Agrarian Distress and Crop Insurance in Odisha: Some Empirical Findings from Kalahandi District of Odisha

Abstract

In India, risks involved in agricultural production are inherently very high, which have increased appreciably due to climate change and globalisation. Both the government and the farmers take many ex-ante and ex-post measures to reduce risk and impart greater resilience to agriculture. However, in spite of the preventive measures in place, when there is crop failure, insurance is considered the most effective mechanism to compensate the farmers for their losses. Crop insurance is an ex-ante risk adaptive measure that transfers the production risk from the insured to the insurer. Realising the need of crop insurance for management of agricultural risk, Government of Odisha launched National Agricultural Insurance Scheme (NAIS) from the rabi season of 1999-2000 in all the thirty districts. NAIS is an area-based yield insurance scheme, providing coverage for yield losses due to natural calamities, pest attack and plant diseases and covers all food crops and major crops. This paper seeks to analyse the performance of NAIS in Kalahandi district of Odisha by using data from both secondary and primary sources. The principal objectives of the study are to identify the reasons for non-adoption of crop insurance by majority of farmers and explore the determinants of participation in the scheme. The study reveals that the performance of NAIS is not satisfactory due to its low coverage and undue delay in indemnity payment.