Crop Insurance Need for a New Approach

A K Agarwal The area form of crop insurance is far from a perfect scheme for providing coverage to farmers against various risks agriculture is exposed to. But looking to the cost of administering schemes based on individual approach, and the time taken by even developed countries in evolving a suitable pattern of crop insurance for their farmers, the introduction of area form of crop insurance appears to be the only solution at the moment TILE question of starting a crop insurance scheme has been under active consideration of the Government of India since 1965, when a Crop Insurance Bill and a model scheme were formulated. After receiving the views of state governments, it was decided to get the economic, administrative and actuarial implications of the scheme examined by an expert committee. This committee held the view that crop insurance would not be fea- fele in the near future as it would equire the diversion of scarce financial resources from more promising measures which raise agricultural productivity and at the same time reduce yield variability. But here we must appreciate that a certain range of fluctuation in crop output will remain even after the best fanning techniques are adopted. Crop insurance will compensate whenever loss is more than what a fanner can reasonably be expected to bear. Crop insurance is certainly not going to eliminate causes of yield variability and whenever in any area losses from a particular hazard like drought or flood are frequent the proper remedy lies in measures other than crop insurance.