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Crop insurance in Karnataka

Author

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  • Kalavakonda, Vijay
  • Mahul, Olivier

Abstract

The authors examine the performance of the crop insurance scheme in Karnataka, a southern state of India and the second driest state in the country. Their analysis highlights weaknesses in product design, implementation challenges, and operational problems. The authors'finding is that the crop insurance scheme in its current form does not achieve its objectives, either explicit (risk management) or implicit (safety net and containment of both the central and state governments'contingent liability). The crop insurance scheme performs poorly both in terms of coverage (number of hectares insured and number of farmers purchasing insurance) and financial performance. The authors provide a framework for designing a crop insurance scheme based on the premise that insurance is a cost effective risk management techniques. They also provide some new ideas and thinking toward both improving the existing crop insurance scheme and exploring alternatives to the current product, based on an area-yield approach.

Suggested Citation

  • Kalavakonda, Vijay & Mahul, Olivier, 2005. "Crop insurance in Karnataka," Policy Research Working Paper Series 3654, The World Bank.
  • Handle: RePEc:wbk:wbrwps:3654
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    References listed on IDEAS

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    7. Olivier Mahul, 1999. "Optimum Area Yield Crop Insurance," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(1), pages 75-82.
    8. Olivier Mahul, 2003. "Hedging price risk in the presence of crop yield and revenue insurance," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 30(2), pages 217-239, June.
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    Cited by:

    1. Ulka Kelkar & Catherine Rose James & Ritu Kumar, 2006. "The Indian insurance industry and climate change: exposure, opportunities and strategies ahead," Climate Policy, Taylor & Francis Journals, vol. 6(6), pages 658-671, November.
    2. Zant, Wouter, 2008. "Hot Stuff: Index Insurance for Indian Smallholder Pepper Growers," World Development, Elsevier, vol. 36(9), pages 1585-1606, September.
    3. Nayanatara, S. Nayak & Billava, Narayan & Ashalata, K.V., 2020. "Agriculture Insurance’s Outreach Constrained by Procedural Delays and Norms: Reflections from North Karnataka, India," Research on World Agricultural Economy, Nan Yang Academy of Sciences Pte Ltd (NASS), vol. 1(1), December.
    4. Molini, Vasco & Keyzer, Michiel A. & van den Boom, Bart & Zant, Wouter, 2007. "Creating safety nets through semi-parametric index-based insurance: A simulation for Northern Ghana," 101st Seminar, July 5-6, 2007, Berlin Germany 9263, European Association of Agricultural Economists.
    5. Swain, M., 2015. "Performance of Crop Yield and Rainfall Insurance Schemes in Odisha: Some Empirical Findings," Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 28(2).

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