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Need and Conceptualisation of Agricultural Insurance in India

Risk and uncertainty are identical to life. Man may meet an untimely death. He may suffer from accident, destruction of property, fire, sea perils, floods, earthquakes and other natural calamities. Whenever there is certainty, there is risk as well as insecurity. It is to provide against risk and insecurity that insurance came into being. The main principle underlying insurance is pooling of risks. It is thus a co-operative device to spread the loss caused by a risk over a large number of persons who are also exposed to the same risk and insure themselves against that risk.[1]

[1] 1N.D.KAPOOR, ELEMENTS OF MERCANTILE LAW446 (6th ed. 2006)

The possibility of financial loss among the people might be insured by an important social device that is insurance. A person who purchases insurance shares his risk with other people and that reduces his burden of suffering loss. The management of insurance means includes conducting pleading of insurance in case of claim, collecting premiums and soliciting insurance. Insurance is based on large numbers of law. In the concept of insurance insurer decides the presumption of possible loss, for that he combines so many similar units. Importance of laws to calculate the probability of loss is another essential thing to determine the risk in insurance. As per this insurer calculates the loss and decides the rate of premium. [2]

[2] Property & Casualty Licensing Manual, Insurance concept and principles, http://www.insuranceschools

The need to protect farmers from agriculture instability has been a continuing thing of agriculture policy. According to the National Agriculture Policy (NAP) 2000, Despite technological and economic advancements, the condition of farmers continues to be unstable due to natural calamities and price fluctuations‖. The impact of this instability is highlighted in some years because of growth in news of farmer suicides in many parts of the country. In India crop insurance is one of the instruments for protecting farmers from agricultural changeability. This paper focuses on the use of agriculture insurance schemes to protect farmers from agricultural instability.

Agricultural Insurance is a means of protecting the agriculturist against financial losses due to uncertainties. These types of uncertainties may arise because of natural calamities.

Unfortunately, agricultural insurance in the country has not made much improvement even though the need to protect Indian farmers from agriculture instability is much important policy. The natural calamities can slow the process of development by reducing the food supplies and raw materials which we get through agriculture.

Successive failure of crops results in indebtedness of farmers. It creates bad impact on farming and farm economy and consequently the economy in general. As all knows, agriculture is backbone of Indian society. Indian Government has been concerned about the risk and uncertainty in agriculture. All of us are aware about the unfortunate deaths of farmers in India. Reason of deaths is loss due uncertainty in production of grains. There are so many reasons of unproductively of grain that may be discussed later.

Era of 1915 is pre-independence era in which shri J.S. Chakravarthi of Mysore State had proposed a rain insurance scheme for the farmers. Their main intention behind this scheme was to insure farmers against draught. He wanted to spread his idea of rainfall insurance through country so he published so many concepts regarding rainfall insurance in the Mysore Economic Journal. In 1920 he published a book titled ―Agricultural Insurance: Practical Scheme suited to Indian Conditions‖. Apart from this some other states like Madras, Dewas, and Baroda, also made attempts to introduce crop insurance relief in various forms, but with little success.3

[3] Agricultural Insurance Company Of India Ltd., http://www.aicofindia.com/AICEng/Pages/evolution.aspx (last updated Mar.28, 2015)

Author:
CA. Nitesh Nanavati, Assistant Professor of Law, Unitedworld School of Law (UWSL)

Disclaimer: The opinions / views expressed in this article are solely of the author in his / her individual capacity. They do not purport to reflect the opinions and/or views of the College and/or University or its members.

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