On Improving Awareness about Crop Insurance in India

Abstract

In­come from agri­cul­ture is volatile and crop in­sur­ance can be a means to mit­i­gate this volatil­ity. In India, how­ever, the cov­er­age of crop in­sur­ance is very low. At­tempts by the gov­ern­ment to in­crease cov­er­age have pri­mar­ily been through pre­mium sub­si­dies. Al­though the lit­er­a­ture points to sev­eral fac­tors re­spon­si­ble for low take-up of crop in­sur­ance, most of these stud­ies are based on crop in­sur­ance prod­ucts de­signed by pri­vate or­gan­i­sa­tions. These prod­ucts are fun­da­men­tally dif­fer­ent from pub­lic crop in­sur­ance schemes. While ac­tive mar­ket­ing and cam­paign­ing are done for pri­vate crop in­sur­ance prod­ucts, there is al­most no cam­paign­ing for gov­ern­ment-spon­sored schemes. Cor­rob­o­rat­ing this, coun­try­wide sur­vey data show lack of aware­ness as the pri­mary rea­son for not in­sur­ing crops. This paper looks at the fac­tors that are as­so­ci­ated with aware­ness about crop in­sur­ance. Its main find­ings are that farm­ers who ob­tained tech­ni­cal ad­vice and/or at­tended agri­cul­tural train­ing are more likely to be aware, and that higher fi­nan­cial in­clu­sion does not help in im­prov­ing aware­ness. These re­sults are ro­bust after con­trol­ling for other pos­si­ble con­found­ing vari­ables. The re­sults sug­gest that strength­en­ing agri­cul­tural ex­ten­sion ser­vices may be crit­i­cal for im­prov­ing aware­ness and, in turn, cov­er­age of crop in­sur­ance in India.