On Improving Awareness about Crop Insurance in India

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.