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As agriculture is a risky business, many households are suffering low average income as well as substantial fluctuations in their income. However, rainfall insurance is emerging as a significant tool and holds promise for monsoon dependent farmers.
Agriculture forms the backbone of the economy by supporting two-thirds of the Indian population and providing employment to 57% of the workforce. Besides, it provides raw material to a large number of industries. So any change in the sector has a multiplier implication for the economy. However till today, crop yield is dependent on the whims and fancies of the monsoons. Any shortfall or delay in monsoon will impact the farming community adversely. While some in the farming community have access to irrigation, the quality of monsoon is still an important determining factor. When rainfall is insufficient and sporadic, the poor rural households are the worst hit. Against this backdrop, depending on traditional methods of coping risk, such as borrowing from relatives also prove futile. Over the years, the lack of proper insurance coverage compelled the farming community to sell off their productive assets, forgo medical care and sometimes even starve themselves or finally resort to suicide with fatalist resignation. Apprehending such helplessness, most farmers are shying away from planting high-yield crops, which produce more but are more vulnerable to rain shortfalls.
A Comprehensive Crop Insurance Scheme (CCIS) was implemented in the country in April 1985. It was offered to farmers who got crop loans from financial institutions and covered crops such as food grains, oilseeds and pulses. However, there were a number of debates regarding modifying the scope and content of CCIS to include more crops. Also, very few farmers are eligible to purchase the insurance and often receive payments years after their loss. Crop insurance has proved to be cumbersome to administer and prone to losses. Going by this, private insurers have been reluctant to insure individual farmer's crops.
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