Role Of Insurance In The Development Of Agriculture In India

"Indian agricultural sector still depended mostly on monsoons. The erratic and uneven distribution of monsoon rains continued unpredictability and hence farmers exposure to risk and uncertainty. In this scenario of high risk and uncertainty of rain fed agriculture, allocating risk is an important aspect of decision making to farmers. About 70% population of our country depends on agriculture but Indian agriculture depends on monsoon. It leads to operating risk in cultivation of different crops. To cover the risk which may occur in future there is need to some provision. Crop Insurance scheme is the only mechanism available to safeguard against production risk in agriculture. In this research paper I am trying to give focus on Agriculture Insurance scheme in India as well as Agriculture Insurance companies. With the passing of Insurance Regulatory and Development Authority (IRDA) Act 1999 Indian insurance sector opened to a healthy competition by entry of new private insurers into insurance business hitherto the area of public sector. Insurance penetration (premium as % of GDP) in India was merely 1.93% showing 0.54% and 1.39% in nonlife and life insurance sectors respectively, which is far below from the 16.54%, 13.35%, 11.28% & 11.17% of South Africa, South Korea, Japan & UK respectively (table 1). Being an agrarian economy, there are immense opportunities in agricultural/rural insurance in India. The new areas like weather insurance, rainfall insurance and cyclone insurance give scope even for new private insurers and reinsures to exploit the opportunities in the niche areas." Key Words: Crop Insurance, Agriculture, Population, Insurance Companies Policy