Why are farmers not insuring crops against risks in India? A review

Abstract

Despite decades of sustained efforts by both the national and state governments to enhance the adoption of crop insurance in India, a low adoption rate is continuously reported. Hence, this has become a research issue over the years, and various studies have identified determinants and barriers related to social, economic, educational, and structural factors. There is a dearth of research in the context of behavioural aspects in India, while several empirical pieces of evidence have emerged in this domain from developing and developed countries. This study, therefore, aims to review these two strands of studies by posing two relevant questions: (a) how do different social, economic, educational, and structural factors affect crop insurance adoption in India? and (b) how do different behavioural anomalies affect farmers' decision to adopt crop insurance? In doing so, this study has brought out various research avenues for future studies to be undertaken in India and elsewhere.

Keywords

• Crop-insurance
• Adoption
• Socio-economic factors
• Behavioural biases
• India