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Consumption Smoothing and Insurance Against the Income Risks: A Case of India

Author

Listed:
  • KUMAR, PARMOD

    (Institute for Social and Economic Change, Bangalore)

  • SINGH, SUDHIR KUMAR

    (Word Bank)

Abstract

This paper examines the incidence of consumption smoothing or risk sharing among the above and below poverty households in India. The results suggest partial risk sharing activities between households either within the same village or within their same ethnic groups. The results of insurance through same ethnic groups are more robust than that of village insurance. The results of insurance along the same caste line were found across the board whereas results for village insurance appeared in few cases. The implications of these results are quite significant. The findings of the paper indicate that various welfare programmes launched by the government to provide safety nets to the poor are not being targeted adequately as the poorest of the poor households remain the most vulnerable. The findings strengthen the case for improved targeting and making some provision for the public insurance for the households who lie at the bottom in the income bracket.

Suggested Citation

  • Kumar, Parmod & Singh, Sudhir Kumar, 2012. "Consumption Smoothing and Insurance Against the Income Risks: A Case of India," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 47(2), pages 265-283.
    • Handle: RePEc:dse:indecr:0056
    as

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    More about this item

    Keywords

    Consumption smoothing; Risk sharing; Insurance; Above poverty; Below poverty; Antyodaya; Public distribution system;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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