Raitu Jagruthi

Cultivating Assurance in Farmers

A Comprehensive Scheme for Commercially viable
Crop Insurance Scheme and empower Farmers with
Risk Mitigation and Best Farming Practices.

Sumanth Garakarajula
Sreedhar Bandaru

Agrarian Crisis Scenario India

Small land holdings
Inadequate access to institutional credit
Land & Tenant issues

Timely available Seeds, Fertilizers

Spurious Seeds and Pesticides
Lack of irrigation facilities
Erratic power supply

Uncertain weather
Unscientific practices of farming
Access to Markets and
Low Market price and High cost of production

Unstable Income Debt ridden

Farmer

Becoming
Suicidal

Governments Failed to Avert the

Situation

Numerous government plans,

programs, schemes, waivers,

subsidies failed to improve the

farmers situation for decades.

Let us ask ourselves!

How farmers in developed countries
surviving?

What is the that Indian farmers lack

and the First world Farmers have?

The answer ?
Risk Management
Farmer Risks:
Yield
Drought
Flood
Rainfall
Price fluctuation
Hail etc.,

Crops are covered by crop insurance

Why Crop Insurance failed in India?

Comprehensive Crop Insurance (1984)
Scheme and National Agricultural Crop Insurance Scheme- (1999)
Crop insurance schemes introduced in India were financially unsuccessful
and largely a failure (Enrique Pantoja, 2002).
Government of India scrapped its first Comprehensive Crop Insurance
scheme and the Indian Government reported that the scheme is not
viable. (Ministry of Finance, Government of India, 1997)
Farmers who are paying insurance premium were not compensated
because the Mandal average output never fell before 60 percent which is
threshold level for payout.
Huge losses in implementing these schemes was the multi-peril risk
coverage. For covering multiple risks faced by farmer, comprehensive data
are essential for actuarial calculations. Even after 25 years of
implementation of crop insurance schemes no private or public agency
had reliable data.

Why Crop Insurance failed in India?

The problems of administrative costs, fraud, adverse selection, and moral
hazard seem insuperable in the case of crop insurance, and no private

insurers have been willing to supply crop insurance to low-income

consumers for these reasons. (Micro Insurance Demand and Market
Prospects-India)

Hindrances for Crop Insurance in

India?
High Administrative Costs

No Actuarial Data
Unscientific Farm practices
Micro-Spatial Weather Data

Adverse Selections, Moral Hazard, Fraud

The Solution
Raithu Jagruthi Project address all the issues that are hindering crop
insurance for farmers

Profiles Farmers and their Farms

Establishes micro-weather stations
Monitors Individual farms and farmers
Teaches Scientific Practices
Delivers Agriculture advisory
Document Farmer practices on Daily basis
Checks for Spurious seeds and pesticides
Assist in procuring credit, seeds and fertilizers

Helps them access to markets

Creates a Farmer Credit Farming Practice History

The Solution

Agri-Advisory Division
Scientific Experts advising
farmers

Monitor
IT Division keeps all
data

Document
Collect Data
Deliver advises

Verify seeds etc

Seeds and presticide

sellers, Banks, AO officers,
Govt officials, Weather
services etc.

Farmer

Insurance
Company
Underwriter access
the data for the
indemnity

Raitu Jagruthi
Recruits
Farmers and
enrolls for
insurance.

Farmer Data
Service
Division

RJ verifies and approves Seeds and

pesticides for

Seed/Pesticide/Fertilizer Sellers
(farmers choice) are
approved by Raitu Jagruthi to
eliminate the possibility of
spurious seeds and pesticides

Farmer

Now Back to the Question!

What is the that Indian farmers lack and the Developed country Farmers
have?
In developed countries:
Farmer follow best crop practices
Insurance companies have the individual farmers historical actuarial Data
Micro weather data
No fraud, moral hazard and information problems associates with farmers.

Benefits
Safety net for farmers and their Families
Stable income for farmers
Farmers learn best practices

Farmers will have documented history of their farming practices

Accessibility to credit and insurance increases.
Lower cost of production by scientific farming
Access to markets

Sustainable agricultural development

Sociological impact of reduced distressed farmers and families
Generates Employment
Real and permanent good!

Future Extension of this project

The project can itself become an insurance company in
future and underwrite the indemnity

A huge data of farmers and families will be helpful in

further services like micro-health insurance etc.
A communication network for farmers will be created
with this system, which can use for Agricultural Extension
services.

Project Outline
Duration of the Project: 3 years
Location of implantation : 10 mandals or 250 villages in Nizamabad
Parliamentary Constituency
Target Group and No. of Beneficiaries: All sizes of farmers. About 80,000 Farmer
families
Budget Estimate: 35 Crores for three years.
Employment generation: about 1000 local jobs.
Deliverables:
A well tested individual historical data of farmers for the actuarial use.
A well tested IT-enabled system to resolve location-specific crop husbandry problems
of all crops in a periodic manner throughout the year and reachable to all farmers.
A well tested scalable system.
A robust system which is ready to replicate.
A model for state-level extension system using ICTs
A framework to capture location-specific content.
A data set of individual farmers farm related practices, crop problems and advisories.

In long run, Insurance is the only way to

secure stability in farmers income.

Insurance coverage is Indispensable to

farmer. It is only the matter when it starts!
Subsidies, waivers and other schemes
can only be effective, if farmer learns to
manage risk and follow best practices.
This pilot project educate and empower
farmers for Risk Mitigation.
-END -