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Agriculture Insurance in India

Published by:
Online Location
Publication date
Number of Pages
Type of Publication:
Working Papers & Briefs
Focus Region:
Asia and the Pacific
Focus Topic:
Market / Trade
Climate / Weather / Environment
Rural Finance / Insurance
Type of Risk:
Policy & institutional
Type of Risk Managment Option:
Risk transfer
Risk coping
Sidharth Sinha
Center for Insurance and Risk Management

Government run crop yield insurance scheme, procurement at minimum support prices and calamity relief funds are the major instruments being used to protect the Indian farmer from agricultural variability. However, crop insurance covers only about 10 percentof sown area and suffers from an adverse claim to premium ratio. There are problems with both the design and delivery of crop insurance schemes. These problems could be overcome with rainfall insurance with a well developed rainfall measurement infrastructure. Private and public insurers are currently experimenting with rainfall insurance products. Given the current levels of yield and rainfall variability the actuarially fair premium rates are likely to be high and in many cases unattractive or unaffordable. Instead of adopting the easy and unsustainable route of large subsidies, in the long term the government should consider risk mitigation through improvements in the irrigation and water management infrastructure.