Insuring crops against climate risks: A most effective agricultural practice in India

Several studies have enquired about the reason for the low adoption of crop insurance in India and noticed determinants associated with demographic, socio-economic, landholding, institutional characteristics, etc. However, limited studies consider nationally representative sample data for analysis, and further, there is a dearth of understanding in the intensification of crop insurance adoption. A few studies reveal that determinants are different for adopting crop insurance and the number of crops insured. Thus, this study aims to identify factors influencing crop insurance adoption and the number of crops insured in India. The National Sample Survey Office 70th and 77th rounds related to the Situation Assessment Survey of Agricultural Households conducted in the 2012–13 and 2018–19 Kharif season (July - December) data are taken, and the double hurdle model is employed. Like other empirical studies in India, this study finds that socio-economic variables like caste, education, and economic status influence farmers’ behaviour towards crop insurance adoption. Large farmers are more likely to opt for crop insurance than other farmers. In particular, most variables related to access to various agricultural institutions are positive and significant for adoption but not for intensification of crop insurance. A separate analysis for landholding categories highlights the importance of these variables, particularly for marginal farmers. This needs special attention in the policy as it is imperative from the ongoing agricultural crisis in India to enhance adoption coverage so more farmers opt for crop insurance and purchase insurance for multiple crops. Such analysis is imperative as crop insurance is considered one of the most effective climate-smart agriculture practices.