India’s crop insurance program is the world’s largest with 25 million farmers insured. However, issues in design, particularly related to delays in claims settlement have lead to 95 million farmer households not being covered, despite significant government subsidy. To address this and other problems, the government of India is piloting a modified national agriculture insurance scheme, a market based scheme with involvement from the private sector. Compared with the existing scheme, the new program has a design that can offer more timely, calm settlement, less distortion in the allocation of government subsidies and cross subsides between farmers groups and reduced basis risk. Implementation and technical challenges lie ahead which can addressed but will require a comprehensive strategy, innovative solutions, and timely roll out.
The government of India stared offering a widespread crop insurance program in 1985 with the Comprehensive Crop Insurance Scheme. The CCIS has been replaced by the National Agriculture insurance Scheme. The NAIS is to considered to be an improvement over the CCIS, but it has simply replaced one flawed scheme with another slightly less flawed one. Government crop insurance has proved to be a failure worldwide, but in India farmers face floods, drought, peats, disease and other natural disaster. The weather is the greatest adversary, something that can never be controlled by man. yet, farming has been in existing since. Farming has a long way since then nevertheless; Farmer are still at the mercy of heavens. Crop insurance is a risk management tool that farmers can use today’s agriculture world.
Farmers in India have been subjected to publicly administered insurance schemes since 1972. Every scheme has been flawed, yet the government of India is still attempting to strengthen agriculture protecting its farmers from the weather conditions.
In both the developing and develop countries governments crops insurance schemes have run at a huge losses while not delivering an effective product. The inadequacy of such schemes is a well- established facts. On the other hand private insurance does exist in situations where it is feasible and not subsidized insurance is offered. The farmers stand to benefit even more from private insurance when there are several competitors.