• Insurance for poor people

Insurance for poor people

India’s National Agricultural Insurance Scheme (NAIS) is vital for providing insurance cover to farmers, across regions, across seasons and across crops. This paper provides a comprehensive review of the NAIS and suggests changes to make it more effective.

Key recommendations include:

• crop insurance should be kept as a separate programme from other schemes to ensure income of farmers
• make the scheme compulsory for both poor farmers who do not have access to risk-mitigating devices nor have the capacity to withstand risk, and for farmers growing food-grains on the ground of national food self-sufficiency
• food crops should be given first priority in every region, and second and third priorities should depend on the region’s agriculture
• to prevent problems of moral hazard the policy sales closing should be set a about a month prior to planting and should fit the planting pattern in the specific regions
• to make NAIS financially viable actuarial rates should be charged, as the current premium rates have a large element of subsidy

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