The National Agricultural Insurance Scheme (NAIS) was launched by the Government of India in 1999 under the Ministry of Agriculture. The primary aim of the scheme was to provide financial support to farmers in case of crop losses due to natural calamities, pests, and diseases. This initiative was designed to help stabilize farm incomes, safeguard the livelihoods of farmers, and reduce the financial burden caused by crop failures.
The scheme was later replaced by the Pradhan Mantri Fasal Bima Yojana (PMFBY) in 2016, but NAIS played an important role in improving insurance coverage and helping farmers in the earlier years.
Objectives of NAIS
- Risk Coverage: To provide crop insurance coverage to farmers to protect against the risk of crop failure due to natural disasters like droughts, floods, and pest attacks.
- Income Support: To provide financial support to farmers whose crops were damaged, helping them to recover and maintain their livelihoods.
- Inclusive Coverage: To ensure that a wide range of farmers, including small and marginal farmers, benefited from the insurance scheme.
- Stabilize Farm Income: To reduce the financial distress that farmers face during adverse climatic conditions or unforeseen events, stabilizing their income over time.
- Encourage Crop Production: By protecting farmers from losses, the scheme aimed to encourage crop production and reduce the risk of farmers abandoning agriculture due to crop loss.
Features of NAIS
- Coverage of All Crops: NAIS provided coverage for a wide variety of crops, including food crops (like rice, wheat, pulses, etc.), oilseeds (like groundnut, soybeans, etc.), and horticultural crops. It aimed to provide a comprehensive solution to crop loss due to various factors.
- Risk Coverage: The scheme covered risks like:
- Natural calamities (droughts, floods, cyclones, etc.)
- Pests and diseases affecting crops
- Losses due to unforeseen weather conditions or other disasters.
- Area-Based Approach: The insurance was offered on an area approach, which means that a village or a block was considered as an assessment unit. If the crop loss in a particular area reached a certain threshold, the entire area was compensated, rather than compensating individual farmers.
- Sum Insured: The sum insured was determined based on the scale of finance provided by the banks or the state’s financial institutions for a particular crop. This amount typically reflected the input costs and the potential output of the crop.
- Premium Subsidy: Farmers were required to pay a subsidized premium under NAIS. The government provided subsidies to reduce the premium burden, especially for small and marginal farmers.
- Premium Rate: The premium rate was relatively affordable for farmers. It ranged from 1.5% to 2.5% of the sum insured, depending on the crop, with the government subsidizing a significant portion of the premium.
- Assessment of Losses: Crop losses were assessed based on the yield data collected from the affected areas. The loss percentage was calculated by comparing the actual yield with the normal yield (average yield over a specified period).
- Claims Settlement: Once the crop loss was assessed, the compensation was provided to the affected farmers. The claims were usually settled within a reasonable time frame after the assessment.
Eligibility for NAIS
- Farmers Growing Eligible Crops: The farmers had to be cultivating crops that were covered under the scheme. Both food crops and non-food crops were eligible, provided they were grown in insured areas.
- Small and Marginal Farmers: NAIS had a special focus on small and marginal farmers, with a large proportion of them benefiting from the subsidized premiums and financial protection.
- Farmers with Credit Linkage: Typically, farmers who had a credit linkage with financial institutions were eligible for NAIS. However, the scheme also allowed non-loanee farmers (those not having credit facilities) to apply for coverage.
- Geographical Coverage: The scheme was available across various states and union territories, with certain regions identified for implementation based on the climatic conditions and crop patterns.
Transition to Pradhan Mantri Fasal Bima Yojana (PMFBY)
In 2016, the National Agricultural Insurance Scheme was replaced by the Pradhan Mantri Fasal Bima Yojana (PMFBY), which aimed to address some of the shortcomings of NAIS. PMFBY introduced several reforms:
- Coverage for All Stages: PMFBY extended coverage to the entire crop cycle, including pre-sowing, during the growing period, and post-harvest stages.
- Reduced Premium Rates: The premium rates under PMFBY were further reduced, and the government increased its contribution to make the scheme more affordable for farmers.
- Technology-Driven Process: PMFBY made use of modern technologies such as remote sensing and weather-based insurance models to assess crop damage, improving the accuracy and timeliness of claims.
- More Inclusive: PMFBY aimed to be more inclusive by covering more crops and extending insurance to farmers who were previously excluded
FAQs
Which crops are covered under NAIS?
- Food crops: Wheat, rice, maize, pulses, and other cereals.
- Cash crops: Cotton, sugarcane, and oilseeds.
- Horticultural crops: Fruits, vegetables, and other horticultural produce.
- Commercial crops: Such as tea, coffee, and rubber.
How does NAIS work?
- Natural calamities: Drought, floods, cyclones, etc.
- Pests and diseases: Affecting the growth or yield of crops.
- Yield loss: If the actual yield falls below the threshold level as defined by the scheme.
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