUs already have quite a vide range of products
but as the scenario is changing fast in view of globalisation of agriculture
sector too, new and tailor made products will be required by the sector. Even
the features of old products will need to be reviewed and enriched.
Pricing
As we have seen the target group being small and
marginal farmers their premium paying capacity is very limited. At present, the
premium rates range from 1.5 percent to 3.5 percent for food crops and oil
seeds. Keeping in view the paying capacity rates are stiff. The only way it can
be helped is by bringing more and more people under the fold of insurance –
more the spread less the premium.
Effective
Channels
We need to develop and sustain effective and
efficient channels of distribution for agri-insurance products. For instance,
already existing large branch network of commercial banks, cooperative
institutions and postal network. In
fact, initiatives in this direction have already started like some of the PSUs
have tied up with Nationalised Banks for distribution of their products. Even
tie-up with postal network has been finalised by Oriental Insurance Company
Limited, one of the PSUs.
In addition to above, we can explore possibilities
of developing dedicated channels such as Rural Agents at block levels to reach
the Agri-insurance facility to the door steps of the farmers, particularly
those in resource poor segments. The system of brokers, a newly introduced
channel, can be utilised for this purpose.
Promotional
Strategies
For creating awareness and educating people in this
direction suitable publicity campaigns should be organised, if need be, with
help of Central and State governments, Central agencies like DAVP, Doordarshan,
and state extension agencies can be utilised for carrying the message of
agriculture insurance and its importance to villages. The insurance can be
popularised as one of the important input like fertilizer.
Simplification of
Procedures
The existing procedures for procuring insurance and
claim processing are very cumbersome and time consuming. Due attention should
be accorded towards simplification and systematization of the entire process of
agri-insurance business in such as way that financial security can be
effectively packaged and delivered to all segments of the farming community.
Holistic
Approach.
In view of globalisation of the agriculture sector
and the new Agriculture Policy, it has become more than necessary to cater to
the insurance requirements of agriculture and allied sectors in a holistic
manner.
This will include addressing specific requirements
pertaining not only to crop insurance, but also would extend in respect of
horticulture, plantation, cattle and live stock, poultry, sericulture,
aquaculture (shrimps and prawns), fresh-water fish, apiculture, sericulture,
agricultural implements etc.
Comprehensive
package
In order to make it convenient, a comprehensive
package of all relevant insurance policies for farmers should be devised and
made available which includes insurance for the assets, agri-inputs, tractors,
other agriculture implements, dwelling houses, personal accidents, health etc.
Confidence
Building
The focus of all these activities should be to build
confidence in agricultural community which will secure sustainable production
in the sector ensuring food and livelihood security for supporting enhancement
of competitiveness.
CONCLUSION
The agricultural rural markets are still virgin
territories to a great extent and offer exciting opportunities for insurance
companies. The surest path to success is to judge and measure the requirements
of the people correctly and offer such schemes that they would understand and
able to afford. There is also an urgent need to enter into tie-ups or
understandings with government agencies to ensure the success of the schemes.
The need of the hour is to have innovative policies that have explicit benefits
for the people to observe, understand and measure. However, all of these have
to be supported by appropriate policy measures at the ground level.
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