Rainfall insurance in India: does it deal with risks in dryland farming?

Byjesh, K and Deb, U and Bantilan, C (2014) Rainfall insurance in India: does it deal with risks in dryland farming? In: 8th Conference of the Asian Society of Agricultural Economists (ASAE), 15-17 October 2014, BRAC Centre for Development Management (BRAC-CDM), Savar, Dhaka, Bangladesh.. (Submitted)

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Rainfall continues to be a major risk confronted by the dryland farmers in semi-arid tropics of India. Through the years, dryland farmers experience an increasingly erratic rainfall and frequent occurrence of droughts. Crop yield and farm income are highly correlated with quantum and distribution of rainfall thereby livelihoods of resource poor farmer are at risk. Rainfall insurance, a type of Weather Based Crop Insurance Scheme (WBCIS), was introduced as a risk covering mechanism to extreme rainfall events and to reduce hassles in operationalization of other crop insurance schemes. This study documents rainfall insurance scheme and its operational modalities such as eligibility criteria, payment of premium, benefit structure and payouts, and technical hassles. It examined the hypothesis that low spread of rainfall insurance was linked with the situation where prospective buyers were unable to relate the product to their regular exposure. This study also underlines incongruity comparing the variation in longitudinal actual village data and reference weather data (mandal level3 ) that were used to calculate strike, exit and payouts to the farmers across six villages of semi-arid tropics (SAT) region. It identified several challenges on the ground in its capacity to cover risk among the farmers. The challenges include lack of proper awareness among farmers, absence of reliable weather datasets, misinformation on insurance contract and processes, exclusion of high risky crops from the rainfall insurance coverage. Real time calculation of risk benefits with existing policy found that existing design cannot appropriate to meet the loss, if incurred during the climate extremes. Hence, there is a need to relook at the insurance policy design in terms of efficiency. The study also argued that with continuous government support and by drawing on both quasi government and private players into the process for greater transparency and design to improve effectiveness of this initiative

Item Type: Conference or Workshop Item (Paper)
Divisions: RP-Market Institutions and Policies
CRP: CGIAR Research Program on Policies, Institutions, and Markets (PIM)
Uncontrolled Keywords: WBCIS, Rainfall Insurance, Risk management, Semi-arid tropics, Dryland farming,India
Subjects: Others > Agriculture-Farming, Production, Technology, Economics
Depositing User: Ms. Ishrath Durafsha
Date Deposited: 15 Dec 2014 08:10
Last Modified: 15 Dec 2014 08:10
URI: http://oar.icrisat.org/id/eprint/8385
Acknowledgement: UNSPECIFIED
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