ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Crop Insurance in India

Where Do We Stand?

Crop insurance is a vital component of agriculture, especially in a country such as India, where the majority of farmers are small and marginal with low savings that reduces their ability to weather agricultural risks and fluctuations. Programmes extending insurance cover for crops in India have long been in operation, but have not been able to include the majority of the agricultural sector within their ambit. Analysing the 70th Round Situation Assessment Survey data, collected by the National Sample Survey Office, the performance of crop insurance at the household level is examined and factors that determine its adoption are identified using an econometric analysis. The Pradhan Mantri Fasal Bima Yojana is then analysed by looking more closely at the structure of the scheme.

We thank the Reserve Bank of India and the Indian Council of Social Science Research for their support to the Institute for Social and Economic Change, Bengaluru. An earlier version of this paper was presented at the ISEC–SASS conference held at ISEC in 2018.

The latter half of 2018 witnessed widespread protests by farmers in Delhi and other important centres of the country. These protests were aimed at pressing the government to find solutions to the ongoing agricultural crisis that is characterised by inadequate farm incomes. This situation has been exacerbated by drought and water shortages in several parts of the country. Farmers are not able to repay their debts, leading to distress and in some cases, suicides. While low income is an issue, the fluctuation in incomes is even more distressing. Furthermore, it is likely that such concerns will be more frequent in future due to climate change. It has been stated by scholars that weather-based risks to agriculture have increased in the recent years, notably in the form of climate change (Lobell and Field 2007; Rosenzweig et al 2013). Developing regions that depend on farm incomes are more vulnerable to these systemic changes (Rosenzweig and Parry 1994; Fischer et al 2005).

Farmers in developing nations such as India have to incorporate these risks into their production arrangements and many are ill-equipped to do so (Rajeev et al 2016). Here, the role of crop insurance is important. Crop insurance schemes are required to bridge the gap between income and consumption requirements during periods of crop losses or crop failures.

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Updated On : 5th Jul, 2019
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