Crop insurance scheme was introduced in India in 1985 and later modified under the National agricultural Insurance Scheme in 1999. The premium is about 2% of the insured amount for cereals and millets and 5% in case of pulses and oil seeds. But the existence of this scheme has not deterred hundreds of farmers from committing suicide due to drought and crop failure. Probably drastic changes may be needed to suit such schemes to the needs of millions of farmers depending on timely rain for cultivating their land. Based on a study of 37 insurance schemes working in different countries, a comprehensive weather index based insurance scheme has been arrived at internationally worthy of consideration.
"Weather index based insurance sets out an objective parameter, such as the level of rainfall, at a specific location, during an agreed period. The terms of the contract correlate as closely as possible with the loss of agricultural production suffered by the farmer. All policyholders within the same area receive payouts based on rainfall measurements at the weather station close to their farms, eliminating the need for expensive, time-consuming loss assessments in the field. Ethiopian bean farmer Shuma Bejiga took part in one of the insurance programmes that was examined in the study. He received an insurance payment in 2009, after two successive years of poor rains."We were expecting the short rains in March and April but they only started in June. To make things worse, the rain then stopped at the flowering stage of the crops, so they never had a chance to develop," said Shuma, who supports his wife and ten children with the proceeds of his farm. "This insurance payment is the first I have received and it covers much of my loss. I really appreciate the payment; it will at least take us through the next few months."