National agricultural insurance scheme: A guide for farmers

The National Agricultural Insurance Scheme (NAIS), also known as Rashtriya Krishi Bima Yojana (RKBY), was a key government initiative launched in 1999-2000 to protect Indian farmers from financial distress caused by crop failure. It provided a safety net against losses from natural calamities, pests, and diseases, thereby helping to stabilize farm incomes in disaster years. It has since been replaced by the Pradhan Mantri Fasal Bima Yojana (PMFBY) in 2016, but understanding its structure offers valuable insight into the evolution of agricultural support in India.

Key Benefits of the Scheme

The NAIS was designed with several farmer-centric benefits. Its primary advantage was providing financial security to farmers, ensuring they had the means to recover and prepare for the next season even after a bad harvest. 

The scheme was notably inclusive, covering all farmers—both loanee and non-loanee—as well as sharecroppers and tenant farmers who grew notified crops in notified areas. Furthermore, it offered premium subsidies to support small and marginal farmers; the subsidy was 50% of the premium amount, shared equally between the Central and State Governments. 

The process was also designed for efficiency, with claim assessment and settlement being automated, ensuring that the claim amount was directly credited to the farmer's bank account without cumbersome paperwork.

How Farmers Could Apply

The application process under NAIS differed for two main groups of farmers. For loanee farmers, the process was largely streamlined and integrated with their credit cycle. These farmers, who availed of Seasonal Agricultural Operations (SAO) loans from financial institutions, were compulsorily covered under the scheme. The sum insured was typically equal to the crop loan amount, and the insurance charges were added to their loan account.

 For non-loanee farmers, participation in the scheme was voluntary. They could opt for the coverage by directly registering and paying the required premium to the implementing agency, the Agriculture Insurance Company of India.

Conclusion

The National Agricultural Insurance Scheme played a pivotal role in India's agricultural landscape by providing a foundational risk management tool for millions of farmers. Its design, which emphasized an area-based approach and included both loanee and non-loanee farmers, laid the groundwork for future crop insurance programs. While NAIS has been superseded by the more robust Pradhan Mantri Fasal Bima Yojana, its legacy continues in the ongoing effort to safeguard the Indian farmer against the uncertainties of nature.