Agricultural Insurance in India-Issues and Challenges

Indian agricultural sector still depended mostly on monsoons. The erratic and uneven distribution of monsoon rains perpetuated yield/price volatility and hence farmers exposure to risk and uncertainty. In this scenario of high risk and uncertainty of rain fed agriculture, allocating risk is an important aspect of decision making to farmers. This indicates a need for contingent plans that will help to improve the handling of risky outcomes across individuals. Hence a development policy which includes explicit insurance arrangements for both farm as well as non-farm activities/workers helps in economic development of the country through specialization and also helps in increase/stabilize income of the farmers/non-farm workers. In this backdrop, this paper tries to elicit the issues and challenges of Agricultural Insurance in India.