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Overcoming Challenges to Crop Insurance in Indian Agriculture
Kurukshetra | February 2017
Overcoming Challenges to Crop Insurance in Indian Agriculture Keynote Address by Chairman, NABARD for National Seminar on “De-risking Indian Agriculture: Crop Insurance Way” 10 February 2017, University School of Management, Kurukshetra University
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Prelude: General, Thematic, Conceptual Observations
 
It is my pleasure to be invited and to be a part of the Inaugural Session of the seminar on a topical theme of “De-risking Indian Agriculture: Crop Insurance Way”, being organized by the University School of Management at Kurukshetra University. 
It would be pleasant if deliberations in the seminar by researchers, scholars and experts could suggest mechanisms to attain a sustained state of risk-free agriculture, in case that is possible, since “de-risking” – implying 100% risk-free agriculture – appears to be a challenge. The theme of seminar proposes that Crop Insurance could be the way, which makes crop insurance itself a challenging proposition by its proposed potentiality to “de-risk” agriculture.
It raises a pertinent question: whether we can only manage or cope with the entire gamut of risks in agriculture, or can we make it completely “de-risked”? A “de-risked” agriculture (so-to-say) would imply farmers perceiving no-risk or need not take any risk. The concept of “de-risked” agriculture (absence of risks) could alternately imply a state of complete “uncertainty” in agriculture.  
Practically, some risk(s) may always be present despite or because of our limited capacity to measure or compute risks statistically as a probability. Risks in agriculture could be minimized though complete “de-risking” of agriculture may not be possible with the available technologies, knowledge and cognitive powers.
Distinguished participants, I would like to keep my discourse centered on suggestible coping strategies underlying Crop Insurance (CI) mechanism to mitigate, reduce or minimize risks in agriculture through this schematic instrument or “means”. It’s only when this “means” becomes the end for all the farmers that we can think of achieving “de-risked” state of agriculture. Crop Insurance is essentially a compensatory mechanism whose complete success principally would depend on both ex-ante actions of the prospective beneficiaries (farmers) in adopting CI mechanism as also ex-post actions of the agencies concerned (banks, insurance agencies, government line departments) in releasing claims. To me, the theme of seminar appears to envisaging an ideal situation wherein 100% farmers subscribe to Crop Insurance, 100% affected farmers submit claims (validly) and 100% claims get released (deservedly). The aim (implicit or avowed) of realization of something proposed as sort of ideal by seminar’s theme, makes the means of Crop Insurance a challenging goal in itself.
I tend to see critical need for daunting spirit and deep commitment by all stakeholders to make Crop Insurance a successful instrument for risk mitigation/minimization. The extent of commitment to action may determine/justify goal-setting: either becoming completely risk-free agriculture or aiming for risk minimization.
It may be presumed that “de-risking” deserves deep commitment –to the extent of 100% or complete dedication to achieving the goal of 100% coverage of farmers on sustained/continued basis even as risks in Indian agriculture are multifarious. 
 
Characteristic Features of Indian Agriculture and Farmers’ Community
 
We have reached a state wherein as per the NSSO’s Situation Assessment Survey (SAS) report of 2003, at least 40% of our farmers making entry into the New Millennium expressed wish to make an exit from agriculture. Could an entry by innovative “start-ups” in agriculture (suppose) be an answer to the problem of exit of farmers from traditionally carried agriculture? Emergence of new class of farmers may not be an answer to the decay of the existing class/community of farmers or a part of it even as the principle of competitive “natural selection” applied to agricultural economy in the form of “economic selection” may not a socially viable option. The ongoing research in evolutionary economics tells that society/community and culture is as important as economy. 
Indian agriculture is not just hereditary (at micro level) but ancestral also (at macro, historical level). It’s a culture –social culture that has traditions, values, practices, customs, and a way of life. By this approach (of expecting farmers’ “exit”), risks in Indian agriculture get enhanced, particularly after integration of agriculture with multifarious markets (output and input markets) though at rudimentary/under-developed level. The changing situation, from low risk to higher risks, in Indian agriculture could be articulated better through a practical case of risks associated with the system of perilous private land ownership vis-à-vis other form(s). We consciously take up the case of land ownership, since ultimately the form of land ownership and mode of access/possession determines the cropping pattern, risk-perception associated with it, and profitability of farmers. It barely needs emphasis that Crop Insurance activity is a direct function of profitability that depends on risk-perception in the given regimes of ownerships and entitlements.   
The case of Haryana State: Historical documents (Gazetteer of Gurgaon District 1883-84 and B.H. Baden-Powell’s The Land Revenue Systems of British India) reveal that during the pre-British period, farmers used to obtain cultivable land from local authority on the basis of periodical distribution practice, then called “pana palat” (in Karnal and Northern districts) and “pana marna” (in Gurgaon, Rewari, Ferozpur-Jhirka, Nuh, Palwal, etc.) allocated by the criterion of demographic size and composition of family/farm-household. This simple arrangement of land distribution for cultivation based on periodical allocation was perceived less risky by farmers in almost every sense. Gradually after 1900, with the emergence of private ownership system, the old arrangement of less-risky periodical allotment gave way to the phenomenon of risky land market-based private ownerships, during the British period. Currently, particularly after Green Revolution, land (permanent sale-purchase) market and lease market have emerged alternative mechanisms to gain cultivable land by replacing periodical allocation. Risks associated with apparently “independent” agriculture under the regime of private ownership have increased, if perceived as such. Farmers who wish to reduce their stake, or even exit from agriculture have been making exit, through market channel even as small/marginal farmers do gain land through market channel since big/large farmers tend to sell land. Some farmers, especially the marginal and small subsistent ones, do not perceive risks. Farmers have mixed response to risks. So, “exit” from farming need not be an avowed policy prescription. Not only traditional aspect, but also risk perception is changing; and agriculture has been automatically adapting (through markets) to the demands of modern economy/society, particularly after Green Revolution. History of Indian agriculture shows that for risk-free farming, or at least to contain set of risks, possibly we need to promote the concept of really free markets, for instance, through local bazaars and “kisan mandies”, where farmers’ community feels free from the economic exploitation, demands/expectations, extortions and pressures of several kind.  
However, barring few states/regions, commercialization of Indian agriculture is non-uniform and limited. NSSO’s SAS reports of 2003 and 2013 and other studies, showing data on awareness and use of MSP concept by farmers, their marketable surplus, its distribution, mode of selling clearly reveal that Indian agriculture is yet to attain the status of fully commercialized agriculture with attendant risks, and such absence of reasonable returns could pose first challenge to the spread/coverage and adoption of Crop Insurance instrument. So, we need to explore reasons why the so-called “traditional” agriculture has not yet attained the status of fully viable agriculture. Why Indian agriculture is at the most semi-commercial/quasi-commercial/semi-subsistence instead of uniformly developed commercialized agriculture in all states/regions? This aspect could hold the secret of success (or reason) for failure by farmers to use Crop Insurance technology/instrument.
 
The fact of low profitability of agriculture expressed by farmers in NSSO surveys could have correlation with risk perceptions of farmers. As long as own-perception of risks by farmers is poor/low (that is, farmers act safely) and above all government support (market, price, subsidies) is there, farmers in all likelihood are to attribute profits (whatever) mainly to the exogenous factors (government, favorable market/price), and not to the risks which are not yet internalized fully by them. The postulate of micro-economic theory of firms in mainstream economics that profit is directly proportional to risk (perception) describes well the state of Indian farmers: Their poor perception of profits (in NSSO survey) is directly proportional to their poor risk perception; no risk, no profit. 
 
Risk Perceptions of Indian Farmers
 
Farmers in Pre-British period hardly took/perceive any conscious risk. Cultivable land and gain in area was easily available by periodical allotment. Market/price mechanism was absent. Except payment of land rent and ‘begaar” (unpaid labor), farmers did not face any visible risk (threat) from semi-feudal/quasi-feudal economic/social system. Research in economic history shows that village moneylender was least interested in permanent confiscation/encroachment/grabbing of agricultural land to cause eviction/dispossession of farmer. The old culture of low risk perception continued under the British period. After Independence, more or less same pattern (low risk) continued even with the emergence of formal banking system, institutions and markets, since role of government and authorities had been by-and-large protective and supportive in the framework of a quasi-welfare state. Farmers continued to nestle comfortably in state-support. Acknowledging the varied levels of existence of actual risks by different classes of farmers is an issue.
 
The only kind of risks and perils that could matter the most to the farmers are related to the realm of nature and physical environment: heavy rainfall, floods, flashfloods, hailstorm, snowstorm, landslide, land-cutting, soil erosion, cold, extreme hot/humid, wind, drought, cloudburst, etc. or pests, diseases (blight), wild animals, or accidental-natural events like, natural fire (hot summers) or thunder-lightening, etc. The calamitous impact of climate change has created greater risks to the production and productivity or crop damage or even total crop loss, whose chances have now increased due to adverse climatic conditions in the past few years. In nutshell, being less competitive and less capitalistic, farmers hardly perceive any risk in conscious mind emanating from systemic factors; “rising cost” issue is concomitant with survival of farmers. Farmers are “survivors” of ongoing competitive processes of “economic selection” amid rising costs and falling returns. That is why they appear “risk-averse”. Only a small proportion of farmers (big, large, medium) may have strong risk perception and participate in markets with sizeable voluntary marketable surplus; the majority of the farmers is risk-averse since not participating in risky equations of formal market borrowing, selling-buying, exchange, etc. Family subsistence and principle of own farm-based self-sufficiency for food security explains the poor (market) risk perception of the majority of marginal/small farmers.

Past Experience with Crop Insurance Schemes in India
 
European countries have been trendsetters in adopting crop insurance schemes by their farmers. The first crop insurance programme in the form of hail insurance for the distressed grape growers was started in 1820s in France and Germany. In 1883, it started in the USA for tobacco crop. The earliest Multi-Peril Crop Insurance (MPCI) started in the USA in 1939 with the formation of Federal Crop Insurance Corporation. Agriculture Insurance Company of India (AICI) is such similar corporation to administer crop insurance in India. However, research studies have shown, and it is noteworthy, that crop insurance system of Japan that started during the early-1960s is considered as the best crop insurance model in the world in terms of quality, efficacy and coverage. Most importantly, Japanese model does not emphasize involvement of the banks in crop insurance for any functional role such as collection of premium or enrolment/subscription by farmers for crop insurance policies through banks. Farmers have formed associations at grass root level of village for collection of premium. Farmers themselves perform the role of educating and guiding new farmers for dissemination of crop insurance programmes which become popular just like spread of mainstream culture and cultural values continues; no exclusive/special agencies are created for formal extension of programmes. However, Government has created a big special state fund to support crop insurance activities undertaken by different tiers of farmers’ decentralized organizations/federations including national federation.     
In India, references are made to the idea of introducing crop insurance during the British period in the form of rainfall insurance scheme for Mysore state, and few other schemes. However, the first crop insurance programme started in independent India in 1972 on H-4 cotton in Gujarat, later extended to few other crops. It could cover over 3000 farmers in a span of six years (1972 to 1978) and was replaced by Pilot Crop Insurance Scheme (PCIS) in 1978 to cover food crops (cereals, millets, pulses), oilseeds, cotton and potato. The PCIS was confined to the borrowing farmers on a voluntary basis. The scheme was implemented in 13 states and could cover about 6.27 lakh farmers from 1979 to 1984. The Comprehensive Crop Insurance Scheme (CCIS) implemented during 1985 to 1999 was an extension of PCIS though made compulsory for borrowing farmers. Premium rate was 2% of the Sum Insured (SI) for cereals and millets and 1% for pulses and oilseeds. Premium was shared between Centre and State in 2:1 ratio. The scheme when discontinued in 1999 was implemented in 16 States and two UTs. The CCIS covered cumulative 7.63 crore farmers during 15 years period, from 1985 to 1999.  
 
The CCIS was replaced by National Agricultural Insurance Scheme (NAIS) and administered by AICI to cover the envisaged 30-35 different crops during each season. But it encountered difficulties due to the shortcomings such as large insurance unit area (block) being rarely homogeneous, non-reflection of pre-sowing and post-harvest losses in the yield index, huge infrastructure/manpower required to conduct over 20 lakh Crop Cutting Experiments (CCEs), delay in settlement of claims, and coverage of limited number of crops actually where historical yield data was available. The ‘Modified NAIS’ (mNAIS) was implemented from Rabi 2010-11 in 50 districts even as the modified scheme had taken care of shortcomings of the NAIS, which are: insurance unit was reduced to village panchayat; claims up to 25% of the SI was payable in case of prevented/failed sowing; minimum indemnity level was made 70% (in place of 60% under NAIS); and premium rates were actuarial based supported by upfront premium subsidy (25 to 75%) equally shared by the Centre and States. Some issues confronted mNAIS, which included increased number of CCEs (due to lowered insurance area) that could not be handled timely, higher share (50%) in premium by farmers as compared to 30% under NAIS, etc. 
 
The traditional schemes (NAIS and mNAIS) still faced the issue relating to area discrepancy (area insured being more than area sown), which had afflicted the earlier scheme of CCIS. Some other issues were: delay in receiving crop cutting data on yields of crops; quality and reliability of such data; non-compliance with the provision of compulsory insurance for loanee farmers; multiple loans on the same land; high insurance premium perceived by farmers; delay in claim settlement; high indemnity payouts compared to premium collection, etc. These issues have persisted as challenges.
 
The New Millennium witnessed policy attention to weather index based crop insurance. Countries like India, Mexico, Ukraine, Malawi, Ethiopia and China have been running World Bank initiated pilots of weather index based crop insurance for some years. The first pilot on weather index based crop insurance in India was carried out in 2003 by ICICI-Lombard, followed by AICI and IFFCO-Tokyo during 2004. In some States like J&K, weather based crop insurance pilots were introduced later in 2013 in the form of Weather risk-Based Crop Insurance Scheme (WBCIS) which is in implementation in the country since Kharif-2007. Till 2013, around 4.70 crore farmers and 63.20 million hectares area was insured under WBCIS.
 
The National Crop Insurance Programme (NCIP) introduced since Rabi 2013-14 with the component schemes of mNAIS and WBCIS has higher premium as compared to the NAIS because there are several improvements and additional benefits to the farmers under these schemes. Premium rates being charged are on actuarial basis and claim liability is at present on the insurance company. To make the premium affordable to the farmers, Government is providing upfront subsidy up to 75% under mNAIS and 50% under WBCIS. Coverage is envisaged to include food crops, oilseeds and annual commercial and horticultural crops. The risk cover would be available for standing crops, prevented sowing and post-harvest losses due to cyclone in coastal areas. However, cloudburst and hailstorm risks are not covered under NCIP. NCIP witnessed uneven spread in terms of farmers/area covered in different states.  

Unified Package Insurance Scheme 
 
The Unified Package Insurance Scheme (UPIS) for farmers whose guidelines were introduced in March 2016 will be implemented in 45 selected districts on pilot basis from Kharif 2016. The Scheme contains seven sections: (i) Crop Insurance (under Prime Minister Fasal Bima Yojna (PMFBY)/WBCIS); (ii) Personal Accident Insurance (as per PMSBY); (iii) Life Insurance (as per PMJJBY); (iv) Building and contents insurance (fire and allied perils); (v) Agriculture Pumpset Insurance (up to 10 HP); (vi) Student Safety Insurance; and (vii) Agricultural Tractor Insurance. This package provides a comprehensive and holistic set of insurance cover to the farm households even as farm and farming get integrated with all other aspects of life of the farmers and their families as a compound of farm household/ agricultural household. 
 
Prime Minister Fasal Bima Yojna
 
PMFBY is a replacement scheme for NAIS/mNAIS and under implementation from year 2015. State/UT Government is envisaged to notify as an insurance unit, Village/Village Panchayat or any other equivalent unit for major crops. For other crops it may be a unit of size above the level of Village / village Panchayat. For the claims arising out of crop damage due to post-harvest losses and localized risks, assessment of damage will be made on individual farm basis. Adoption of innovative technology especially Smart phones/hand held devices for capturing conduct of CCEs is a pre-condition for scheme implementation, which is a positive feature. 
 
The Government of India has designed an insurance portal www.agri-insurance.gov.in for better administration, coordination amongst stakeholders, proper dissemination of information and transparency for Farmers, States, Insurers and Banks. The basic information like notified areas, crops, Sum Insured, Government subsidy, premium to be paid by farmers (calculation facility), and insurance companies concerned in the particular insurance unit has been digitized and put on the web portal so that farmers and other stakeholders may get the relevant information on Internet and through SMS. The idea behind developing a web-based, integrated IT solution is to speed up service delivery, unify fragmented databases, achieve a single view of data, eliminate manual processes and thus provide insurance services to farmers faster than before. Further, to ensure better administration and ease in accessing information by farmers, an android based “crop insurance app” has also been launched which could be downloaded from either the website of DAC&FW of MoA, Government of India or Google Play Store. The Government is also endeavoring for the integration of all the stakeholders, viz., farmers, insurance companies, financial institutions and Government agencies on an IT platform to ensure better administration, coordination and transparency for getting real time information and monitoring etc. in a phased manner in consultation with Ministry of Finance and other stakeholders. Online submission of application forms by the farmers especially for non-loanee farmers for getting insurance coverage through designated bank branches is also envisaged under the new scheme.
 
Performance 
 
(i) WBCIS, NAIS, mNAIS:- Under WBCIS the number of farmers insured increased from 6.79 lakh during 2007-08 to 136.14 lakh during 2012-13, and 89.27 lakh during Kharif 2013. It works out to 0.76% of total 893.50 lakh farmers covered during 2007-08 and 15.24% during 2012-13. As per the Govt. of India Report of the Committee to Review the Implementation of Crop Insurance Schemes in India (May 2014), average number of farmers covered per year were 156.70 lakh under NAIS, 18.30 lakh under mNAIS and 72.20 lakh under WBCIS. Combing three schemes, average coverage of number of farmers per year (May 2014 report) works out to 247.20 lakh or 27.66% of the total 893.50 lakh farmers in the country. Therefore, prior to PMFBY, per year around 28% of total farmers, on an average, participated in crop insurance programme, which needs to be enhanced to 100% on sustained basis so that the ideal of “de-risking” of agriculture proposed by the theme of this seminar may be realized.  
(ii) PMFBY:- About 309 lakh farmers in 23 states (34.5% of total farmers) had been covered under PMFBY during Kharif-2015, of which 294 lakh farmers were loanee and 15 lakh were non-loanee. During Kharif-2016, however, 366.64 lakh farmers (41% of total) have been covered, out of which 264.04 lakh farmers are loanee and 102.60 lakh farmers are non-loanee. PMFBY was implemented by 21 States during Kharif-2016. 
The achievement of 41% coverage of farmers within a couple of years after inception of PMFBY appears impressive, particularly as compared to 28% coverage of farmers achieved under three schemes combined (WBCIS + NAIS + mNAIS) prior to the implementation of PMFBY. 
 
However, some States and UTs are yet to join and participate in the scheme of PMFBY, which include: Punjab, Sikkim, Mizoram, Nagaland, Arunachal Pradesh, Delhi, Chandigarh and Lakshdweep. Of these States/UTs, though all are important to adopt Crop Insurance, particularly PMFBY, the case of Punjab is most important since this State has witnessed the phenomenon of farmers’ suicides for quite some time amid increasing risks of commercial agriculture. It is understood that farmers in Punjab were not encouraged or felt keen to take up PMFBY (or even WBCIS) as they were able to save their crops (say from drought) through additional irrigation for which even the State Government has been providing electricity subsidy for this purpose. Punjab was reportedly also not keen to take up PMFBY (and WBCIS) as state’s production variability was very low due to assured irrigation. However, after seeing the damage due to unseasonal rains and hailstorm during Rabi-2016, it is reported that Punjab has expressed its desire to implement PMFBY and WBCIS for crops which have very high production variability, particularly cotton and major crops, in the areas bordering Rajasthan.  
 
Challenges in Crop Insurance/PMFBY and Suggestions
 
Government of India is targeting to increase the insurance coverage to 50% of the total crop area of 194.90 million hectares, from the existing level of about 25-27% crop area. Gradually, I think, this area could even be increased to 100% for “de-risking” Indian agriculture through Crop Insurance, which is also the theme of this seminar. Just ahead of the introduction of the new scheme of PMFBY by Government of India, NABARD had conducted a study on Crop Insurance across different regions in select States of the country, covering relevant aspects such as performance, coverage, benefits, limitations/constraints, challenges, etc. through field survey of all stakeholders. Based on the findings, I propose to share important critical challenges and suggestions. 
 
1. Regional variation in spread of Crop Insurance scheme(s) needs to be addressed by reaching out to the hilly and interior areas. For instance, in J&K State, farmers are deprived of deserved benefits of Crop Insurance even as around 1-2% of total farmers/area per year were covered; Laddakh region was marked by total absence of penetration of Crop Insurance services. Crop Insurance facility for apple/fruit growers and other farmers can significantly aid in soothing militant human aggression of villagers/youths, by showing deep commitment by State Government to the Crop Insurance schemes, for example by budgeting of State’s share in subsidy on premium. A more or less similar steps for greater coverage of farmers may be needed in the hilly/North-Eastern States, which are yet to join. 
2. Infrastructure in the form of setting up of Automatic Weather Stations (AWSs) needs immediate attention, part of which could be financed under RIDF if state governments showed interest.
3. There have been problems of coordination among stakeholders. It may be ensured whether State Level Coordination Committee for Crop Insurance (SLCCCI) was appropriately/optimally functional in each State. 
4. Each State may set up a significant sized dedicated fund (Crop Insurance Fund) each year, since progress of farmers is at stake without crop insurance facilities adopted by them. 
5. Involvement of farmers by forming Crop Insurance associations of farmers at village level could be thought of so that farmers get a feel of voluntary participation in CI schemes. Farmers’ Clubs could take up the role of such CI associations at village level.
6. Unit of claim settlement needed to be individual farmer in all cases of risks be it localized or non-localized, for which necessary modifications in schemes could be desired. Needless to emphasize, expeditious settlement of eligible claims of farmers is still a major challenge.  

Strategy to Meet Challenge of 100% Adoption of Crop Insurance Scheme(s) by Farmers
 
The primary objective of the strategy is “progressive farming” as envisaged under Crop Insurance Schemes. Crop Insurance may be adopted with a view to achieve this objective of “progressive farming” by farmers instead of expecting solely pecuniary gains from taking up crop insurance policy.   The strategy may be based on Japanese 3-tier model of crop insurance.
 
1.      Form Village Level Farmers’ “Mutual Relief Associations” (Tier-I)
 
All farmers within a village may be guided to form Associations and be networked through internet facility made available in village. Farmers’ Association would be an organization for a specific purpose that is Crop Insurance. The association itself would carry out most of the insurance operations at lowest level on its own (make informal mutual relief contracts among farmers, provide farmers with crop loss prevention guidance, select leader of the next tier Federation, communicate farmers’ needs to the upper tier (Federation), collect premium from all farmers, retain a portion of the premium as fee and in the form of deposit, carry out loss prevention activities, etc.).  
Association, through an internet communicative portal, may seek guidance from progressive farmers of same tier-I and from upper tier-II Federation (on matters relating to agri-extension, adoption of new technology, yield/loss assessment, disease/pest control, market-price, market arrivals, etc.) and disseminate information amongst farmers/members of the Association through internet. This village-based Farmers’ Association may also arrange hiring/inviting technical experts with a view to strengthen farming system in concurrence with basic operations of crop insurance. Farmers’ Association at village level would require village level infrastructure. Such step has already been initiated in Haryana; so, it facilitates forming farmers’ associations for any purpose, including Crop Insurance. It is reported that State Government of Haryana has recently launched first “Village Secretariat” in Haibatpur Village of Jind district in May 2015, which is an innovative concept in administrative matters –it’s termed as “Administrative Complex” at village level. Similar innovations on formal lines may be suggested in crop insurance matters for tier-I of Crop Insurance schemes. Farmer’ “Mutual Relief Association” could be a foundation of sustained Crop Insurance activities in village. Village Secretariats may necessarily have internet facility so that farmers can interact and share information. Farmers’ Associations could be placed in Village Secretariat. Association(s) of farmers’ in each village may thus be self-equipped with handling basic/primary tasks of Crop Insurance along with Agri-extension so that both these tasks go hand-in-hand and free role-play by Farmers’ Associations is also ensured. 

 2.      Form “District Federations” of Farmers (Tier-II) 
 
 Tier-II District Federation for Crop Insurance may be established in each district, to be engaged in insurance business. All Village Associations of farmers within district (or block) would automatically become members of the Federation. The Federation may take some part of insurance responsibility of the Associations, when these Associations may not be able to fully cover risks within their areas/villages. Federation may give guidance on request to the Associations on matters concerning agri-extension, adoption of new technology, insect/pest control, and participate in carrying out yield/loss assessment of crops to help state machinery/ institutional stakeholders. District Federations may also arrange technical experts for farmers. 
 If tier-I and tier-II are made fully active in agriculture production support-service (besides doing function of crop insurance) then a major problem of “progressive farming” techniques and technology-adoption may be resolved. Associations and Federations may make use of modern technology, viz., telecom, digital and computer technology, including Kisan Portal (agri-extension), mPortal (for weather forecast message) and Insurance Portal, to modernize farming on “progressive” lines more effectively. 

3.      Form “State Agriculture/Farmers’ Insurance Association” for Advocacy (Tier-III)
 
State Agriculture/Farmers’ Insurance Association (SA-FIA) at top level may be formed by members from all district level Federations. The main functions of SA-FIA may be envisaged to do advocacy for promoting farmers’ interests (leadership, raising consciousness of Farmers’ Associations to exercise decentralized participatory roles, interaction with State Government), conduct field studies, carry out publicity (of Crop Insurance schemes), and conduct training courses of crop insurance programmes for Associations of farmers in each village, particularly at initial stage when awareness of farmers on advantages of Crop Insurance is relatively lesser. 
The proposed SA-FIA may also include representatives invited from the State Agricultural University and relevant Departments of State Government (Agriculture, Horticulture, Marketing), IMD, etc. SA-FIA may organize periodical meetings for interaction on all issues and challenges that might be emerging in the course of implementation of Crop Insurance. Where SLCCCI is dysfunctional or functioning below par, there SA-FIA may act as State Nodal Agency to roll out Crop Insurance (CI) products (state specific CI products) since it is observed that Crop Insurance may not be optimally handled solely by Insurance Companies having little experience in the complicated area of Crop Insurance and in still more complicated farming systems and practices, which are a culture apart.  There SA-FIA may be more effective. 
 
 4.      Enhanced Capital Investment for Crop Insurance in States’ Annual Budgets 
 
State Governments may be required to enhance the amount of capital budgeted for Annual Budget for agriculture, and include Crop Insurance as major item of capital expenditure for the infrastructures and premium subsidy. State Governments may take on them financial encumbrance of paying majority of the office expenses of the Farmers’ Associations and Federations (for instance, space in Village Secretariat/Administrative Complex) and significantly contributing in their subsidy premium. With the enhancement of share of State Governments in grants/incomes due to the recommendations of the 14th Finance Commission, it may not be very difficult for State Governments to incur all those expenses cited above to secure economic interests and protection of farmers through more meaningful role of the government in Crop Insurance. Role of public sector spending by State Government clubbed with universal participation of farmers through Associations, conjoined by legal force of a proposed Crop Insurance Law, may ensure truly successful progress in Crop Insurance as a mechanism for risk mitigation by farmers. 

 5.      ‘Agricultural Mutual Relief Fund’
 
Crop insurance requires dedicated attention towards financial commitment at enhanced level by State Governments for assured protection of farmers. “Agriculture Mutual Relief Fund” may be set up in all States. The “Fund” may be set up by State Governments as insurance credit facility for District Federations, which may require substantial funds to perform various activities related to Crop Insurance, particularly to enroll non-loanee farmers. 
The contributing sources of “Fund” may be suggested as under:
 
1. Base of the Fund may be constituted as contribution proposed to be made by Village Associations of Farmers from a portion of money saved and deposited by them based on premium fee collected by them. This financial participation may impart a sense of decentralized participation in the Crop Insurance programme(s). 
2. A portion to the Fund may be contributed by enhanced provision of capital expenditure on agriculture in the States’ Annual Budgets.
3. A portion of the Fund may be replenished by State Disaster Relief Fund (SDRF) needed by farmers to supplement ongoing relief operations at village level, by convergence of Crop Insurance scheme(s) with disaster relief programmes/funds.
4. A portion of the Fund may be contributed by share of Corporate Social Responsibility (CSR). Private telecom companies could also be willing to associate with this Fund, through contribution, to help the cause of farmers’ associations for Crop Insurance.
5. A portion of the Fund may also be contributed by banks. Banks’ associating with Farmers’ Associations through this “Fund” may create a virtuous circle wherein farmers may eventually get back to the banks to be linked for credit on voluntary basis, thereby strengthening Credit Inclusion of farmers.
6. A portion of the Fund may be contributed by regulated Agricultural Markets/ APMCs.

To conclude: The tasks confronting the challenge of universal Crop Insurance for “de-risking” our agriculture may be tackled through a still deeper commitment of the State Governments towards these activities, which are essentially in the nature of public goods for the farmers, and enhance their public good by way of greater capital investment (both through annual budgets and special fund contributions). A decentralized participatory approach appears to be a better way for enhanced coverage of area by forming village-based associations of farmers (and federations) devoted to the Crop Insurance. With these observations, I wish this seminar a grand success.