Access to Credit-Linked Crop Insurance in India: Does Farm Size Matter?

This study examines the access to crop insurance for farmer households and its impact on farm income. The special interest of the paper is to assess the implications of farm size on access to crop insurance in India, in light of evidence from a nationally representative survey in India. A unit-level dataset of 34,946 observations related to 31,784 cereal-producing households is compiled from the Situation Assessment Survey of Agricultural Households in Rural India, 2019. Econometric methods (Logistic regression and Propensity score matching) are used in this study. The survey reveals that insurance access increases with an increase in the farm size of the households. The majority of insured farmers who experienced crop failure are denied claims without providing any reason. Logistic regression suggests that farm size significantly determines crop insurance access. Other significant socio-economic determinants include age, yield, formal training, participation in an employment guarantee scheme, possession of a Kisan Credit Card, and experience of crop loss. Finally, propensity score matching results suggest that crop insurance significantly improves farm income and mitigates downward risk during crop failure. However, the impact on farm income varies across the farm size categories of farmers. Considering the positive impact of crop insurance in increasing farm income and safeguarding against crop failure, policymakers should consider strategies to increase the outreach of crop insurance access by making smallholders aware of the crop insurance scheme.