Crop Insurance

Crop insurance is provided in order to protect farmers against crop failure due to – natural calamities, pests and diseases, weather conditions.

  • National Crop Insurance Programme
  • Special Rehabilitation Package for Distressed Farmers
  • Commission for Agricultural Costs and Prices
  • Determinants of MSP

National Crop Insurance Programme

Government of India had introduced the National Crop Insurance Programme (NCIP) with component schemes of –

  • Modified National Agricultural Scheme (MNAIS),
  • Weather Based Crop Insurance Scheme (WBCIS) and
  • Coconut Palm Insurance Scheme (CPIS).

In addition, National Agricultural Insurance Scheme (NAIS) which was to be withdrawn after implementation of NCIP from rabi 2013-14 has been extended further up to 2015-16.

The existing crop insurance schemes have recently been reviewed in consultation with various stakeholders including states/ UTs. As a result of the review, a new scheme Pradhan Mantri Fasal Bima Yojana (PMFBY) has been approved for implementation from kharif 2016 along with pilot Unified Package Insurance Scheme (UPIS) and restructured Weather Based Crop Insurance Scheme (WBCIS).

Under the PMFBY –

  • a uniform maximum premium of only 2 per cent will be paid by farmers for all kharif crops and 1.5 per cent for all rabi crops;
  • in case of annual commercial and horticultural crops, the maximum premium to be paid by farmers will be only 5 per cent;
  • the premium rates to be paid by farmers are very low; and
  • balance premium will be paid by the Government to provide full insured amount to the farmers against crop loss on account of natural calamities.

Special Rehabilitation Package for Distressed Farmers

  • (i) A Special Rehabilitation Package for 31 suicide prone districts in the four states, namely, Andhra Pradesh, Maharashtra, Karnataka and Kerala was implemented. Against the approved outlay of 16978.78 crore, 19,998.70 crore was sanctioned/released under the package to these states. The package has stabilized the conditions of the farmers in the identified districts.
  • (ii) As part of Special Rehabilitation Package meant for suicide districts, two packages were approved by the Government of India for Kerala based on the various programmes/interventions suggested by the M.S. Swaminathan Research Foundation in 2008:
    • (i) development of Kuanad Wetland Ecosystem with financial outlay of 1,840.75 crore and
    • (ii) mitigation of Agrarian Distress in Idukki district with financial outlay of 764.65 crore.
    • The Government of Kerala has been advised to implement sanctioned projects under the ongoing schemes and also to continue the activities for improving the conditions of farmers by taking various initiatives under Rashtriya Krishi Vikas Yojana and other schemes/programmes in order to sustain the gains achieved under these packages.

Commission for Agricultural Costs and Prices

CACP has been set up

  • to evolve a balanced and integrated price structure;
  • to advise (mandated) on the price policy (MSP) of 23 crops.

These crops include

  • seven cereal crops (paddy, wheat, jowar, bajra, maize, ragi and barley),
  • five pulse crops (gram, tur, moong, urad and lentil),
  • seven oilseeds (groundnut, sunflower seed, soyabean, rapeseed—mustard, safflower, niger seed and sesamum),
  • copra (dried coconut),
  • coon,
  • raw jute,
  • sugarcane.

While recommending MSPs/FRP, CACP is called upon to ensure that the production patterns are broadly in line with the overall needs (demand) of the economy.

CACP submits its recommendations to the government in the form of price policy reports every year, separately for five groups of commodities namely kharif crops, rabi crops, sugarcane, raw jute and copra.

Before preparing these five pricing policy reports, the Commission seeks views of various state governments, concerned national organizations and ministries.

Determinants of MSP

While recommending price policy of various commodities under its mandate, the Commission keeps in mind

  • demand and supply,
  • cost of production,
  • price trends in the market, both domestic and international,
  • inter crop price parity,
  • terms of trade between agricultural and non-agricultural sectors,
  • likely implications of MSP on consumers of that product,
  • ensuring optimal utilization of natural resources like land and water.

It may be noted that cost of production is an important factor that goes as an input in determination of MSP but it is not the only factor. Thus, recommending MSPs of various crops is not a ‘cost plus’ pricing exercise, though cost is an important determinant.


Bibliography : India Year Book ( PUBLICATIONS DIVISION – GOI )



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