Abstract
In India, risks involved in agricultural production are inherently very high, which have increased appreciably due to climate change and globalisation. Both the government and the farmers take many ex-ante and ex-post measures to reduce risk and impart greater resilience to agriculture. However, in spite of the preventive measures in place, when there is crop failure, insurance is considered the most effective mechanism to compensate the farmers for their losses. Crop insurance is an ex-ante risk adaptive measure that transfers the production risk from the insured to the insurer. Realising the need of crop insurance for management of agricultural risk, Government of Odisha launched National Agricultural Insurance Scheme (NAIS) from the rabi season of 1999-2000 in all the thirty districts. NAIS is an area-based yield insurance scheme, providing coverage for yield losses due to natural calamities, pest attack and plant diseases and covers all food crops and major crops. This paper seeks to analyse the performance of NAIS in Kalahandi district of Odisha by using data from both secondary and primary sources. The principal objectives of the study are to identify the reasons for non-adoption of crop insurance by majority of farmers and explore the determinants of participation in the scheme. The study reveals that the performance of NAIS is not satisfactory due to its low coverage and undue delay in indemnity payment.
Highlights
The new economic policy of globalisation, liberalisation and privatisation pursued by India since 1991 to accelerate the pace of development has created some challenges to the agriculture sector
In order to understand the effectiveness of National Agricultural Insurance Scheme (NAIS) as a risk management tool at the ground level, a field survey was conducted in Kalahandi district in western Odisha
A comparison of socioeconomic characteristics of users and non-users of crop insurance reveals that the majority of the loanee and non-loanee NAIS users belong to general castes and SEBCs (86 per cent)
Summary
The new economic policy of globalisation, liberalisation and privatisation pursued by India since 1991 to accelerate the pace of development has created some challenges to the agriculture sector. Public investment in agriculture has declined due to financial constraint. This has caused deterioration of rural infrastructure, stagnation in agricultural research and development and neglect of extension services. Withdrawal of input subsidies has increased cost of cultivation making agriculture unremunerative. Owing to the exposure of domestic agriculture to international competition, crop prices have become more volatile and vulnerable to world commodity prices. On the top of it climate change has appeared as a major threat to Indian agriculture due to increase in occurrence of climate-induced natural disasters such as drought, flood and cyclone. Farmers are in great distress and are losing interest in agriculture owing to increase in cost of cultivation on the one hand and on the other hand, there is lot of uncertainty in agricultural production.
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